Speaker 1: From Bahard where Innovation, Money and power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and ed Love Love.
Speaker 2: I met Lovelow in San Francisco. Caroline Hyde is off today.
Speaker 2: This is Bloomberg Technology coming up full coverage of the
Speaker 2: second biggest bank collapse in US history. We'll discuss the
Speaker 2: outlook for funding with Jojao a Millennia Capital. Plus another
Speaker 2: big week for tech earnings ahead with AMD, Quilcom and
Speaker 2: Apple all reporting. We'll get a preview of what's to come.
Speaker 2: And soft banks chip design firm ARM filing confidentially for
Speaker 2: an IPO in the US over the weekend. More in
Speaker 2: the offering later this app There is just one story
Speaker 2: that we're talking about, and that is JP Morgan stepping
Speaker 2: in to acquire First Republic, taking on portions of its
Speaker 2: loan book and deposit base in a deal negotiated with regulators.
Speaker 2: You see JP Morgan high by two point seven percent.
Speaker 2: Some kind of feel good at bank, the biggest bank
Speaker 2: that's got even bigger. Let's get more details on First
Speaker 2: Republic bringing Bloomberg Shnali Bassack, who's out in Los Angeles
Speaker 2: at the Milking Conference. And I imagine this is the
Speaker 2: topic of the day, Shinali. But bring us the details
Speaker 2: of this JP Morgan deal to acquire First Republic.
Speaker 3: It certainly is because, as you say, we are watching
Speaker 3: the biggest US bank get bigger. As we know that
Speaker 3: there were other bidders behind the scenes. We had reported
Speaker 3: that Apollo and black Rock had supported, for example, PNC's
Speaker 3: efforts to buy the company as well. Yet the reason
Speaker 3: JP Morgan had emerged as the biggest bidder here and
Speaker 3: the most successful is because, as we know it that
Speaker 3: the cost of the deposed insurance fund for the fdiit
Speaker 3: was the least under a JP Morgan acquisition.
Speaker 4: Now, any other.
Speaker 3: Politics that come out beyond this is up for debate.
Speaker 3: But the question here is does this stem the banking crisis.
Speaker 3: We have seen a lot of California lenders now go
Speaker 3: through a series of struggles as we have been talking about,
Speaker 3: have failed. This one now is another major deal and
Speaker 3: it certainly gives JP Morgan and even more attract it
Speaker 3: the base of customers high net worth individuals. Remember, when
Speaker 3: we look at First Republic, there has been a lot
Speaker 3: of bleeding already for the last couple of weeks and
Speaker 3: months but this deal and an iconic franchise is certainly
Speaker 3: a co for JP Morgan.
Speaker 2: You go back to when SBB collapse in one of
Speaker 2: the beneficiaries was JP Morgan right snapping up some of
Speaker 2: the venture capital and startup customers or depositors.
Speaker 4: You pose a.
Speaker 2: Question there sheanali about whether this fixes the sort of
Speaker 2: systemic risk? Are there any answers to that on the
Speaker 2: ground yet? In milkn conference in LA.
Speaker 3: Yeah, you can kind of put it in their two buckets.
Speaker 3: Here you have a lot of banking titans that believe
Speaker 3: that there could be some pain among a couple of
Speaker 3: more regional lenders. We just talked to Julian Salisbury, for example,
Speaker 3: the CIO over at Coleman, who believes it's almost death
Speaker 3: by a million cuts, where you see sustained pressure on
Speaker 3: the industry but not wholesale failures or systemic wrist. On
Speaker 3: the other hand, you talk to the likes of a
Speaker 3: Mark Rowan, the CEO of Apollo, which was behind that
Speaker 3: P and C bid, and there are les there's a
Speaker 3: second wave. Really, there's a lot of problems under the
Speaker 3: surface when you look at other asset classes like commercial
Speaker 3: real estate, so to where the pain will be felt
Speaker 3: further is a huge open question ed and the fact
Speaker 3: is is that there could still be more pain among
Speaker 3: this industry as well as other parts of the market,
Speaker 3: as we continue to see the pressure high interest rates
Speaker 3: on the systems.
Speaker 2: All right, Bloomboagtion, Ali Bassack out at Milking, go work
Speaker 2: the corridors.
Speaker 4: We'll see you later in the week.
Speaker 2: Let's stick with his story and for more, let's bring
Speaker 2: in Lenny a cap to investor Joe Chow. Joe, I
Speaker 2: would frame you as an avench capitalist with a knowledge
Speaker 2: base in fintech the banking sector, but you also have
Speaker 2: your own exposure to First Republic. Can you just tell
Speaker 2: our audience what that exposure is?
Speaker 5: Yeah, So, as a VC fund, we have profolio companies
Speaker 5: and our operations which run on both our Socing Value
Speaker 5: Bank and for Republic.
Speaker 2: So, Joe, this outcome, what do you make of it?
Speaker 2: I mean, JP Morgan becomes much bigger, but they've stepped
Speaker 2: in and saved First Republic essentially.
