Speaker 1: Technology coming up on the program Stability AIS. Breakout success
Speaker 1: faces threats as the startup confronts executive departures and concerns
Speaker 1: with its CEO. Will bring you our Bloomberg reporting on
Speaker 1: the artificial intelligence startup, plus full coverage of earnings ahead
Speaker 1: from Palenteer and Lucid's results to Rivian reporting after the bell.
Speaker 1: We got you covered, and we'll have an exclusive conversation
Speaker 1: with Spotify as the music streaming company further integrates AI
Speaker 1: technology in to its products.
Speaker 2: All right, let's get straight to our top story.
Speaker 1: Stability AI is confronting a series of executive departures, struggles
Speaker 1: to raise funds at a target valuation, and an accusation
Speaker 1: it's not paid its bills on time or in full.
Speaker 1: After breakout success with the stable diffusion model, the startup
Speaker 1: now faces mounting risks to its edge in the booming
Speaker 1: field of generative generative AI.
Speaker 2: The reporters who broke that story.
Speaker 1: Rachel mets here in San Francisco, Mark Bergen out in London,
Speaker 1: Join me now, Rachel, let's start with you. What were
Speaker 1: the main takeaway that we learned in the course of
Speaker 1: our reporting.
Speaker 3: We spent several months looking into this story and speaking
Speaker 3: to a lot of different people, including Emad Mustak himself,
Speaker 3: who is the person behind Stability AI, and we learned
Speaker 3: that we're looking at a company that seemed to come
Speaker 3: out of nowhere, has a CEO who tends to make
Speaker 3: some blue sky comments about things that may not have
Speaker 3: happened yet, and the company itself just seems kind of disorganized,
Speaker 3: I guess, I would say.
Speaker 2: And that was just a bit of what we've noticed.
Speaker 1: So let's remind us as what put Stability on the map.
Speaker 1: It was the stable diffusion model. What is that?
Speaker 3: In basic terms, stable diffusion is an image generation AI model.
Speaker 3: What it does is you type in a few words
Speaker 3: and it will give you back an image or a
Speaker 3: number of images. It was actually initially developed by a
Speaker 3: group of German researchers and a reserve scientist from a
Speaker 3: startup called Runway. Emad Mustak in mid twenty two approached
Speaker 3: this group of people to say, hey, I will support financially.
Speaker 3: I will pay for the computing power needed to improve
Speaker 3: this model to further train it.
Speaker 1: Okay, let's bring in Bloomba's Mark Bergen, who's out in London.
Speaker 1: One of the co bylines of this story. We were
Speaker 1: just showing pictures of m Ad the CEO of Stability.
Speaker 1: A lot of your reported reporting focused on him his
Speaker 1: leadership of the company.
Speaker 2: What did you learn.
Speaker 4: Yeah, I mean he's certainly a charismatic character. He has
Speaker 4: a history here in London. He's worked for hedge funds,
Speaker 4: He's worked as a consultant prior to Stability, He's worked
Speaker 4: with a lot of around emerging markets and finance.
Speaker 5: He has a couple of companies.
Speaker 4: Are in crypto and blockchain space. And then, as Rachel said,
Speaker 4: I mean a mod moustache has even said his own
Speaker 4: words on stage. We kind of came out of nowhere,
Speaker 4: certainly not a well known entity in person here in
Speaker 4: London and in the valley, raised a lot of money,
Speaker 4: over one hundred million from some pretty high established investor
Speaker 4: is what we you know.
Speaker 5: I think that he has really.
Speaker 4: Positioned his company and its unique benefits around open source technology,
Speaker 4: and some investors we talked to that's what got them
Speaker 4: really excited. And one of the reasons they invested is
Speaker 4: they thought there would be an open source alternative to
Speaker 4: the open.
Speaker 5: A eyes and Googles of the world.
Speaker 4: As we talk in the story, that's clearly been threatened
Speaker 4: by companies like Meta, a lot of other newcomers that
Speaker 4: are also introducing competing sort of open source or open
Speaker 4: source like software products, Whereas what we're seeing in Stability
Speaker 4: is a lot of this internal turmoil while they're facing
Speaker 4: increased competition.
Speaker 1: So let's get to the specifics of that internal tour
Speaker 1: mail turmoil, Rachel. One of the things you report is
Speaker 1: that they tried to raise funds at a specific valuation.
Speaker 1: Four billion US dollars is what they were seeking. They
Speaker 1: weren't able to tell us about that, and also some
Speaker 1: of the departures that they've had at the higher levels
Speaker 1: of the company.
Speaker 3: So the company raised over one hundred million in funding
Speaker 3: late last year, right at the height of the success,
Speaker 3: the break out success of Stable Diffusion, and since then
Speaker 3: it hasn't announced a really large funding round. At that
Speaker 3: time it was valued at a billion dollars, and our
Speaker 3: reporting at Bloomberg has indicated that it was trying to
Speaker 3: raise at four billion dollars. As far as we are aware,
Speaker 3: that hasn't yet happened.
Speaker 1: We just showed some of the responses we got from
Speaker 1: Stability to our reporting, one stating that they've not had
Speaker 1: problems raising funds, Mark, and that actually that they said
Speaker 1: they weren't trying to raise funds. The other is that
Speaker 1: some of those departures in late July, according to stability
Speaker 1: were they were let go rather than people that resigned
Speaker 1: in their own volition. Mark, What else have you learned?
Speaker 1: What are kind of some of the key factors that
Speaker 1: you report out in this story.
Speaker 4: Yeah, I think what makes them a really interesting company,
Speaker 4: beyond the fact that they have such a successful stable diffusion,
Speaker 4: is they're trying to build these what they're called foundational models,
Speaker 4: Like they're trying to build this ground level infrastructure for
Speaker 4: generative AI, what a lot of investors and people in
Speaker 4: business believe is sort of the future of the Internet
Speaker 4: and the next transformational economy. That is a very expensive industry, right,
Speaker 4: very expensive enterprise.
