Speaker 1: From Mahard where Innovations, Money and Power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: I'm Caroline Hyde at Bloomberg's world headquarters in New York
Speaker 3: and I met Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology coming up.
Speaker 3: Semiconductors slide. That's on reports that China has told telecom
Speaker 3: carries to drop foreign chips. They'll bring you the details.
Speaker 5: Plus Apple plans to overhaul its entire line of Mac
Speaker 5: computers to add an AI focused in house processor or
Speaker 5: break down our exclusive Bloomberg reporting.
Speaker 3: And Kathy Wood buys into chatchybt Boom with a stake
Speaker 3: in Open AI. We'll discuss that and so much more
Speaker 3: throughout the hour, but first let's get over to these
Speaker 3: public trading markets. From a macro context, this is one
Speaker 3: we're seeing a search for safety today. There is warriors
Speaker 3: regarding Iran Israel. We're seeing geopolitical risks heightened, and maybe
Speaker 3: just as squaring away of certain volatility that we've seen
Speaker 3: throughout the week when it comes to concerns about CPIPPI.
Speaker 3: As we move towards the weekend, we're currently seeing, for once,
Speaker 3: equity is actually moving at the opposite way of a
Speaker 3: bomb market. Even though the bond market has been selling
Speaker 3: off and equities is still managed to ride higher. Today
Speaker 3: it's the opposite. Were actually seeing bond markets move higher.
Speaker 3: We're seeing money move into the havens that are the
Speaker 3: tenure yield. We're off by also eight nine basis points,
Speaker 3: so we're seeing money move there, money move into the
Speaker 3: Bloomberg Dollar Index, in fact, the highest level that since
Speaker 3: we've seen twenty twenty four. Head are up another seven
Speaker 3: tenths of a percent, but money coming out of equities
Speaker 3: as we worry about geopolitical tensions. We're off by one
Speaker 3: point four percent on the NASDAK and of course that
Speaker 3: key chip story that we're will be digging into in
Speaker 3: a moment. Move on, have a little look what's happening
Speaker 3: in another key risk asset, and actually surprisingly flat for
Speaker 3: bitcoin over all over the course of a week now.
Speaker 3: The volatility has been there to see on a day
Speaker 3: to day basis, and we rode higher at the start
Speaker 3: where we've just come off with some of those highs.
Speaker 3: Of course, a dollar strength is going to mean a
Speaker 3: bit of a bitcoin weakness, But what are you watching.
Speaker 5: We have a lot of technology stories to bring you
Speaker 5: this Friday. Apple is an interesting one, up seven ten
Speaker 5: to one percent after a four percent jump Thursday, which
Speaker 5: I think was the biggest jump since May of last year.
Speaker 4: Bloombos Mark German.
Speaker 5: Is reporting a complete overhaul of the Mac line, and
Speaker 5: we'll talk to Mark a little bit later in the program.
Speaker 5: Alphabet Paarent of Google down a percentage twenty is giving
Speaker 5: us a little bit back after hitting the two trillion
Speaker 5: dollar market cap mark Thursday. Recently, a lot more optimism
Speaker 5: that Google's starting to get it right on AI. They'll
Speaker 5: actually have products, particularly in the enterprise or commercial use case.
Speaker 5: But pulling back a little bit this Friday after a
Speaker 5: key milestone, we're keeping our.
Speaker 4: Eyes on the banks.
Speaker 5: Bank earnings kind of kick us off for earnings. Overall,
Speaker 5: you can see us kind of mixed fortunes, all of
Speaker 5: these three names moving to the downside going into it
Speaker 5: for us, so Blomow Technology AI. What's happening with aim
Speaker 5: banks was a big theme, but they all have their
Speaker 5: own individual stories.
Speaker 4: I'm not going to tell you the story.
Speaker 5: Bloomberg Shnali Bassak the correct person to bring us the banks,
Speaker 5: Rap joins us on set in New York and she
Speaker 5: brings you this story Snali, three big names, both moving lower,
Speaker 5: all moving lower.
Speaker 6: Yeah, all moving lower. And remember that is a little
Speaker 6: bit of a reversal. City Group had beat profit estimates
Speaker 6: here and we did see an earlier gain. Remember the
Speaker 6: market is lower on the day, but some of the
Speaker 6: declines they're seeing are quite stark. JP Morgan, for example,
Speaker 6: Intra Day is having its worst day since March of
Speaker 6: twenty twenty three, when we know times are very different.