Speaker 5: Yeah, I would say this Republic incident is a little
Speaker 5: bit different than the Local Value Bank incident in a
Speaker 5: few ways. CD was largely unanticipated, but in the case
Speaker 5: of b FC, most vcs and founders have already made
Speaker 5: content continuous planted in the last few weeks. So in fact,
Speaker 5: most founders, entrepreneurs vcs now have several bank accounts with
Speaker 5: different banks and so you know, so you know, we're
Speaker 5: not unprepared for sort of the transition here. Now our
Speaker 5: you know, accounts at efforts will roll over to a
Speaker 5: new acquirers hipping workings account, so that would ensure continuity.
Speaker 5: But I think on a broader sense, the different between
Speaker 5: First C and slolicon value bank was FIRC has also
Speaker 5: a larger non tech consumer base, and I think this
Speaker 5: outcome helping shore the continuity of that. But for businesses
Speaker 5: and tech tech business in the VCS, we've already been
Speaker 5: largely prepared for this outcome.
Speaker 4: Prepared.
Speaker 2: How are you talking about diversification of banking.
Speaker 5: Yeah, since, like you know, a few weeks ago, most
Speaker 5: vcs and most founders that leads in our portfolio and
Speaker 5: the ones we've we've connected with and the ones we're
Speaker 5: seeing in the market have opened several new accounts at
Speaker 5: different banks, even instant banks multiple accounts. And there's also
Speaker 5: fintech players which are offering a higher deplit insurance than
Speaker 5: to fifty because they're parking their opening accounts with multiple banks,
Speaker 5: so that ensure you can actually, lets say, add four
Speaker 5: to fifty case to give to a million. So that's
Speaker 5: been underway for you know, since the SVB fallout, and
Speaker 5: so when you know, this incident kind of occurred with FC,
Speaker 5: vcs and founders have already kind of been making continuous
Speaker 5: a plant plus even if the ones that happened, you know,
Speaker 5: I guess they're the positive for being short by the
Speaker 5: large bank in the US. So I think, you know,
Speaker 5: founders and vcs feel much safer this time and securely on.
Speaker 4: The last time, Joe.
Speaker 2: Even for private market participants in vcs. There are some
Speaker 2: big picture questions, one of which is what does the
Speaker 2: Fed do this Wednesday?
Speaker 5: Yeah, you know, financial stability was always sort of a
Speaker 5: third objective by the Fed after the inflation and unemployment rate.
Speaker 5: You know, if you if you look at sort of
Speaker 5: effas of terms from Marks, you know, I think he
Speaker 5: did to say in the pressure that we expect to
Speaker 5: inflict some pains, and I think, you know, what was
Speaker 5: happening here within the broader financial system is not inconsistent
Speaker 5: with what they would anticipate. I think the real question
Speaker 5: in my mind is to what extent will the banking
Speaker 5: crisis and followouts sort of deter the FED from from
Speaker 5: raising rates. In my view, you know, they're probably gonna
Speaker 5: raise race another twenty five pips at this meeting.
Speaker 6: But but you know, in my own.
Speaker 5: View, holding rates at you know, five and a half,
Speaker 5: five hun quarts five and a half is also very
Speaker 5: very restrictive and so and so financials abilities, you know,
Speaker 5: become a large concern for the FED and might actually
Speaker 5: deser the FED from raising riks further. But by keeping
Speaker 5: race at parent levels, there's still being very restrictive on
Speaker 5: financial conditions and that could really kind of temper and
Speaker 5: non inflation over time.
Speaker 2: What what is the environment like right now, Joe? For
Speaker 2: vcs that yourself considering writing checks for startups trying to
Speaker 2: raise money, you.
Speaker 6: Know, there's two schools of thought.
Speaker 5: You know, my own school of thought is this is
Speaker 5: actually the best comething best because you know, because values
Speaker 5: start down and we believe this is a help you
Speaker 5: reset for valuations and companies. And but there's another school
Speaker 5: of thought, which is many found many vcs are actually
Speaker 5: uh kind of holding back from investing, and so you know,
Speaker 5: but within the broader system. You know, there's you know,
Speaker 5: amongst kind of this period of weakness, I would I
Speaker 5: would call uh, the whole AI kind of a genet
Speaker 5: AI sort of a uh you know, innovation has been
Speaker 5: introducing some new life back into the ecosystem.
Speaker 6: So I think broader quality speaking, most.
Speaker 5: Vcs are slowing down not only on investing, but lpis
Speaker 5: are slowing down on investing in funds well, when bright
Speaker 5: Spot is general AI, which seems to offer a lot.
Speaker 6: Of new blood and excitement back into this ecosystem.
Speaker 2: Hey, Joe, there was a guest on Bluemoll television earlier
Speaker 2: saying that banks and markets don't have crystal balls, they
Speaker 2: don't have clairvoyance. But as you look into the future,
Speaker 2: does the JP Morgan intervention kind of settle things a.
Speaker 4: Bit for now?
Speaker 5: I think in the short term yes, because kaping Morgan
Speaker 5: and I looked at the assets. They're fifteen to twenty
Speaker 5: some larger than evarsas assets, and that should really contain
Speaker 5: sort of the spread of the of the of the
Speaker 5: bad assets.
Speaker 6: But also I think you know, having.