Speaker 5: Open AI is raised over ten billion.
Speaker 4: We've seen startups like Rachel mentioned Runway, raising a lot
Speaker 4: of money because this is requires a lot of research,
Speaker 4: that requires a lot of compute, It requires hiring top
Speaker 4: shelf very expensive engineers. We talked Mustak in our reporting
Speaker 4: shows that their revenue he had previously sent out a
Speaker 4: tweet saying it was around ten million run rate of
Speaker 4: revenue for the year. It's below that now, in part
Speaker 4: because of their investment in research and development.
Speaker 5: So it's a very expensive business. It's something that a lot.
Speaker 4: Of their competitors have felt the need to be on
Speaker 4: this constant ramp of fundraising, and the fact that they
Speaker 4: have not, I think is certainly almost an outlier amongst
Speaker 4: their peers.
Speaker 1: Invokes Rachel Max mark Bergen. Just really important reporting on
Speaker 1: a company that we talk about often and here on
Speaker 1: Bloomberg Technology, and now we find out the reality behind
Speaker 1: that name that has a lot of momentum. Thank you
Speaker 1: very much, all right here on Bloomberg Technology. I want
Speaker 1: to get quick check in of the markets broadly. This
Speaker 1: is what we're looking at, and aw's that one hundred
Speaker 1: down one point five percent. We've seen the index level
Speaker 1: kind of treading water, but now some outside declines, particularly
Speaker 1: in chip names. You've got the socks, we're down two
Speaker 1: point six percent. Yields have come down though that's been
Speaker 1: the story the selloff in treasuries, but the US tenure
Speaker 1: yield back down towards four percent. It had been at
Speaker 1: four point two percent last week. We can see it
Speaker 1: continue to pull back. Bitcoin, which has traded in quite
Speaker 1: a narrow range for the last two weeks or so
Speaker 1: around twenty nine five hundred US dollars per token, but
Speaker 1: pushing a little higher in the early part of this
Speaker 1: Tuesday session. The single name that we are watching is Palenteer.
Speaker 1: We are off session lows when it comes to Palenteer
Speaker 1: right now, down seven percent on an inch day basis.
Speaker 1: We've been heading for our biggest decline since November.
Speaker 2: The story really clear.
Speaker 1: The market is not happy with the guidance that they
Speaker 1: gave two point two to one billion dollars for revenue
Speaker 1: in full year twenty three, and this has been seeing
Speaker 1: a range of two point one nine to two point
Speaker 1: twenty four. But it's about not walking the walk while
Speaker 1: the company is certainly talking to the talk for more
Speaker 1: impaltied results. I want to bring a man deep sing
Speaker 1: Boomberg Intelligence senior technology analysts that there's a real fighting
Speaker 1: talk from this this company in Alex carp in particular,
Speaker 1: Man deep about the momentum they have driven by their
Speaker 1: artificial intelligence offering. But do you see any of that
Speaker 1: momentum show up in the financial guidance they gave.
Speaker 6: No, And I think it's too early for any company
Speaker 6: on the software side to really guide in terms of
Speaker 6: the revenue impact, but it comes to a generative AI.
Speaker 6: They have called out a few use cases around healthcare
Speaker 6: and antology, which seem interesting, but it's too early, I
Speaker 6: think to say that you know it's going to drive
Speaker 6: revenue growth, as you see in the case of the
Speaker 6: lives of Nvidia, and that's where you know, with the
Speaker 6: model that Palenteer has, which is not a recurring subscription
Speaker 6: model unlike a lot of the cloud players, and when
Speaker 6: you're training at eighteen to twenty times sales, the kind
Speaker 6: of growth they are putting, it's just not enough to
Speaker 6: you know, sustain that stock momentum. And I think that's
Speaker 6: why you're seeing that reaction to them.
Speaker 1: This is what Alex carb the CEO of palenter Technology
Speaker 1: is told Bloomberg in an interview.
Speaker 2: We've got a good chance.
Speaker 1: Of becoming the most important software company in the world.
Speaker 2: What's your response to that, Mandy.
Speaker 6: Too early, because when you look at the partnerships that
Speaker 6: have been announce so far, Snowflake has partnered with Nvidia,
Speaker 6: what are they trying to do. They're trying to leverage,
Speaker 6: you know, Nvidia's expertise when it comes to GPUs and
Speaker 6: accelerators and overlay that with the product that they have
Speaker 6: at commercial enterprises. And that's the I think part where
Speaker 6: Talenteer will find it challenging to grow because they have,
Speaker 6: you know, the customer base when it comes to the
Speaker 6: government side. On the commercial side, they don't have enough
Speaker 6: partnerships to drive that momentum, and most of the software sales,
Speaker 6: if you think about it, happen you know at that
Speaker 6: top level where you need salesforce, where you need to
Speaker 6: constantly add customers up sell. In fact, Talenteers net retention
Speaker 6: rate declined to one hundred and ten percent. They were
Speaker 6: around one hundred and thirty percent. That just goes to
Speaker 6: show they have some churn issues and commercial side sequentially
Speaker 6: decelerated in the quarter. So clearly commercial side is where
Speaker 6: there'll be challenged and they need partnerships. They need the
Speaker 6: service providers to drive the nomentum.
Speaker 1: You wrote about Talentie small customer base in your Bloomberg
Speaker 1: Intelligence Reacts. The way they described it is that they
Speaker 1: have for artificial intelligence platform aipay organizations as customers, but
Speaker 1: they're talking to three hundred What do you make of
Speaker 1: their ability to convert? But also I guess on the
Speaker 1: other side of the table the willingness of big commercial
Speaker 1: orgs to invest in AI driven data analysis.