Speaker 3: Remember ed we have JP.
Speaker 6: Morgan coming off six consecutive years of record revenue. So
Speaker 6: the big question is when analysts had expected them to
Speaker 6: raise the bar on that interest income, are they just
Speaker 6: being conservative when they have not done so, or are
Speaker 6: we seeing a consumer that is starting to, if not
Speaker 6: tap out, start to slow down a little bit in
Speaker 6: the way that they are starting to borrow and spend
Speaker 6: on those credit card businesses in particular. Now, some positive
Speaker 6: news for anyone watching Woomberg Technology in particular is you
Speaker 6: do see an uptick here in those underwriting businesses. IPOs
Speaker 6: are back baby, and you are seeing it in the
Speaker 6: number of big banks, and certainly you don't see the
Speaker 6: advisory fees jumping back just as strong yet, but they're
Speaker 6: pretty optimistic over there at JP Morgan what things are
Speaker 6: starting to look like in investment banking.
Speaker 3: And you didn't even mention Ai Shanana Bassec. We thank
Speaker 3: you so much for bring us the latest on and
Speaker 3: earnings context, and of course we brace ourselves for the
Speaker 3: technology earnings to start coming thick and fast at the
Speaker 3: end of next week. But for now we're focused in
Speaker 3: on basically all of the chip set to under propressure.
Speaker 3: We shine a light on Intel off by three point
Speaker 3: four percent, AMD, one of your worst performers, off by
Speaker 3: almost four percent. But in fact, every single member of
Speaker 3: the Semiconductor Index of Philadelphia Semiconductor Index is in the
Speaker 3: red on Semi off by more than four percent. But
Speaker 3: really this is as we see the reporting coming from
Speaker 3: the Wall Street Journal at the moment ed Beijing ordering
Speaker 3: Telecoon carriage, China Mobile and the likes to say no
Speaker 3: to foreign chips in their core networks by twenty twenty seven.
Speaker 3: This is really notable, but perhaps.
Speaker 5: Unsupp Yeah, it is another development in China's effort to
Speaker 5: onshore their own semiconductor industry. Right, so the journal one
Speaker 5: key part of their report is that actually the Ministry
Speaker 5: for Industry and Information Technology has given a timeline, call
Speaker 5: it a timeline or a deadline for not just China Mobile,
Speaker 5: but China Unicorn and China Telecom Corp. To swap out
Speaker 5: foreign chips, those being US chipmakers AMD Intel get twenty
Speaker 5: five percent revenue historically from China on the more commercial
Speaker 5: use case for chips and put in a domestic one.
Speaker 5: The question really is is there a domestic supply chain
Speaker 5: ready to support that.
Speaker 3: By twenty twenty seven They often might well hope so.
Speaker 3: And it's interesting and that almost front running. This was
Speaker 3: a great piece out of Bloomberg Intelligence to showing that
Speaker 3: Chinese export curbs are actually more of a risk the
Speaker 3: US export curbs at the moment. This is a tip
Speaker 3: for tat that you and I have been reporting on
Speaker 3: since we start first got together back in twenty twenty
Speaker 3: two of this technology show and really thinking about how
Speaker 3: US trying to restrain some of its own technology going
Speaker 3: into China. Well, unsurprisingly China is going to be doing
Speaker 3: the same in reverse, but this time actually BI saying
Speaker 3: China's export restrictions is going to be key policy risk
Speaker 3: to some of the US chip manufacturers that have in
Speaker 3: recent years built up their overall supply chain dependency on China.
Speaker 3: So I think that's a really another interesting shoot drop
Speaker 3: at the moment, whether it's export restrictions, whether it's at
Speaker 3: the moment import restrictions coming from China of US tech, I.
Speaker 5: Think we should just get to someone who's got skin
Speaker 5: in the game joining us now is Alison Porter, portfolio
Speaker 5: manager on the Global Technology Leaders and Sustainable Future Technology
Speaker 5: Funds at Janis Henderson, and I think I'm right in
Speaker 5: saying if we just pick out AMD as an example,
Speaker 5: it's one name.