Speaker 5: And there's you know, debates on whether it's politically viable
Speaker 5: or not, but I think having the largest band to
Speaker 5: kind of step in and contain sort of this this
Speaker 5: usual kind of health restore system and not very much
Speaker 5: like an eight and nine. But you know, I guess
Speaker 5: the question is, are we are we fully through the banking.
Speaker 6: Fallouts?
Speaker 5: I think for large banks which have regularly, uh you know,
Speaker 5: regularly passed the first card test, the stress testing, I think,
Speaker 5: personally think they will be fun. I think mis sized
Speaker 5: banks management who haven't been on top of it would
Speaker 5: be on top of it now. My actually natural concern
Speaker 5: would be with the smaller banks, which you know, maybe
Speaker 5: I would expect to be to see a little more
Speaker 5: stress in the bankings on the smaller side. I think
Speaker 5: from this larger banks, I think the crisis that uh
Speaker 5: in the first term content.
Speaker 2: All right, Joe Chow, Millennia Capital Goods, catch up, Thank
Speaker 2: you for your time. Now, another busy week ahead for
Speaker 2: earnings with Apple, a m D and qualcom Or reporting numbers.
Speaker 2: Let's get a preview of what to expect from the
Speaker 2: iPhone maker with our own Mark German. Good morning to you, Mark.
Speaker 2: What's on deck for Apple?
Speaker 1: Yeah, good morning, thank you for having me. So this
Speaker 1: quarter is likely to play out a bit similarly the
Speaker 1: last quarter. Right, Bloomberg consensus at this point anticipates about
Speaker 1: a five percent annual decline. Last year for the second quarter,
Speaker 1: Apple reported revenue of about ninety seven billion. For this
Speaker 1: year twenty twenty three, the second quarter will come in
Speaker 1: at around ninety two billion. That's according to a summary
Speaker 1: of analyst estimates. Now, within that ninety two billion, it appears,
Speaker 1: according to these estimates, that all of the Apple major
Speaker 1: product categories aside from services, will see a bit of
Speaker 1: a decline. That includes the iPhone, the iPad, the Mac,
Speaker 1: as well as wearables. The iPhone decline is likely to
Speaker 1: be less significant than in the previous quarter because in
Speaker 1: the previous quarter we had the supply chain challenges that
Speaker 1: have now been essentially fully resolved. But you'll still see
Speaker 1: the iPad and the math go down quite significantly compared
Speaker 1: to the year ago quarter.
Speaker 4: Services, however, are.
Speaker 1: The estimates indicate that should be up a little bit,
Speaker 1: which obviously is news and positive growth somewhere for Apple
Speaker 1: on this quarter.
Speaker 2: All right, Bluemos, Mark Gurhman, We're all waiting for Apple
Speaker 2: later in the week. And by the way, Mark's power
Speaker 2: On column was out over the weekend. If you don't subscribe,
Speaker 2: do so. He's focused on Apple watching software. Thank you
Speaker 2: to Mark. Now sticking with earnings. Another stock we're watching
Speaker 2: is Checkpoint Software, out with earnings that frankly disappointed to
Speaker 2: the downside as revenue missed expectation. Shares at one point
Speaker 2: in the session down by the most since February of
Speaker 2: twenty twenty one. Now, coming up, how the AI startup
Speaker 2: pine Cone managed to get a seven hundred and fifty
Speaker 2: million dollars valuation in a one hundred dollars million dollar
Speaker 2: funding round.
Speaker 4: We'll talk to the CEO Ido Liberty. That's next.
Speaker 2: Meantime, here's what Wing Venture partner Jake Flomenberg, who took
Speaker 2: part in that round, had to say about.
Speaker 4: It last week.
Speaker 7: And so, if you're building a generative AI startup or
Speaker 7: a generative AI application and you want to marry that
Speaker 7: with your own company's data, or if you want to
Speaker 7: remember things from one question to the next, you need
Speaker 7: a vector database like Han Kong.
Speaker 2: The White House is probing how companies use AI to
Speaker 2: monitor and manage workers. The Biden administration says such practices
Speaker 2: are on the rise and can inflict significant harm. Just
Speaker 2: last week, the Minnesota Statehouse actually passed a bill to
Speaker 2: require companies like Amazon to provide warehouse workers with copies
Speaker 2: of data they collected on their pace of work. California
Speaker 2: and New York had passed similar legislation in the past
Speaker 2: couple of years. Let's keep talking about AI with pine Cone,
Speaker 2: an AI powered platform. We've just raised one hundred million
Speaker 2: dollars in a funding round last week, valuing the company
Speaker 2: at seven hundred and fifty million dollars. Founder and CEO
Speaker 2: Eedo Liberty joins us. Now, we would describe pine Cone
Speaker 2: Edo as the long term memory for AI models, right,
Speaker 2: Explain what pine Cone.
Speaker 8: Does provides exactly that. I mean when.
Speaker 9: We think about AI models as being smart, they might
Speaker 9: not be very knowledgeable.
Speaker 8: And if you see.
Speaker 9: All the issues that people have had with what's called illucinations,
Speaker 9: basically AI models giving very smart sounding answers but with
Speaker 9: wrong information. That is solved by equipping them with long
Speaker 9: term memory, which is provided by fine.