Speaker 6: I think clearly there is an appetite and there is
Speaker 6: excitement around generative AI. The way enterprises typically go about
Speaker 6: this kind of stuff is they will do it in
Speaker 6: you know, pilot and phases, and you know you're going
Speaker 6: to wait for ROI to really allocate a huge budget
Speaker 6: for twenty twenty four for example. And as I said,
Speaker 6: it's a very competitive space. You are competing with hyperscalers,
Speaker 6: You're competing with the likes of Snowflake data breaks that
Speaker 6: have an army of salespeople, which I think Palenteer will
Speaker 6: find it hard to compete with. And what it does
Speaker 6: to their bottom line is they have no way but
Speaker 6: to keep hiring salespeople. So I know they focus on
Speaker 6: operatability and they're doing a buyback, but to my mind,
Speaker 6: their expenses will have to grow, especially when it comes
Speaker 6: to sales and marketing, and that will limit any operating
Speaker 6: leverage you'll see in the NEUTRA.
Speaker 1: All Right, a big thanks to Bloemberg Intelligence senior tech
Speaker 1: analyst Mandy Singh. We've got some fresh news just out
Speaker 1: this past hour and video has announced an updated AI
Speaker 1: processor that gives a jolt frankly to the chip's capacity
Speaker 1: and speed. This is the company seeks to cement its
Speaker 1: dominance in what is a burgeoning market, and video says
Speaker 1: the super chip, which is called the GH two hundred,
Speaker 1: is going to go into production in the second quarter
Speaker 1: of twenty twenty four. It's part of a new lineup
Speaker 1: of both hardware and software that, in videos introduce focus
Speaker 1: on artificial intelligence.
Speaker 2: All right.
Speaker 1: Another top story, Amazon will meet with FTC chair Li
Speaker 1: Nakhan next week in a final push to avoid an
Speaker 1: antitrust lawsuit over the e commerce giants marketplace for third
Speaker 1: party sellers that, according to Bloomberg sources, joining us now
Speaker 1: Adam Kavakovit's Chamber of Progress founder and CEO.
Speaker 2: What do you make of this?
Speaker 1: Either we are closer towards a show off, a showdown
Speaker 1: between Amazon and the FDC, or we're close to avoiding one.
Speaker 2: What's your assessment?
Speaker 7: Well, I don't think we're close to avoiding one.
Speaker 8: And I think that's partly because Lena Kahn has made
Speaker 8: her name as an Amazon critic right her Really her
Speaker 8: claim to fame originally was her twenty seventeen law review
Speaker 8: paper which articulated her view that while Amazon probably has
Speaker 8: pro consumer justifications for its behavior, she believed that it was
Speaker 8: doing harm to rival retailers and to online sellers. And she,
Speaker 8: you know again, six years ago, called for an expansion
Speaker 8: of antitrust law to deal with what she viewed as
Speaker 8: problematic behavior. And so I think in some ways for her,
Speaker 8: this is a long time coming, though. And I think
Speaker 8: the way to think of this meeting next week that
Speaker 8: Amazon will have with the FTC sometimes it's called the
Speaker 8: last Rights meeting. It's really a formality. I think it's
Speaker 8: it's not going to it's not likely to deter the
Speaker 8: FTC from bringing a lawsuit. I fully expect that they
Speaker 8: will bring a lawsuit, and candidly, based on the pace
Speaker 8: of these things, that lawsuit probably won't see the inside
Speaker 8: of a courtroom for about two years, which maybe long
Speaker 8: after Lena Kahn has left the FTC.
Speaker 1: I just want to remind our audience, Adam, that the
Speaker 1: Chamber of Progress essentially a tech industry trade group, that
Speaker 1: antitrust is an area that you research and share policy
Speaker 1: perspective on regularly. When I was at some Valley a
Speaker 1: couple of weeks ago, the Microsoft Activision deal was firm
Speaker 1: in focus and a lot of people asking the question,
Speaker 1: why does the FTC keep picking fights that to many
Speaker 1: in the market that they feel that they can't win.
Speaker 8: It's a great question, and I think that there are
Speaker 8: things that the FTC can do that are more practical wins.
Speaker 8: But I think it's very clear that Lena Khan has
Speaker 8: come into the agency as a critic of past FTC chairs.
Speaker 9: She feels that they've been too conciliatory.
Speaker 8: And she wants to bring lawsuits and I sort of
Speaker 8: call it a little bit of a yolo strategy. I
Speaker 8: don't think she particularly cares if she loses those suits.
Speaker 8: I think this particular suit, based on the reporting and
Speaker 8: some of the leaks that have come out of the
Speaker 8: FTC about the things they're looking at, all of the
Speaker 8: behavior in question Amazon, I think has pretty compelling pro
Speaker 8: consumer justifications for But she's really seen a broader goal,
Speaker 8: which is to expand the range of antitrust law to
Speaker 8: encounter harms to suppliers and harms to sellers and harms
Speaker 8: to workers, and so I think.
Speaker 9: She is intent on bringing cases that she believes serve
Speaker 9: that mission.
Speaker 8: And so I don't think the losing record terres Her,
Speaker 8: I think she thinks, well, you know, we should try
Speaker 8: and if we lose, then that might prompt Congress to
Speaker 8: change the laws. And I think that's pretty explicitly stated
Speaker 8: as a strategy of.
Speaker 1: Hers, best of your knowledge, Adam, When they all go
Speaker 1: into a room, when the FTC and Amazon sit down,
Speaker 1: what happens? I mean, what is it that one side
Speaker 1: has to convince the other of.
Speaker 10: Well, it's interesting because I think if you look at
Speaker 10: the issues that the FTC has been investigating, these are
Speaker 10: the kinds of issues that in prior administrations and even
Speaker 10: in other countries might yield a settlement with Amazon rather
Speaker 10: than being taken to court.
Speaker 7: In fact, both the EU the EU settled.