Speaker 4: That you have exposure to, it that you hold.
Speaker 5: You know, the journal is reporting one specific industry case
Speaker 5: of a much broader thing where China wants its domestic
Speaker 5: entities to use domestic chips.
Speaker 4: Your response to.
Speaker 1: That, well, you know, I would put a little bit
Speaker 1: of this into context. China top down are doing foreign
Speaker 1: chips and tailcos. We don't see it as being, you know,
Speaker 1: a huge change because essentially that's a market that has
Speaker 1: been dominated by WAWI and the use of those and
Speaker 1: the use of in house chips has been around for
Speaker 1: a number of years now since chip companies were banned
Speaker 1: from supporting Bowies five G rollout and really in terms
Speaker 1: of China tail Co five D spend that actually peaked
Speaker 1: some time ago, and other areas like f PGAs you know,
Speaker 1: they've had a significant inventry correction.
Speaker 7: And for you know China who may want to replace
Speaker 7: US chips, but.
Speaker 1: Again you know actually using seven nanometer chips domestically, they
Speaker 1: don't have that supply yet.
Speaker 7: So I think for them to get to five and
Speaker 7: meter athena animeter, you're.
Speaker 1: Going to need You're going to need those for sixty deployment,
Speaker 1: which will ultimately need US chips by that time period.
Speaker 1: So you know, we think this is ongoing and wrangling,
Speaker 1: but in terms of the end markets, it's not hugely
Speaker 1: significant for the areas that we're focused on.
Speaker 3: Let's go to where you're focused there for Allison, because
Speaker 3: all of this comes in a current context of a
Speaker 3: threat over supply. We are all envisioning a whole new
Speaker 3: world on which we're going to be living in thanks
Speaker 3: to generative artificial intelligence. But we need the chips, need
Speaker 3: the supply chain, we need to be building these things,
Speaker 3: We need the energy. Alison, what chip names are going
Speaker 3: to be doing well in spite of geopolitical headwinds.
Speaker 1: Well, you know, when I started looking at technology stocks
Speaker 1: back in nineteen eighty six, I think about over a
Speaker 1: third of chip supply and was actually built in the
Speaker 1: US over thirty percent, and way forward to the pandemic.
Speaker 7: And that was down to twelve percent.
Speaker 1: So we see this ongoing focus of deglobalization. That's part
Speaker 1: of national security, it's part of national interest for AI.
Speaker 7: It's also part of the overall focus.
Speaker 1: On improving supply chain standards ESDUY standards throughout the technology
Speaker 1: resupply chain.
Speaker 7: And therefore we.
Speaker 1: Think that actually manufacturing is becoming a more competitive advantage
Speaker 1: more difficult to replicate. Many contract manufacturers, for example Jabel,
Speaker 1: Flixtronic the ability to be able to manufacture at scale.
Speaker 1: These companies have much lower margins and traditionally that could
Speaker 1: be easily moved around from competitors, but that's now becoming
Speaker 1: much more difficult at scale for many of the large
Speaker 1: OEMs to actually move their manufacturing capacity stay around.
Speaker 7: So we think that's one way that we see deglobalization.
Speaker 1: The chips AC actually play into year companies manufacture.
Speaker 3: As a global technology leaders and sustainable future tech fund
Speaker 3: Then do you worry that you're going to have to
Speaker 3: be sacrificing margin on some of the companies that you
Speaker 3: are investing in globally because they're having to you know,
Speaker 3: manufacture in more expensive places to secure supply chain or
Speaker 3: can you play start to play out well opportunities more
Speaker 3: globally that are being overlooked as we've all just focused
Speaker 3: in on a so called Magnificent seven.
Speaker 1: Yeah, I mean, I think there's you know, a significant
Speaker 1: focus on margins and efficiency. You know, the Morgan Stanley
Speaker 1: Technology Conference in March showed that where you know, the
Speaker 1: two most name terms from all of the presentations at
Speaker 1: that conference, it weren't AI, it wasn't chipsacked, it was
Speaker 1: in fact, margins and efficiency. And you see, you know,
Speaker 1: I think that's one of the really interesting aspects of
Speaker 1: where we are just now because we have a major
Speaker 1: new technology weave. But that's also hesting at a time
Speaker 1: when you know, we have this rising cost of capital
Speaker 1: and companies are really focused on efficiencies and improving margins,
Speaker 1: and that creates really interesting opportunities for investors.