Speaker 2: Con interesting timing one hundred million dollar round a seven
Speaker 2: hundred and fifty million dollar valuation. You did a much
Speaker 2: smaller round a sort of a year ago. How difficult
Speaker 2: was it to raise those funds? And why did you
Speaker 2: raise the fund.
Speaker 8: It wasn't difficult at all.
Speaker 9: In fact, the fact that sector databases really asserted themselves
Speaker 9: as a critical piece of generative AI and the ability
Speaker 9: to do that escale correctly and pine Cone being the
Speaker 9: leader in that space and made that a no brainer
Speaker 9: to be honest, And so it was. Yeah, it was
Speaker 9: needed for us to really fuel the future research and
Speaker 9: development and future investment in the field.
Speaker 2: You know, we're covering AI more than a daily basis
Speaker 2: here on the show, right and we're talking to those
Speaker 2: that are working on foundational models vcs that are investing
Speaker 2: in the technology. We kind of break it down to
Speaker 2: data prep, deep learning, and then inference. Where does pine
Speaker 2: Cone sit within that development cycle.
Speaker 9: Well, it's sort of a different component altogether. This is
Speaker 9: about search and retrieval and access to your long term memories.
Speaker 9: If you are trying to build a generative AI on
Speaker 9: your own company data and you want your then you
Speaker 9: want your application to not hallucinate or make gross mistakes,
Speaker 9: then you have to equip it with that capability and
Speaker 9: that's what prime Cone provides. That could be either on
Speaker 9: training side or data cleaning, or in production at real
Speaker 9: time or customer facing.
Speaker 8: This happens everywhere up and down the stack. It's just
Speaker 8: a whole different component.
Speaker 9: And in some sense, doubling down on what I said before,
Speaker 9: this is the realization that this is a critical piece
Speaker 9: and that it's here to stay was exactly what catalyzed that,
Speaker 9: both the round and evaluation.
Speaker 2: You have customers like Shopify, HubSpot, ZAPR, and Gong interesting
Speaker 2: names in Layman's terms, What is it you're doing for them?
Speaker 8: When when large language models.
Speaker 9: Processed texts, they don't save it or represent then in
Speaker 9: the same way. And when you want to search for data,
Speaker 9: when a large language model search is for data, they
Speaker 9: don't search through it with a regular search engine like
Speaker 9: you would and I would like search on Google, but
Speaker 9: in a very different pattern. And that pattern is support
Speaker 9: supported by pine Cone. And so if you know, if
Speaker 9: you're on Gong and you want to see what the
Speaker 9: some salesperson you know offered some discount for some customer, uh,
Speaker 9: that's much easier to do with the large language model
Speaker 9: searching through the data with with pine Cone.
Speaker 8: Than with keyword search for example. Right.
Speaker 9: The same goes for Shopify, who built a shopping assist
Speaker 9: app very quickly with those capabilities, surfacing the actual information
Speaker 9: about their products and so on.
Speaker 8: Uh, the customer's products.
Speaker 9: You know, it's it's really retrieval and search in the
Speaker 9: way that AI models expect them to happen.
Speaker 8: And the daily power.
Speaker 9: It's very power, very new kinds of applications, especially where
Speaker 9: hallucinations is.
Speaker 8: Something that you really try very strong to avoid.
Speaker 2: You know, is there a risk that the pool of
Speaker 2: data is finite that it just runs out for training
Speaker 2: foundational models?
Speaker 8: I'm not sure what you mean by that, to be honest.
Speaker 8: There's a debate we are enable, Okay.
Speaker 2: Well, there's debit from industry participants. Right, there are lots
Speaker 2: of data inputs that go into training generative AI tools. Right,
Speaker 2: if you take for example, Google and Bard, they clearly
Speaker 2: have an advantage in the data that they are able
Speaker 2: to draw on to train that model. Others have less access,
Speaker 2: especially those of the training models where there are far
Speaker 2: fewer parameters and inputs. I guess my question is, you know,
Speaker 2: how are you helping and make data available and what
Speaker 2: the risk is that there is not sufficient access to
Speaker 2: data to train future models.
Speaker 9: So, first of all, I don't think that that is
Speaker 9: that is a serious risk for training better models, because
Speaker 9: I think we have scarcely tapped the.
Speaker 8: Single percents of what's available out there.
Speaker 9: But what pinekone allows you to do is actually make
Speaker 9: your AI models a lot more accurate and a lot
Speaker 9: more actionable without retraining them, which is I think why
Speaker 9: it has been so successful and why we're ramped up
Speaker 9: thousands of customers even just in Q one, because you know,
Speaker 9: with the large language model, even without being retrained, if
Speaker 9: it's given the right context and the right information from
Speaker 9: which to construct the answer, then you don't have to
Speaker 9: bake into the model all the data in your company.
Speaker 8: You just have to present it to the model at
Speaker 8: the query time say hey, you know, I want.
Speaker 9: To see what this customers are for a discount, and
Speaker 9: here are you know, twenty snippets of texts that I
Speaker 9: think contained the answer. Can you just steal that from
Speaker 9: that and give it to me in a reasonable way.
Speaker 9: That's a much easier problem and a much more manageable
Speaker 9: sort problem to sort.