Speaker 8: With Amazon on some of these issues related to prime
Speaker 8: and what they call their Fulfillment by Amazon program last year,
Speaker 8: and the UK is actually exploring a similar settlement. If
Speaker 8: the FTC wanted to take a constructive approach here with
Speaker 8: it with Amazon, I think they could, and frankly, I
Speaker 8: think there's.
Speaker 7: Probably room for compromise.
Speaker 8: But I don't think that's what's going to happen, because
Speaker 8: she has, you know, pretty publicly dismissed settlements again as
Speaker 8: being overly conciliatory sort of trimming your trimming the FTC
Speaker 8: sales too much, and so I don't think I wouldn't
Speaker 8: inspect that next week's meeting will be kind of an
Speaker 8: exchange or real opportunity to have off a lawsuit. It's
Speaker 8: really much more of a formality, and I would expect
Speaker 8: that they'll the FDC will file their lawsuit pretty soon
Speaker 8: after those meetings.
Speaker 1: Since last we spoke at him, I guess the big
Speaker 1: development in the world of technology and antitrust has been
Speaker 1: the Warren Graham Bill, basically the Brawl proposal for a
Speaker 1: new agency to regulate the technology industry. What was the
Speaker 1: Chamber of Progress's response to that?
Speaker 7: We took a look at that.
Speaker 8: I think one of the things that I see a
Speaker 8: lot in tech policy debates is you see policymakers doing
Speaker 8: things like that where they say, well.
Speaker 9: We need a new agency, right, we need a new regulator.
Speaker 7: There are people who called for that.
Speaker 9: What I think that does it's a frankly a little
Speaker 9: bit of.
Speaker 8: A cheat because it puts aside the harder question of
Speaker 8: what behaviors policymakers.
Speaker 7: Want to ban.
Speaker 2: Right.
Speaker 9: I think this Amazon case is a really good example.
Speaker 8: I think many people look at big tech companies and
Speaker 8: they think they've got a lot of power.
Speaker 7: We are to regulate big big companies.
Speaker 9: I think that's something that is broadly popular.
Speaker 8: But then when you look at the details, right this,
Speaker 8: this case, I think largely is going to be about
Speaker 8: Amazon Prime in a route, whether that bundle is pro competitive,
Speaker 8: and so I think that you know, so I think
Speaker 8: I think there's a gap between do we want more regulation,
Speaker 8: Sure most people are for that, but then what do
Speaker 8: we what is the problem we want solved? And again,
Speaker 8: if you look at this Amazon situation, I don't think
Speaker 8: that's that's something they're clamoring for change around.
Speaker 2: So you're a reminder our audience.
Speaker 1: What we've reported is that Chair Lee Na Khan and
Speaker 1: the agency's three other commissioners will meet with Amazon next week.
Speaker 1: According to sources, both Amazon and the FTC declined to comment.
Speaker 1: Adam Baca, it's Chamber of Progress founder and CEO, thank
Speaker 1: you very much. Now coming up here on Bloomberg Technology,
Speaker 1: local NBA games could be coming to your streaming ads
Speaker 1: sooner than you think. We'll talk about the tech giants
Speaker 1: that want those rights and why they're for sale.
Speaker 2: Next. This is Bloomberg Time for Talking Tech.
Speaker 1: First up, super conductor stocks in South Korea plunge Tuesday
Speaker 1: after a US based research center rebutted claims of a
Speaker 1: breakthrough in the technology. A Condensed matter theory center at
Speaker 1: the University of Maryland challenge claims made by Quantum Energy
Speaker 1: Research Center that had synthesized material known as LK ninety nine,
Speaker 1: which we reported on the show.
Speaker 2: Last week and elsewhere.
Speaker 1: Walt Disney, Apple, Amazon, and YouTube have all expressed interest
Speaker 1: in streaming local NBA games. The media and tech giants
Speaker 1: are open to acquiring local rights held currently by Diamond
Speaker 1: Sports Group, but only if they can obtain a critical
Speaker 1: mass of teams that according to Bloomberg's sources, here with
Speaker 1: the latest Bloomberg's Jerry Smith, seems like a lot of
Speaker 1: names throwing their hat in the ring, Jerry, and a
Speaker 1: lot of it contingent on achieving a big package.
Speaker 2: What do we know. Yeah, that's right.
Speaker 11: I mean, that's something we've seen in the sports media industry.
Speaker 11: The biggest change being these big tech companies Amazon, Apple,
Speaker 11: and YouTube really aggressively getting into this space. We've saw
Speaker 11: Amazon with the getting the NFL rights. YouTube is Sunday
Speaker 11: Ticket rights, and Apple has MLS and baseball as well,
Speaker 11: So this is an opportunity now where the local sports
Speaker 11: rights in many cases, many of these teams are broadcast
Speaker 11: by a company called Diamond Sports, groups that file for
Speaker 11: bankruptcy in March, and one thing that bankruptcy allows is
Speaker 11: for Diamond Sports to reject contracts and not pay these teams.
Speaker 11: And when that happens, the rights go back to the
Speaker 11: leagues and then they become up for grabs, and these
Speaker 11: big tech companies as well as Disney which owns ESPN,
Speaker 11: see an opportunity to swoop in and potentially buy these rights.
Speaker 1: Explains to US straighted distinction between so the local level
Speaker 1: and the nationwide level. There's a big audience in bluebog
Speaker 1: technology that aren't even in the US, but the NBA
Speaker 1: is available on many cable streaming platforms. What is it
Speaker 1: specifically that the local rights give you.
Speaker 2: That's right.
Speaker 11: So there's two different really sets of rights in the US.
Speaker 11: There's the national rights, which are owned by ESPN and
Speaker 11: Warner Brothers Discovery, and then in each team's local market,
Speaker 11: there's a broadcaster that broadcast the games just for people
Speaker 11: who live in that city. So if you're a Boston
Speaker 11: Celtics fan, for example, you would be if you're in
Speaker 11: the Boston area, you would get that broadcaster there. So
Speaker 11: these are different teams in different cities, and in a
Speaker 11: lot of cases they have been broadcast by a cable
Speaker 11: channel owner. Diamond a Diamond with a bankruptcy in large
Speaker 11: part because its owner took on a lot of debt
Speaker 11: while there was quirt cutting happening. And now these rights
Speaker 11: are really potentially up for grabs.