Speaker 7: And it's a real stockpickers market, so it's.
Speaker 1: Not easy to generalize on sub sectors. It's very much
Speaker 1: about you know, active management, which is quite typical when
Speaker 1: we hit these technology inflection points.
Speaker 5: In this stock pickers market. Should you pick Apple? Apple
Speaker 5: is becoming increasingly attractive, it seems to you, guys, twelve
Speaker 5: month forward pay of twenty five times it had been downtrodden.
Speaker 5: Now is it a good name?
Speaker 1: We own Apple within our portfolio, but it's not been
Speaker 1: one of our largest holdings for quite some time.
Speaker 7: Apple's a tremendous company.
Speaker 1: It led technology in each of the last three ways,
Speaker 1: you know, through the PC wave, the mobile Internet. They
Speaker 1: were all really started by catalysts from product catalysts from Apple.
Speaker 7: Let's AI.
Speaker 1: We've was started by the product catalysts of Microsoft Chat,
Speaker 1: GPT and Open AI, and also in Vidia on Silicon
Speaker 1: and Apple's role and AI has yet to be defined,
Speaker 1: and we're sure that over the longer term they will
Speaker 1: continue to innovate, but right now they're not one of
Speaker 1: the early drivers of their genera to the IWAVE as.
Speaker 3: A sumporter, just a joy to have you on. Thank
Speaker 3: you Janis Henderson talking us through the winners and the
Speaker 3: losers you're looking at in the moment. And look, we
Speaker 3: were just finishing there on Apple and its focus or
Speaker 3: like thereof on AI. Let's just talk about Apple overhauling
Speaker 3: therefore its entire magline with in house processes that, guess what,
Speaker 3: focus on artificial intelligence. We're going to bring you the
Speaker 3: details next. This is BLUEBG Technology. It's looking to boost
Speaker 3: some lagging computer sales with an overhaul of its entire
Speaker 3: Mac line, planning to unveil an AI focused M four processor.
Speaker 3: Apple is aiming to release the updated computers beginning actually
Speaker 3: late this year extending into early next year. Joining us
Speaker 3: now with this scoop of course, Roomberg's Mark German and Mark,
Speaker 3: this is a very quick upgrade. Basically the cycle is
Speaker 3: so short.
Speaker 8: Yeah, good morning, thank you for having me.
Speaker 9: I mean, Apple Silicon started off on about a one
Speaker 9: point five year, one and a half year upgrade cycle,
Speaker 9: and they've accelerated that. The M three chips came a
Speaker 9: little sooner than anticipated in October of twenty twenty three.
Speaker 8: So just about six months ago. Now the M four.
Speaker 9: Chips are going to be coming even sooner than that,
Speaker 9: coming about one year after the M three processors. So
Speaker 9: they're planning new Imax Macminie's low and macropros high end
Speaker 9: nec pros. Like you said, for release between the end
Speaker 9: of twenty four and early twenty five. So this is
Speaker 9: an accelerated timeline. And it's interesting because this is now
Speaker 9: matching the timeline of processor upgrades that you see on
Speaker 9: the iPhone and that you once saw on the iPad
Speaker 9: but no longer.
Speaker 8: And this is pretty significant.
Speaker 9: In house silicon is becoming an even more important part
Speaker 9: of the company's story. There are other companies that are
Speaker 9: so hyper focused on the cloud and such.
Speaker 8: Apple is still focused on in device chips.
Speaker 4: I think that's where we should focus mark.
Speaker 5: Our last guest, Alison Porter at Janis, is an Apple shareholder,
Speaker 5: and what she just told us is that to her mind,
Speaker 5: Apple's role in AI has yet to be defined. But
Speaker 5: I look at where the stock closed Thursday after you
Speaker 5: published your report, and again the momentum today, and I
Speaker 5: think the market sees an AI story. What are you
Speaker 5: hearing internally at Apple about this side of it?
Speaker 9: The AI story at Apple exists, and it's almost the
Speaker 9: complete opposite of what you're seeing from other companies.
Speaker 8: There's so much hype.
Speaker 9: Around in Nvidia because of their cloud infrastructure that powers
Speaker 9: artificial intelligence.