Speaker 2: All right, pine Cone founder and Cooedo Liberty, thank you
Speaker 2: so much for joining the show. Time for Talking Tech
Speaker 2: India's most valuable startup by you look into reinsure employees
Speaker 2: and partners. After a weekend raid of the company's offices
Speaker 2: by the agency that investigates money laundering in the country.
Speaker 2: The investigations come at a time when the education company,
Speaker 2: valued the twenty two billion dollars, is in talks with
Speaker 2: investors to raise funds to address a liquidity crunch, and
Speaker 2: Ali Barba co founder Jack Maher is joining the University
Speaker 2: of Tokyo as a visiting professor. Mar is set to
Speaker 2: assume the new position to day and will provide advice
Speaker 2: on research topics and conduct his own research. Will also
Speaker 2: give seminars about entrepreneurship and innovation. Plus, Twitter co founder
Speaker 2: Jack Dorsey is offering sharp criticism of the social media's
Speaker 2: new owner, Elon Musk and his handling of the deal,
Speaker 2: after previously being publicly in favor of the sale. When
Speaker 2: asked if Musk has proven himself to be the best
Speaker 2: possible steward for the platform, Dorsey said, quote not no,
Speaker 2: nor do I think he acted right after realizing his
Speaker 2: timing was bad, Nor do I think the board should
Speaker 2: enforce the sale. Welcome back to Bloomberg Technology. I'm ed
Speaker 2: Lovelow in San Francisco. We've got to talk a little
Speaker 2: bit about AI. Now here's what some of our guests
Speaker 2: have had to say about what they think of generative
Speaker 2: AI's applications and where it's best suited.
Speaker 4: Have a listen.
Speaker 7: This technology really takes personalization to the next level when
Speaker 7: it comes to any type of education, but specifically financial literacy,
Speaker 7: which is so complicated.
Speaker 10: Certain categories are more exciting than others right now. Obviously,
Speaker 10: generative AI is a category that is very exciting to
Speaker 10: startup founders, customers, and venture capitalists as well.
Speaker 7: There'll be hundreds, if not thousands of opportunities to build
Speaker 7: interesting applications powered by AI.
Speaker 10: Technology makes it easier to create. Generative AI is accelerating
Speaker 10: that trend by decades, maybe centuries.
Speaker 11: To me, brainstorming is actually a perfect use case for
Speaker 11: these tools.
Speaker 8: I don't really care whether you're using AI or some
Speaker 8: other technology. I care what are you delivering to, what
Speaker 8: set are customers and how delighted are they going to be?
Speaker 2: So I show you these two names Starbucks and Young
Speaker 2: Brands reporting earnings Tuesday Wednesday. AI Artificial intelligence is absolutely
Speaker 2: dominated earning statements and calls over the last ten days
Speaker 2: or so, particularly for the technology sector. Do we see
Speaker 2: that happen again this week when it comes to qsr's
Speaker 2: Qui restaurants and some of the more consumer facing companies.
Speaker 2: It's really big question if that carries on throughout this
Speaker 2: earning season. For more, let's bring in Presto Automation Chairman
Speaker 2: and Interim CEO Krishna Gupta. Presto one of the largest
Speaker 2: providers of AI power tech for restaurants like McDonald Zapplebee's,
Speaker 2: Chili's and much more. Krishna, what do you think is
Speaker 2: AI going to dominate the earnings narrative for this sector
Speaker 2: this week?
Speaker 4: And great to be on.
Speaker 11: Well, let me start by saying I completely agree with
Speaker 11: Keith Ruboy, which is that I don't care whether it's
Speaker 11: AI or not. All that matters is are you creating
Speaker 11: something that's immediately actionable and valuable for customers today? And
Speaker 11: we believe that there are a lot of opportunities to
Speaker 11: do that using AI in the hospitality and the restaurant sectors.
Speaker 11: So yes, I expect every QSR, frankly every corporation in
Speaker 11: the world to be thinking about what are the most
Speaker 11: immediately actionable opportunities to leverage AI today.
Speaker 2: Press Automation Chairman and Interim CEO Christiana Guttu is with
Speaker 2: me in New York we were talking about the role
Speaker 2: of art official intelligence in the restaurant industry, the quick
Speaker 2: serve restaurant industry, and I was about to ask you
Speaker 2: why you're so focused on drive through. How is something
Speaker 2: so manual complemented by artificial intelligence.
Speaker 11: Well, it's not necessarily complemented. I think it actually ends
Speaker 11: up being one of the most immediately actionable applications of
Speaker 11: generative AI in the enterprise. Because you have labor costs
Speaker 11: which are rising, you have a relatively confined problem set
Speaker 11: in the drive through, and I don't think in three
Speaker 11: years is going to be a single drive through having
Speaker 11: a human take your orders. I think, you know, voice spots,
Speaker 11: whether that's ours or someone else's, will be pervasive. They
Speaker 11: will never get tired of delivering perfect service, upselling the customer,
Speaker 11: and ultimately delivering a lower cost, higher revenue experience to customers.
Speaker 2: Like many of your industry pays, you have looked to
Speaker 2: open AI and GPT tools to complement the work you're
Speaker 2: already doing.
Speaker 4: How does that relationship work?