Speaker 1: All right, Bloomberg, Jerry Smith for that Bloomberg Reporting, Thank
Speaker 1: you very much. Welcome back to Bloomberg Technology. Ed Ludlow
Speaker 1: here in San Francisco. Quick check in on the markets.
Speaker 1: We've reversed direction on the Nasdaq one hundred, down one
Speaker 1: point four percent. We're down in five of the last
Speaker 1: six sessions at the index level.
Speaker 2: A big part of this is sort of the.
Speaker 1: Macro concern this andit is in the banking sector, some
Speaker 1: worries about China's economy, but as we will tell you
Speaker 1: about later in the program, some weakness in software, particularly
Speaker 1: in the earning story in the outlook for the rest
Speaker 1: of this year. That's weighing on the Nasdaq one hundred.
Speaker 1: Very tech heavy and at different corners of it. Some
Speaker 1: high multiple software names they're trading lower. The other name
Speaker 1: that we're continuing to watch, of course, is Tesla, some
Speaker 1: movement to the downside in last couple of sessions. The
Speaker 1: surprise news twenty four hours ago, which we hit hard
Speaker 1: on this show was Zach kirkcom stepping down after four
Speaker 1: years at c for as CFO, thirteen years in the company.
Speaker 1: Trying to find out the reason why. The replacement Tesla's
Speaker 1: current chief accounting officer, who's also going to keep his
Speaker 1: current post in addition to his new gig. We had
Speaker 1: arcinvest Kafie Wood on the program yesterday. Here's what she
Speaker 1: thought about that that news.
Speaker 2: It's a tough job. It's a tough, tough job.
Speaker 12: So I guess thirteen years was a really good run
Speaker 12: for Zach And can't say enough good things about him
Speaker 12: and what he did for Tesla, but I think he
Speaker 12: trained his successor well.
Speaker 1: For more, let's bring in Bloomberg's Dana Hole, who leads
Speaker 1: our coverage of everything Elon Musk but particularly Tesla. Let's
Speaker 1: be honest surprised that Zach left Tesla. Webav teenager named
Speaker 1: as the CFO and chief accounting officer, and you and
Speaker 1: I sat there and thought, we don't know much about
Speaker 1: this guy.
Speaker 7: Do we We really don't. And the announcement was weird.
Speaker 13: I mean, we learned about this in a filing on Monday,
Speaker 13: but the change was made on Friday, and the regulatory
Speaker 13: filing from Tesla says that Tanisa is going to keep
Speaker 13: his current job as CEO and then basically adding CFO
Speaker 13: to his duties.
Speaker 2: So the guy now has two jobs.
Speaker 1: In your Bloomberg story, you write, Tesla's new CFO indeed
Speaker 1: has two jobs and a lot of question marks.
Speaker 2: What are some of those question marks?
Speaker 13: Yeah, he's just not super well known. I mean a
Speaker 13: lot of investors have never met him. He wasn't like
Speaker 13: on stage at Investor Day. He came up through Price
Speaker 13: Waterhouse Coopers, which is Tesla's outside auditing firm. For seventeen years.
Speaker 13: He was at Solar City. He joined Tesla after the
Speaker 13: acquisition of Solar City. But he's just not someone who
Speaker 13: is super well known to the shareholder base. He's only
Speaker 13: spoken on one earnings call, and that was in early
Speaker 13: twenty nineteen.
Speaker 2: That's right.
Speaker 1: I was going to say, I recognized the name from
Speaker 1: one earning school. He came through Sola City twenty sixteen
Speaker 1: corporate controller and now he kind of has this key
Speaker 1: job because Elon Musk is the CEO, but he's very busy,
Speaker 1: and in the last four years, Zach has really been
Speaker 1: a shining light. Just explained to our audience who are
Speaker 1: less familiar with Zach Kirkhorn the role he's played at
Speaker 1: Tesla beyond just being a pencil pushing CFO.
Speaker 13: Sure, so, I think there's like this trend in corporate
Speaker 13: America where the CFO really has a lot of business
Speaker 13: and operational expertise, and Zach was very intimately involved in
Speaker 13: all aspects of the business.
Speaker 2: He had a lot of director reports.
Speaker 13: He was quite keen on improving profit margins and growing
Speaker 13: Tesla's revenue through other things like Tesla Insurance and software.
Speaker 13: And he spoke quite a lot on the earnings calls,
Speaker 13: and he was often the kind of like yin to
Speaker 13: Musk's yang or whatever you want to call it. Like,
Speaker 13: you know, Musk would make this bombastic pronouncement and then
Speaker 13: Zach would either walk it back or provide more context.
Speaker 5: He was very.
Speaker 13: Measured, and he spoke at great length, and those are
Speaker 13: just big shoes to phill and you know, by all accounts,
Speaker 13: I think what's interesting is that Zach is barely forty.
Speaker 13: I believe he's thirty nine, and I mean that's pretty
Speaker 13: young age to retire. He's got a lot of money
Speaker 13: and he can he can do whatever he wants. So
Speaker 13: I'm very curious to see what he does next.
Speaker 1: Donna, you are excellent at digging deep into the regulatory
Speaker 1: filings in the documents we do have available, and you
Speaker 1: did unearth some information about Tenaja his association with Tesla's
Speaker 1: efforts in India.
Speaker 2: Just tell us a little bit about what you learned. Yeah,
Speaker 2: I mean, there's been.
Speaker 13: A lot of speculation about when Tesla will enter the
Speaker 13: India market, and Teanisia's name is on a filing that
Speaker 13: just sort of shows that they have started to try
Speaker 13: to at least get an office there.