Speaker 8: There's Chat, g ABT and Gemini. Those are all cloud products.
Speaker 9: Apple's LM is an on device approach, meaning it runs
Speaker 9: entirely on the device, which makes it more privacy centric,
Speaker 9: but also in some cases it can perform actions far
Speaker 9: quickly there is no lag time because it's on the
Speaker 9: devices themselves. And these new AI chips are the upgraded
Speaker 9: AI components that you're seeing on the M four during
Speaker 9: later this year, as well as the aaighteen pro chip
Speaker 9: that you'll see in the iPhone sixteen Pro and Promax
Speaker 9: Leader this year. Upgraded neural engines, improved processing, improved microphones
Speaker 9: to really optimize artificial intelligence and serri on a device. Now,
Speaker 9: we should note that Apple has been shipping neural engines
Speaker 9: those AI blocks inside of their chips for several years now,
Speaker 9: but this is going to be dubbed the biggest upgrade
Speaker 9: to the neural engine since that component was first released
Speaker 9: several years ago.
Speaker 5: Blue bos Mark German brilliant, thank you. Coming up on
Speaker 5: the show Docu sign unveiling a new platform and an
Speaker 5: expansion of his company's rategy. We're going to discuss that
Speaker 5: with the CEO, Alan Tigerson. That's next. This is Bloomberg,
Speaker 5: this is Talking Tech and in the news Tokyo based
Speaker 5: startup Sakana AI is capitalizing on surging interest from Japanese firms.
Speaker 4: Founded by ex Google researchers.
Speaker 5: Sicana won government supercomputer grants and partnerships with blue chip companies.
Speaker 5: This isn't an effort to build out Japan's AI ecosystem.
Speaker 5: Sakana uses small data sets to train low cost GENAI
Speaker 5: models that could be used to ramp up a company's
Speaker 5: AI capabilities.
Speaker 4: Plus, Samsung is.
Speaker 5: Set to unveil a forty four billion dollar push into
Speaker 5: US chip making as soon as next week. According to sources,
Speaker 5: they're going to outline a project in Taylor, Texas, after
Speaker 5: securing more than six billion.
Speaker 4: From government grants.
Speaker 5: The award marks the latest push from the Biden administration
Speaker 5: to revitalize chip making in the United States, and the
Speaker 5: House is set to try again on advancing the reauthorization
Speaker 5: of a US spy bill. The Foreign Intelligent Surveillance Act,
Speaker 5: failed to reach the floor on Wednesday over GOP concerns
Speaker 5: of privacy and section seven zero two that provision allows
Speaker 5: the surveillance of foreign targets and the potential to warrant
Speaker 5: leslie survey americans in contact with them.
Speaker 4: The bill underwent a revision.
Speaker 5: To a two year period from five in an attempt
Speaker 5: to swing its Republican critics.
Speaker 3: Caroline, let's move away from politics to product announcements. Now
Speaker 3: dog you sign holdings and it's just annual Momentum Music
Speaker 3: conference this week, and it set us up with some
Speaker 3: new products that include an intelligent agreement management platform. I'll
Speaker 3: stick into exactly what that is, Doc sign CEO Alan Tinkerson,
Speaker 3: and please to welcome you, thanks for joining category. It's
Speaker 3: different from what people already experience.
Speaker 2: Well, so people know us mostly for a signature and
Speaker 2: that will continue. But if you think about agreements, they
Speaker 2: go to an entire journey, and there is pain and
Speaker 2: inefficiency at every point in that journey. If you think
Speaker 2: about salespeople from when they maybe reach agreement and principle
Speaker 2: to when they can finally sign an agreement, or a
Speaker 2: purchasing manager who's trying to figure out whether their vendors
Speaker 2: are living up to their obligations, or a recruiter trying
Speaker 2: to close a candidate, those are all at their core
Speaker 2: agreement problems. And we are delivering a suite to help
Speaker 2: companies solve their entire range of agreement problems and so.
Speaker 3: I'm a company, I have suddenly a central depository. I
Speaker 3: know exactly where all of my legal agreements are, and
Speaker 3: I can use generative AI to summarize them to ensure
Speaker 3: that I'm learning the most see whether ensure that they're
Speaker 3: basically following a theme, all in line and purpose. Why
Speaker 3: is this different from what perhaps when you unveil it
Speaker 3: in late May, what box cauld suddenly bring us with
Speaker 3: their central repository system and suddenly bring in GENAI.