Speaker 11: Yeah, well, look, I think LM technology and generative AI
Speaker 11: broadly does enable better personalization, faster speed of service, etc.
Speaker 11: For us, we have a little bit of a unique
Speaker 11: entry into the relationship in the sense that the CEO
Speaker 11: of Open Ai, Sam Altman, is a longtime investor in
Speaker 11: our company, a longtime friend of our founders. So we
Speaker 11: are very actively in discussions with them and incorporating some
Speaker 11: of that technology into what we're doing.
Speaker 2: What's it been like in the first four or five
Speaker 2: months of this year. Are their QSR CEO's phony every
Speaker 2: day saying get in here now and give us some
Speaker 2: AI capability? Literally, what is demand for you?
Speaker 11: Yeah? Look, I mean I think we're at a really
Speaker 11: unique moment in time where the customer's business needs, which
Speaker 11: is low margins and rising labor costs, are met with
Speaker 11: the progress on the technology side. And yes, because of
Speaker 11: how pervasive this term AI is and everything you're reading
Speaker 11: or seeing or hearing, it no longer feels like science fiction.
Speaker 11: I would say in twenty twenty two, some of what
Speaker 11: we were doing felt like futuristic. Maybe it's a twenty
Speaker 11: five initiative. Well, a lot of CEOs and a lot
Speaker 11: of sea level people at our customers in general are
Speaker 11: now thinking, well, maybe we can actually deploy this now,
Speaker 11: Maybe we should, Maybe we need to for the benefit
Speaker 11: of our shareholders deploy these kinds of technologies now, because
Speaker 11: if we don't do so, we're going to be left
Speaker 11: behind relative to our competitors. We're not going to be
Speaker 11: able to have that margin benefit that others are enjoying. So, yes,
Speaker 11: the tone of conversations across the board has changed pretty
Speaker 11: dramatically over the last six months.
Speaker 2: Does AI displace or eliminate jobs in this industry?
Speaker 11: Krishna, I believe, well, it's hard for me to apply
Speaker 11: on this industry specifically, but I do believe that the
Speaker 11: adoption of AI overall will actually be relatively neutral on jobs.
Speaker 11: I believe that's the case historically with any large technology revolution,
Speaker 11: is that new jobs come up, and we're already seeing
Speaker 11: that you need humans, not necessarily incredibly skilled humans, but
Speaker 11: you need humans to be able to train the AIS
Speaker 11: to help them make sure that specific edge cases are
Speaker 11: not run into and so at the end of the day,
Speaker 11: I think there's a lot of opportunity for us to
Speaker 11: help find new jobs for people in the restaurant industry specifically. However,
Speaker 11: you have a unique challenge which is labor availability. A
Speaker 11: lot of people still haven't been able to find laborer
Speaker 11: and we are helping them do that using Automation.
Speaker 2: Press, their automation chairman an interim CEO, christ Na Gutta
Speaker 2: bringing AI to a drive through near you, sing thank
Speaker 2: you Now coming up, bridging the gap in venture capital
Speaker 2: funding for women of color founders. We'll talk about that
Speaker 2: and more with Fearless Fun CEO arian Simone. That's next.
Speaker 2: So we had to bring a second look at shares
Speaker 2: of Ribbean under pressure again, down another two and a
Speaker 2: half percent. Well so, as investors have little faith left
Speaker 2: in the ability of the company to compete in a
Speaker 2: crowded EV market. At least six analists have cut price
Speaker 2: targets since April, a lot of people pointing to its
Speaker 2: market cap being exactly the same as the.
Speaker 4: Cache that's on its balance sheet. This is Bloomberg feelers.
Speaker 2: Fun, the Benure Capital Fund built by women of Color
Speaker 2: for women of color, has recently announced a new industry
Speaker 2: specific cohort of the Get Venture Ready program in partnership
Speaker 2: with JP Morgan Chase. The program is designed exclusively for
Speaker 2: black women business owners in fintech all the workforce development industry.
Speaker 2: To tell us more about what this program entails, that's
Speaker 2: bring in the fun CEO Arianne Simone. Arianna actually just
Speaker 2: want to start on JP Morgan because you have announced
Speaker 2: this partnership with the EN they have acquired First Republic,
Speaker 2: both of them with significant VC relationships and startups that
Speaker 2: adventure backed. What is your reaction to the news that
Speaker 2: JP Morgan has stepped in to acquire First Republic.
Speaker 12: I'm not surprised. JP Morgan has definitely been a leader
Speaker 12: in the space as far as venture capital is concerned
Speaker 12: with emerging fund managers as well as the startup ecosystem
Speaker 12: as a whole, So I'm not surprised when it came
Speaker 12: to even the whole SBB scare and everything.
Speaker 8: That was going on.
Speaker 12: They were as investors in our fund, they were one
Speaker 12: of the first LPs to reach out to see how
Speaker 12: they could be supportive in taking over any type of
Speaker 12: losses we may have incurred or anything that may have
Speaker 12: taken place. Luckily, of course, we didn't. We had very
Speaker 12: low exposure to the issue, but we saw early on
Speaker 12: that they were definitely being a leader in the space
Speaker 12: and wanting to get more into the startup ecosystem.