Speaker 1: All Right, Bloomberg's Dona Hole reporting everything we know so
Speaker 1: far about Tesla's and UCFO, But I'm sure we'll learn
Speaker 1: a lot more in the weeks and months to come. Meanwhile,
Speaker 1: another Elon Musk company, Elon Musk's Brain implant company and Euralink,
Speaker 1: has raised two hundred and eighty million dollars to develop
Speaker 1: its technology. The startup announce the funding round in a
Speaker 1: post on Musk's ex social network. The round led by
Speaker 1: founder's fund, the venture capital firm backed by billionaire Peter Teel.
Speaker 1: Now more from our conversation with our investor Kathy Wood,
Speaker 1: who says the SEC may approve multiple spot bitcoin ETFs
Speaker 1: at the same time, reversing in earlier view that her
Speaker 1: firm would be the first in line to get potential
Speaker 1: approval for the long awaited product.
Speaker 2: Have a listen.
Speaker 12: I think the SEC, if it's going to approve a
Speaker 12: bitcoin etf, will approve more than one at once. So
Speaker 12: then again, because most of these essentially will be the same,
Speaker 12: and it will come down to marketing communicating the message.
Speaker 12: You know, we've been putting out our bitcoin monthly for
Speaker 12: the last year. We are now starting a bitcoin brainstorming session.
Speaker 12: Our first one we launched last Thursday. So we're trying
Speaker 12: to get the word out there that you know, our
Speaker 12: research is deep and we've been doing it since twenty
Speaker 12: fifteen when we gained our first exposure to GBTC. We
Speaker 12: were the first public asset manager to gain exposure to
Speaker 12: bitcoin at all in twenty fifteen.
Speaker 14: That's exactly where I want to go the Grayscale Bitcoin Trust,
Speaker 14: known by its ticker GBTC. If you look at ARCW,
Speaker 14: for example, your ARC next Generation Internet ETF. Right now,
Speaker 14: I see GBTC as the.
Speaker 7: Third largest holding.
Speaker 14: If we are in a situation where the SEC does
Speaker 14: give its blessing for a spot bitcoin ETF, would you
Speaker 14: plan to sell out of GBTC and buy one of
Speaker 14: these physically backfunts.
Speaker 12: I cannot talk about what we would and would not do,
Speaker 12: and in fact, our compliance team is, you know, giving
Speaker 12: us marching orders not to talk very much about this
Speaker 12: filing and it's aftermath at all. So just the fact
Speaker 12: that we filed with our partner twenty one shares is
Speaker 12: as far as as I can go.
Speaker 14: Fair sorry, Katie, fair enough now affecting something along those lines,
Speaker 14: I am curious to get your take on the regulatory
Speaker 14: temperature right now, because in addition to this rush of
Speaker 14: spot bitcoin ETF filings that we've seen, there's also been
Speaker 14: sort of a race that's unfolding for an ether futures ETF.
Speaker 5: There's been a ton.
Speaker 14: Of filings to that effect, and not specific to those funds,
Speaker 14: but do you sense that the moon music around the
Speaker 14: SEC and what their appetite to allow these products to
Speaker 14: launch has changed in the last several months.
Speaker 9: Well, I think that.
Speaker 12: The two other branches of government, the judicial branch and
Speaker 12: the legislative branch, are giving the SEC pause because the
Speaker 12: SEC is losing cases in court.
Speaker 1: That was Kathy Wood of ARC Invests. Wow, as Tuesday's goes,
Speaker 1: it's a busy one. Let's get to another story. Apple
Speaker 1: began testing its next gen laptop processor, setting the stage
Speaker 1: for the release of its most powerful MacBook Pro ever,
Speaker 1: which will come next year. The new machine represents the
Speaker 1: latest advance by the company's in house chip efforts and
Speaker 1: could help entice consumers back to a Mac lineup that's
Speaker 1: fallen in sales. All right, coming up here on Bloomberg Technology,
Speaker 1: investing in viintech and disrupting capital markets, what it means
Speaker 1: for European vcs, and the.
Speaker 2: Outlook of course on AI. All that and more. Next
Speaker 2: we run a Yarrod.
Speaker 1: Border in capital quickly we're looking at shares also of Snowflake.
Speaker 1: We talked about Data Dog oder in the program, giving
Speaker 1: that week outlook for the third quarter, Data Dog is
Speaker 1: down by the most on record, eighteen point eight percent,
Speaker 1: biggest percentage decliner on the Nasdaq one hundred, but it
Speaker 1: is dragging other software names where it look at Snowflake
Speaker 1: down almost seven percent.
Speaker 2: This is Bloomberg Technology time for VC Spotlight.
Speaker 1: Today we're going to look closely at the UK and
Speaker 1: European startup scene with a focus on fintech and what's
Speaker 1: happening in the world of AI. Borderson General partner Rannie
Speaker 1: Yard joins us from London Borders and has been investing
Speaker 1: in European tech for twenty two years, raised more than
Speaker 1: four point five billion dollars to deploy across early and
Speaker 1: growth stage startups. Good morning, Good afternoon, you are Ruana.
Speaker 1: Welcome to Bloomberg Technology. Europe's an interesting one, you know,
Speaker 1: not just geographical but economic variants across the continent sector level.
Speaker 1: Where are you spending most of your focus right now
Speaker 1: in Europe?
Speaker 15: First of all, thank you so much for having me
Speaker 15: on your show this morning.
Speaker 16: It's a great pleasure to be here.
Speaker 15: Look, sexual Wise, Balderton, as you said, is twenty two
Speaker 15: years old and so we are a generalist firm. We
Speaker 15: try to spend our time across the perennial sectors, if
Speaker 15: I can call them that. So fintech, the large swaths
Speaker 15: of enterprise, tech, consumer, but also you have the ability
Speaker 15: to be very targeted to the sectors that are most
Speaker 15: prevalent and relevant in Europe at any given moment. Me personally,
Speaker 15: I still spend a lot of my time in fintech,
Speaker 15: given that that is the roots that I have over
Speaker 15: the course of my career. Versus a partner at Goldman
Speaker 15: Sachs and now at Balderton. The firm also spends a
Speaker 15: lot of time on what one might call deep tech.