Speaker 2: Yes, well, there are lots of folks who do storage
Speaker 2: and more generally manage documents.
Speaker 10: But agreements are very, very unique.
Speaker 2: They have a particular structure, there's a tremendous amount of
Speaker 2: data in and you need to understand the context. And
Speaker 2: so we are I think experts are that the largest players.
Speaker 2: So they've focused on agreements and have a tremendous amount
Speaker 2: of domain knowledge, understanding of the intricacy of agreements. And
Speaker 2: there's also workflow associated agreements, and then we're bringing out
Speaker 2: tools to help companies deliver those in a much more
Speaker 2: delightful and digitally neative way.
Speaker 5: Alan, Good morning, Zed in San Francisco. In the history
Speaker 5: of technology, there are companies that completely reinvent themselves, right.
Speaker 4: Take BlackBerry as an example.
Speaker 5: You used to make smartphones, it now largely makes automotive software.
Speaker 5: The E signature product is still everything for you guys.
Speaker 5: But I wonder if you are trying to tell your
Speaker 5: investors you're used as your audience, that you see a
Speaker 5: future for DocuSign where it's something different beyond E signature,
Speaker 5: where the main business is not E signature.
Speaker 2: Well, certainly beyond these signature, but E Signature will be
Speaker 2: critical to docu sign for years to come. It's such
Speaker 2: a valuable product, solves such a unique pain point very well,
Speaker 2: and after all, the signature moment is a pivotal to
Speaker 2: have the highest value moment in that agreement journey. What
Speaker 2: we're doing here is where we are expanding and providing
Speaker 2: a full suite of offerings related to every step in
Speaker 2: the agreement journey. No one has done that before. I
Speaker 2: think we're the best position to do it. We have
Speaker 2: the trust, we have the customer reach and the expertise,
Speaker 2: and we're benefiting from recent developments in AI and so
Speaker 2: we're bringing all that to the table and I think
Speaker 2: now it's our moment.
Speaker 5: Alan, You've told a lot about doc You sign being
Speaker 5: in transition. In considering where you are in that transition,
Speaker 5: give yourself a scorecard ABC on your performance and where
Speaker 5: you've been in delivering that well.
Speaker 2: I like to measure outcomes, so I was certainly wouldn't
Speaker 2: hear myself at a yet. I think we are making
Speaker 2: really good progress.
Speaker 10: Give it a bit.
Speaker 2: We have done I think an excellent job idolizing the
Speaker 2: innovation engine now bringing out a really really robust suite
Speaker 2: of products informed by years of customer feedback and tremendous
Speaker 2: engagement for beta customers. And now it's time to take
Speaker 2: that to market and roll it out across all of
Speaker 2: the customer segments and geographies and industries that Docu Science serves,
Speaker 2: and that will be a multi year journey. So certainly
Speaker 2: not job's not done yet, but this is a major
Speaker 2: milestone for us, and we're very excited about what the
Speaker 2: future holds.
Speaker 3: It comes to bear and you may come and tell
Speaker 3: us how it all goes. Antikason, it's so great to
Speaker 3: have some time with you. Thank you for stopping by
Speaker 3: the studio. Docu Signed CEO.
Speaker 5: Welcome back to Bloomberg Technology. Ed Ludlow here in San Francisco,
Speaker 5: car and Hid.
Speaker 10: In New York.
Speaker 3: Quick check on these markets as we head towards the weekend,
Speaker 3: and some caution in those markets risk aversion as we
Speaker 3: worry about geopolitical risks Israel around front of mind for many.
Speaker 3: We're seeing tech slocks all the benchmarks and in equities
Speaker 3: actually down amid some of that taking risk of the
Speaker 3: table as money goes into the one market, into the
Speaker 3: US dollar for example, or off by some seven basis points.