Speaker 4: Let's get to your relationship with them.
Speaker 2: I find this really interesting making CAPTO available to women
Speaker 2: of color, but specifically in fintech. Why fintech.
Speaker 12: Well, at the Fearless Fund, we actually invest in CpG
Speaker 12: as well as technology, and CpG were heavy beauty and wellness,
Speaker 12: heavy food and beverage, and in technology were heavy fintech,
Speaker 12: SaaS marketplace and in the fintech sector. We also had
Speaker 12: have investors LPs such as JP, Morgan, Chase and a
Speaker 12: few others that are in the fintech business. For us,
Speaker 12: this makes a very good strategic relationship. Anytime we invest
Speaker 12: in a fintech company, we know that we have potential
Speaker 12: acquirers that are invested in our fund that may acquire
Speaker 12: them later on down the line.
Speaker 8: So it just makes.
Speaker 12: Good for business overall, and it sets up a very good,
Speaker 12: strong pipeline.
Speaker 2: For women of color in all of the industries that
Speaker 2: you're investing in. What has the environment been like so
Speaker 2: far in twenty twenty three are on. We've talked a
Speaker 2: lot about tighter financial conditions on this program, but also
Speaker 2: inequality frankly in how founders and startups are able to
Speaker 2: navigate that those type of financial conditions.
Speaker 12: That is very true. Women of color are the most
Speaker 12: founded entrepreneur demographic, they are just the least funded, so
Speaker 12: in any condition, whether there's a market correction or not,
Speaker 12: they have the biggest gaps of disparity. We exist because
Speaker 12: we do hope to change what the narrative is in
Speaker 12: this landscape. As of right now, the profile of a
Speaker 12: woman of color entrepreneur is somebody who you definitely want
Speaker 12: to bet on if their cash burn rates are low.
Speaker 12: They're not used to large sums of access to capital,
Speaker 12: so they're very good stewards over their investment. Our portfolio
Speaker 12: actually is even quite healthy at a time like this
Speaker 12: because we chose to invest in women of color who
Speaker 12: are very mindful of their investments.
Speaker 2: You're coming to us from Atlanta, Georgia. On this program,
Speaker 2: we talk a lot about San Francisco, Silicon Valley, Miami,
Speaker 2: New York, sometimes ostin less about Atlanta, Georgia. What's the
Speaker 2: environment like for raising venture funds founding a business in
Speaker 2: that city and in that state.
Speaker 12: One thing I can say that the whole VC tech
Speaker 12: ecosystem in Atlanta, Georgia is definitely growing. It's definitely growing.
Speaker 12: I would like to add, even just for transparency, that
Speaker 12: is it easy. No, it's not easy to raise capital
Speaker 12: in any environment, especially when you're an emerging fund manager.
Speaker 12: And especially when your thesis is for women of color.
Speaker 12: But we have been blessed by a very amazing LPs
Speaker 12: such as you saw even on screen with JP Morrigan,
Speaker 12: Bank of America, Allibank, Casco, MasterCard, and many others. So
Speaker 12: for us, even though we are based in Atlanta, yes,
Speaker 12: we have raised capital from many other areas including San Francisco,
Speaker 12: New York, and all the other major areas that you
Speaker 12: see a lot of financial institutions based.
Speaker 2: We had a founder on the show earlier who just
Speaker 2: closed one hundred million dollar round at seven hundred and
Speaker 2: fifty million dollar valuation, but a year ago. You know,
Speaker 2: even at their last stage there are about one hundred
Speaker 2: and twenty eight million dollar valuation. I give you that
Speaker 2: as an example because I want to know what kind
Speaker 2: of activity you're seeing. You know, there is there a
Speaker 2: desperation to go out and get rounds done. From the
Speaker 2: startups perspective, is their willingness to deploy capital.
Speaker 4: From the VC's perspective.
Speaker 8: You are correct.
Speaker 12: With this current market and vitce, you're seeing a lot
Speaker 12: of tech founders raise what we call bridge rounds, which
Speaker 12: is like an in between round before you get to
Speaker 12: your next round. That's just pretty much what the market
Speaker 12: has dictated in this current space. You are also correct
Speaker 12: that a couple of years ago you could see a
Speaker 12: company that was precede with the valuation of nine figures
Speaker 12: and it was just like nothing. It was just something
Speaker 12: that you could see. So valuations have gone down. Some
Speaker 12: investors would like to say they're probably more realistic now
Speaker 12: as far as valuations. So you have seen a drop
Speaker 12: in those, and from a standpoint of the founder, their
Speaker 12: approach to this environment is pretty much just been to
Speaker 12: raise a bridge round to stay afloat while they continue
Speaker 12: to build their technology.
Speaker 2: Hey area, and the last question I want to go
Speaker 2: to is CpG fintech. Where's the most activity right now?
Speaker 2: Are there any specific areas thematically that you're looking at
Speaker 2: going WHOA, there's a lot of activity.
Speaker 12: Here for us, as I was sitting before, we're heavies.