Speaker 15: So just this morning Morgan Stanley wrote a piece where
Speaker 15: they mentioned specifically that Europe was distinguishing.
Speaker 16: Itself in deep deep tech. That is an area of
Speaker 16: continued interest for the whole firm.
Speaker 1: If we run with fintech as an example, which cities
Speaker 1: have the highest concentration of talent and entrepreneurship right now
Speaker 1: in the fintech space across Europe In the UK.
Speaker 16: It's exactly where you would expect it.
Speaker 15: So London continues to be a leading light in innovation
Speaker 15: with respect to fintech, particularly fintech that's focused on capital
Speaker 15: markets and institutions, which, by the way, when you think
Speaker 15: about the wallet share, companies that serve institutional financial services
Speaker 15: are absolutely dwarfing the wallet's share of the SME and
Speaker 15: consumer of financial services together. So that's a very important
Speaker 15: piece that's based out of London. And we've seen over
Speaker 15: the course of the last five to six years a
Speaker 15: real rise in fintech talent, not only in Germany, which
Speaker 15: everyone talks about, but also in Paris, and indeed quite
Speaker 15: a lot of financial services talent has relocated to Paris
Speaker 15: over the last five to six years. And when those
Speaker 15: individuals are thinking about the companies to start, they're actually
Speaker 15: just doing them exactly where they.
Speaker 1: Are ran a which of the areas that you do
Speaker 1: not like that you're avoiding.
Speaker 16: That's a great question.
Speaker 15: So as a firm, we actually don't make any investments
Speaker 15: in life sciences or biomedical sciences, and the reason for
Speaker 15: that is because we think those are specialist fields that
Speaker 15: actually require PhDs and none of us have those PhDs,
Speaker 15: and so healthy dose of humility keeps us away from
Speaker 15: those areas.
Speaker 16: In particular, one of.
Speaker 1: The big names that we talk about on this program,
Speaker 1: Bloomberg Technology, coming out of London, is revolute right especially
Speaker 1: in the fintech scene. Its latest audit for twenty twenty
Speaker 1: two I think comes next month you were an early investor,
Speaker 1: the firm was an early investor. What's your assessment of
Speaker 1: Revolute right now?
Speaker 15: And we're incredibly proud to have been an early investor
Speaker 15: in Revolute. We've been with Nikolai and the teams together
Speaker 15: since the start of the journey. Our assessment is that
Speaker 15: we're proud to be shareholders and now no longer being
Speaker 15: on the board of the firm. We like you look
Speaker 15: forward to the audit twenty twenty two numbers.
Speaker 1: Many column inches and media articals have also covered the
Speaker 1: leadership of Revolute.
Speaker 2: Are you confident in them?
Speaker 1: Do you think a change is needed to continue to
Speaker 1: scale and work to grow that startup?
Speaker 15: And we continue to have every faith in nicola I
Speaker 15: know as has been well shown from the twenty twenty
Speaker 15: one audited financials and the guidance that they provided with
Speaker 15: respect to twenty two. In those financials, the company has
Speaker 15: continued to grow at an amazing pace since the last
Speaker 15: round that they did, and so if the results are
Speaker 15: the proof of the putting, that indeed our faith is
Speaker 15: very well placed.
Speaker 1: The other sort of bigger theme that we talk about
Speaker 1: here on b Tech is UK and Ai the Prime Minister,
Speaker 1: are the government ministers really talking up the UK is
Speaker 1: a place to do development in the field of AI.
Speaker 1: Have you had any interaction with the PM's office and
Speaker 1: any sort of understanding of what the big picture is there?
Speaker 15: Yeah, So I personally have not had that interaction, but
Speaker 15: the firm has, and in some respect the UK government
Speaker 15: is kind of stating what is exceptionally clear to those
Speaker 15: who have been in academia in the UK for a
Speaker 15: long time. So Cambridge and Oxford are centers of excellence.
Speaker 15: Obviously deep Mind came from there. The autonomous driving car
Speaker 15: wave comes out of that center of excellence.
Speaker 16: Oxford Innovation Endeavors.
Speaker 15: I think formerly called OSI also has had a number
Speaker 15: of companies come out of their labs that focus on
Speaker 15: deep tech and AI, and so the academic scene has
Speaker 15: been unbelievably rich, and then commercializing that that research was
Speaker 15: only the natural next step. So it doesn't surprise us
Speaker 15: to the least that this has turned into a national initiative.
Speaker 1: There's a company in your portfolio that really caught my eye,
Speaker 1: Van Move, the.
Speaker 2: Dutch electric bike company.
Speaker 1: We've written a lot about mobility in Europe at Bloomberg Technology.
Speaker 2: What went wrong there?
Speaker 15: Look, I think we just start with like the very
Speaker 15: obvious point, which is that venture is not a zero
Speaker 15: risk business, and certainly we don't confuse ourselves into thinking
Speaker 15: that it is. Van Move had a mission that we
Speaker 15: believed in frankly that was deeply needed in the world,
Speaker 15: which is that micro mobility is very important towards climate change.
Speaker 16: I think unfortunately they got caught in the challenges that
Speaker 16: are associated with COVID.
Speaker 15: The bicycles were not made in Europe, the supply chains
Speaker 15: were incredibly long. You know, they had the misfortune of
Speaker 15: having bicycles on the Panamax ship that basically got stuck
Speaker 15: in the Suez Canal. And despite all efforts from everyone
Speaker 15: to come with a different outcome, not least of which
Speaker 15: because it's people's livelihoods, the final decision from the shareholders
Speaker 15: and the board was that the supply chain issues were
Speaker 15: just too challenging to continue on.