Speaker 3: But tech also getting dragged down by Chips. I'll speak
Speaker 3: to that in a moment. Looking at Bitcoin, another key
Speaker 3: risk asset, just lower as the dollar goes higher. On
Speaker 3: some of this risker version. We're off by more than
Speaker 3: a percentage point, but basically flat over the last five
Speaker 3: trading days. Move on, have a little look what's happening
Speaker 3: on the individual movers because for once, actually Apple is
Speaker 3: on the higher side. We're still one hundred and seventy
Speaker 3: six there or thereabouts. But this as we understand, thanks
Speaker 3: to Mark German, they are looking to overhaul the processes
Speaker 3: within some of their Mac lineup and four coming to
Speaker 3: the fore and indeed AI front and center on your computer.
Speaker 3: We're up by seven tens of percent. Socks, so Chip stocks.
Speaker 3: In fact, every single member of this particular index is
Speaker 3: in the red today. Why Wall Street Journal reporting that
Speaker 3: China is now looking to fight back when it comes
Speaker 3: to that tip for TAT and chip access and they're
Speaker 3: saying to their Chinese cellcom giants, don't have foreign made
Speaker 3: chips by twenty twenty seven into your overall networks. That's
Speaker 3: sending AMD Intel in particular to the downside. This one's interesting.
Speaker 3: It's basically been a mean stock of choice of late
Speaker 3: Destiny one hundred d XYZ. It's a closed then fund
Speaker 3: that gets you access to privately held companies if you
Speaker 3: want to gain access to the likes of Malplaid or
Speaker 3: whether it's Stripe, whether it's Open Ai, whether it's SpaceX. Well,
Speaker 3: this has been a way of doing it, but it's
Speaker 3: made itself a mean frenzy retail investors piling in one
Speaker 3: thousand percent increase at one percent at point, having just
Speaker 3: listed in the last month or so, we're down by
Speaker 3: twenty two percent. But ed, it's not the only investment
Speaker 3: vehicle doing this.
Speaker 5: Yeah, hold that thought on Destiny Tech one hundred. We
Speaker 5: will come back to it. Kafe Woods Arc Investment Management
Speaker 5: has also announced that it holds a stake in open
Speaker 5: Ai through its venture fund in a bet that the
Speaker 5: AI industry will remake the tech landscape. Joining us now
Speaker 5: is Brett Winton, who is our chief futurists also a
Speaker 5: member of the investment committee. And Brett, you and I
Speaker 5: volte last night you got access to open ai, which
Speaker 5: is a private company with a closed profit structure through
Speaker 5: a special purpose vehicle SPV. But it's part of a
Speaker 5: broader thesis around foundation models.
Speaker 4: Give me the short version of the thesis.
Speaker 11: Sure, AI software is going to revolutionize knowledge work and
Speaker 11: thirteen trillion dollars is going to be spent on AI software,
Speaker 11: and three trillion of that is going to flow into
Speaker 11: kind of what we think of as foundation model. So
Speaker 11: open ai and Andropic are the two most prominent examples
Speaker 11: with the best models in the marketplace, both of which
Speaker 11: are in the venture fund. And three trillion dollars translates
Speaker 11: into an expectation for around sixteen trillion dollars in marketcap
Speaker 11: attributable to those foundation models.
Speaker 12: So to give you.
Speaker 11: Context, the global equity market is a little more than
Speaker 11: one hundred trillion dollars as of the end of last year,
Speaker 11: and so sixteen trillion. You know, it's a big chunk,
Speaker 11: almost sector sized in terms of our expectations for enterprise
Speaker 11: value foot print.
Speaker 5: Our venture fund is an interval fund which is made
Speaker 5: of eighty percent eight zero percent private companies twenty percent public.
Speaker 5: You can get access not just only to open AI,
Speaker 5: but SpaceX and anthropic. Why is it different or not
Speaker 5: the same as the Destiny Tech one hundred that Caroline
Speaker 5: was just explaining at the start of the segment.
Speaker 11: Because our interval fund is continuously offered. The price that
Speaker 11: you pay when you buy it is reflective of the
Speaker 11: value of the underlying securities in it. So if you
Speaker 11: buy one hundred dollars of an interval fund, you get
Speaker 11: one hundred dollars of net asset value. The Destiny Fund
Speaker 11: has a net asset value of less than five dollars,
Speaker 11: and they don't issue additional shares even if there's access demand.