Speaker 12: We're fifty percent CpG FI technology and the sectors that
Speaker 12: we are in, Yes, there's definitely heavy activity. One thing
Speaker 12: I can say even on the tech space of course,
Speaker 12: right now we all know that AI is like the
Speaker 12: new hot thing. We've been investing in AI now for
Speaker 12: about I think about a couple of years. We invested
Speaker 12: in a company by the name of Clever Aria Moore
Speaker 12: is the founder on the AI space, but you'll see
Speaker 12: a lot of activity there. One thing I can say,
Speaker 12: even back to fintech is that a lot of the
Speaker 12: febal founders that are of color, they are very hot
Speaker 12: for acquisition in the area of fintech.
Speaker 2: Bilis fun Ceo Arion Smoan. We'll get you back on.
Speaker 2: Thank you so much for your time. Soft Banks Semiconductor
Speaker 2: Design Unit ARM filed confidentially over the weekend for an
Speaker 2: initial public offering. Joining us now is Bloomberg Semiconductor correspondent
Speaker 2: Ian King. Valuation is really interesting here. We've been covering
Speaker 2: this saga story for quite a long time. Where do
Speaker 2: we settle out on that.
Speaker 13: Well, if you remember in video, was trying to buy
Speaker 13: them for forty billion dollars based upon where their revenue
Speaker 13: is roughly a billion a quarter. That's a massive valuation.
Speaker 13: If you were to compare that revenue level to publicly
Speaker 13: traded companies, they'd be worth sort of ten billion, probably
Speaker 13: well less than twenty So really hard to put a
Speaker 13: valuation on it. Obviously, a lot of people really like
Speaker 13: their technology and really like their prospects.
Speaker 4: What does ARM do You say they like their technology?
Speaker 4: I mean, what is ARM?
Speaker 13: Yeah, I mean it's a very good question. It's hard
Speaker 13: to understand the licensing of an instruction set.
Speaker 4: I realize, yes, Niche.
Speaker 13: The way to understand it is they produce a layer
Speaker 13: of technology that is in every smartphone, increasingly in computers
Speaker 13: and also into data centers as well, and they're moving
Speaker 13: up the food chain. They're doing more of the design,
Speaker 13: they're doing more of the kind of thing that Pollcom
Speaker 13: broad Com would do, and that's a very high margin business.
Speaker 2: Is this going to be a really really big payday
Speaker 2: for soft Bank?
Speaker 13: Initially No, in terms of the cash. They've said, look,
Speaker 13: we're not going to dump our entire holdings into the market.
Speaker 13: We're going to put an element of our holdings into
Speaker 13: the market. But what it will do is let people
Speaker 13: know what ARM is worth. They paid thirty two billion
Speaker 13: dollars for this in twenty sixteen. People will be looking
Speaker 13: for this as a kind of a cornerstone of soft
Speaker 13: Banks holdings to kind of restore some faith and confidence
Speaker 13: in that company's investing and try and get evaluation as well.
Speaker 13: Above at thirty.
Speaker 2: Two there's also a jurisdiction or territorial angle to this story,
Speaker 2: which is ARM is a UK based firm, it's a
Speaker 2: US listing soft banks in Japan.
Speaker 4: That's quite complicated, it is.
Speaker 13: I mean, the UK, as we've written, has really really
Speaker 13: wanted them to come back to the LS and really,
Speaker 13: as far as we understand, have failed to do that.
Speaker 13: So it's going to be a US listing a lot
Speaker 13: of ARMS operations. It's CEO here these days, headquarters is
Speaker 13: still Cambridge and obviously the ownership and Japans whole a
Speaker 13: lot of regulatory issues that needed to.
Speaker 4: Be navigated there also give us the boiler plate.
Speaker 2: There's a lot that we don't know, like timing, there
Speaker 2: are lots of factors that need to happen before we
Speaker 2: move forward with this listing.
Speaker 13: Yeah, I mean the big thing is to focus on
Speaker 13: this is going to be the biggest tech IPO this
Speaker 13: year when you look at it from a valuation perspective.
Speaker 13: They've said all along sort of second half of the
Speaker 13: year typically. You know, we've got the filing now, so
Speaker 13: that's say it's probably autumn.
Speaker 2: Right, bloomberg Z and King on all things ARM. We're
Speaker 2: rating that listing. That does it for this edition of
Speaker 2: Bloomberg Technology come back tomorrow for a jam packed show.
Speaker 4: Guests just for example, Uber.
Speaker 2: CEO, Dara Kostra Shahi, Apple co founder Steve Wasne act
Speaker 2: and so Fi CEO and Sinota. You don't want to
Speaker 2: miss that one. And okay, look, we're just a day
Speaker 2: into the week. We have earnings, we have a FED meeting.
Speaker 2: But there's a lot to recap. Check out the podcast
Speaker 2: wherever you get your podcasts, Apple, Spotify, iHeart and of
Speaker 2: course on all of your Bloomberg platforms. Apple comes later
Speaker 2: in the week. That is where a big portion of
Speaker 2: our attention is. But don't forget the discussion we've had
Speaker 2: in the show, which is the QSRs are reporting, Will
Speaker 2: they talk about AI? AI has been the buzzword of
Speaker 2: this earning season, not just the technology sector, but more broadly.
Speaker 2: Go and check out that Bank of America data or
Speaker 2: we will track it here on Bloomberg Technology.
Speaker 4: This is Bloomberg