Speaker 1: The news for our audience was that in Amsterdam court
Speaker 1: declared Van Move's Dutch legal entities bankrupt on Monday, which
Speaker 1: is why I asked about it. But as you say,
Speaker 1: venture not a zero risk business. Borders in capital general
Speaker 1: partner RANI are really good to get the perspective of
Speaker 1: what's happening in European tech Thank you. Spotify's AI powered
Speaker 1: DJ's going global just six months after debuting in North America.
Speaker 1: Spotify listeners in countries like Sweden, Australia, and Singapore will
Speaker 1: be able to access the personalized DJ that comes up
Speaker 1: with curated music selection selections that include spoken word commentary
Speaker 1: by artificial intelligence. The Ad Sultan, Spotify's VP of Personalization,
Speaker 1: joins us now from our New York studios. The thing
Speaker 1: about the AIDJ is it's multifaceted. Let's start with the
Speaker 1: recommendations aspect. The technology is taking your listening history, the
Speaker 1: data from your profile to another level. Explain how so,
Speaker 1: thank you for having me.
Speaker 17: We are very excited about this product because what we
Speaker 17: are doing with the AIDJ is.
Speaker 5: Really transforming the way people listen to music.
Speaker 17: What we have created is a personalized AI guide for you,
Speaker 17: for every single user that knows you and your music
Speaker 17: taste better than anything before and can therefore create this
Speaker 17: lineup that is really special, with commentary that explains to
Speaker 17: you why you are listening to this particular song or
Speaker 17: track or artist and also tells you why you should
Speaker 17: care right so you're more open to discovery. And by
Speaker 17: doing so, with the stunning realistic voice and this form
Speaker 17: factor of an AIDGIT just for you, it is able
Speaker 17: to also.
Speaker 5: Learn from you better than ever before.
Speaker 17: And so it takes this metaphor we've always had with
Speaker 17: Spotify of creating. You know, we've had this metaphor of
Speaker 17: what if you had your own personalized DJ, what would
Speaker 17: they do for discovery? They would create Discover weekly, they
Speaker 17: would curate your homepage, your daily mix. But this metaphor
Speaker 17: is now a reality. So that's why we're so excited
Speaker 17: to have built this product, and it actually recommends better
Speaker 17: and learns better than anything we've done before.
Speaker 1: Of Spotify around the world will be used to sing
Speaker 1: lyrics or even video now when you have your favorite
Speaker 1: tracks playing in playlist form. But the technology level, this
Speaker 1: is a partnership with open AI that provides a lot
Speaker 1: more information about the artist or the song explain how
Speaker 1: it works.
Speaker 17: So this is taking generative AI on two levels. One
Speaker 17: is in the commentary itself, the fact about the track
Speaker 17: or the artist. Why should you care about the song?
Speaker 17: What's important about it? So that is one aspect of
Speaker 17: generative AI we're using, and the other one is, of course,
Speaker 17: this incredibly realistic voice that brings a lot of passion
Speaker 17: and a lot of charisma and a lot of warmth
Speaker 17: to the recommendations of the DJ. So we are taking
Speaker 17: those two aspects of generative AI and we are putting
Speaker 17: them in the hands of music experts inside Spotify, which
Speaker 17: are our music editors. They are some of the most
Speaker 17: knowledgeable and passionate people about music in the world. So
Speaker 17: we take this generative AI technology, including in house and
Speaker 17: some of the work we've done with external partners such
Speaker 17: as open AI, but we're taking that technology and in
Speaker 17: the hands of our music experts. It actually brings something
Speaker 17: new to both listeners and to creators. For listeners it
Speaker 17: expands their horizon, and for creators it introduces them to
Speaker 17: new audiences.
Speaker 2: Ziad.
Speaker 1: When you announced last summer that you were acquiring Sonantic,
Speaker 1: many were like, you know, what's going on here? How
Speaker 1: does this end up in the platform? That's the final
Speaker 1: part right of the AIDJ A voice component.
Speaker 2: Why did you do that? Well?
Speaker 17: Very much, so we did that because when you think
Speaker 17: about our mission, it is really to connect to listeners
Speaker 17: and artists, and very much what we do is audio, right,
Speaker 17: So when you are doing that, you're listening to this
Speaker 17: new song. The best possible way to introduce you to
Speaker 17: a new song is to give you the audio commentary,
Speaker 17: the reason why you are listening to that song, why
Speaker 17: you should care, and also it gives you a chance
Speaker 17: to try it out. And we have found in the
Speaker 17: data since we have started rolling out our data that
Speaker 17: users who hear commentary from that stunning realistic voice from
Speaker 17: Sonantic technology that we acquired, when you hear that commentary,
Speaker 17: you are much more likely to try something new. And
Speaker 17: when you are more likely to try something new, your
Speaker 17: lives get better as a user. The artist benefits because
Speaker 17: they grow their audience. And this is happening in a
Speaker 17: way that has never happened before because in great part
Speaker 17: of that voice technology that you mentioned, you.
Speaker 1: Know, I pit point one thing out is yead that
Speaker 1: this is still in beta phase in many countries the
Speaker 1: early rollout. It's global, but there are many countries that
Speaker 1: don't have it. Come back when the full rollout happens.
Speaker 1: He had Sultan's, Spotify's VP of Personalization.
Speaker 2: Thank you now.
Speaker 1: That does it for this edition of Bloomberg Technology. We're
Speaker 1: only two days into the week, and my goodness, what
Speaker 1: a week. It's been so don't forget check out the podcast,
Speaker 1: where we will recap everything from the program on Apple, Spotify, iHeart,
Speaker 1: and of course, on the Bloomberg platforms. The earning season continues.
Speaker 1: There are big interviews coming up here on the show
Speaker 1: this week from San Francisco. This is Bloomberg Technology