Speaker 11: So if you buy the Destiny Fund at fifty dollars,
Speaker 11: you're paying, you know, fifty dollars for five five dollars
Speaker 11: worth of exposure. Like that fund, roughly a little more
Speaker 11: than a third is SpaceX, but by one hundred dollars
Speaker 11: of that versus one hundred dollars of our venture fund,
Speaker 11: you actually end up with more exposure to SpaceX and
Speaker 11: our venture fund, which is just four point four percent
Speaker 11: or roughly four percent of the venture fund. So it's
Speaker 11: really actually understand people want to get access to innovation.
Speaker 12: I think that's absolutely the right thing to.
Speaker 11: Do, and you need to be careful about how you
Speaker 11: get access to innovation. You should do so in a
Speaker 11: way where you're not buying, you know, ten cents worth
Speaker 11: of stuff for a dollar worth of spending, so.
Speaker 3: It's kind of down to structure and huge premium that
Speaker 3: you're currently seeing on dxyz. Do you also think it's
Speaker 3: something to do with the narrative this blew up on
Speaker 3: Reddit and other like minded, sort of retail focused areas.
Speaker 3: Do you think that your own ARC venture investment fund
Speaker 3: will do the same.
Speaker 11: I mean I think that, you know, I think that
Speaker 11: people are excited about innovation and they're looking for ways
Speaker 11: to access it, and this happened to kind of flash
Speaker 11: across social media channels in a way that inspired them
Speaker 11: to be like, oh, yes, I want access to that company,
Speaker 11: and conceptually they are, and actually practically there are much
Speaker 11: much more efficient and better ways to express that point.
Speaker 11: Of view, and I think you can't, Like, you can't
Speaker 11: tell beforehand what's going to you know, take off on Reddit,
Speaker 11: but you can tell when something is going to end
Speaker 11: in tears for people. And so when you're buying ten
Speaker 11: cents for a dollar, you end up at the end
Speaker 11: of the day with something close to ten cents, even
Speaker 11: if it doesn't trade that Like, there's all kinds of
Speaker 11: ways in which that premium should diminish over the time.
Speaker 11: And so I would advise you to pay at a dollar
Speaker 11: and get the dollars worth of stuff.
Speaker 3: Well said, sixteen trillion dollars by twenty thirty. That's an
Speaker 3: arresting figure when you think of the overall market valuation
Speaker 3: for these foundational models, do you wish you could access
Speaker 3: more open AI and ultimately anthropic as well? When you're
Speaker 3: thinking of the rest that makes up the fund. When
Speaker 3: I'm looking at SpaceX, but epic games as well, free
Speaker 3: noome holdings, relation therapeutics, how much do you want foundational
Speaker 3: models the AI bet to take up of this fund.
Speaker 11: Well, the way we think about it is there are
Speaker 11: five major technology platforms entering the marketplace, and each has
Speaker 11: the potential for amazing compounding returns. And you're better off
Speaker 11: constructing a portfolio that has yes AI exposure and autonomous
Speaker 11: mobility exposure and multio mix exposure, because those exposures could
Speaker 11: independently fail. Like are we one hundred percent right on AI?
Speaker 11: I think it's going to be amazing and amazing revolution.
Speaker 11: But if that that drags out to the right, it's
Speaker 11: unlikely that currencies also will drag out to the right.
Speaker 11: So by exposing yourself to a number of innovation platforms,
Speaker 11: you actually end up with a more efficient exposure to
Speaker 11: innovation as a whole that delivers better returns Brett.
Speaker 5: Last night, Bloomberg reported that Xai Musk's AI company is
Speaker 5: trying to raise between three and four billion dollars at
Speaker 5: around an eighteen billion dollar valuation. According to Frankly, our sources,
Speaker 5: but also a copy of the prospectus will arc through
Speaker 5: the venture funds try and add XAI given your coverage
Speaker 5: of SpaceX and Tesla already.
Speaker 11: I can't comment on future decisions. I will say that
Speaker 11: actually ownership in x confers a twenty five percent pro
Speaker 11: rat ownership in Xai, and I think that the company's
Speaker 11: future is actually closely intermingled. Xai's competitive advantage is it
Speaker 11: has real time access to everything that happens on X
Speaker 11: which is where our news effectively breaks.
Speaker 12: And in a world in which historical data.
Speaker 11: Is commoditized, which is part of what AI models are
Speaker 11: going to do, real time data becomes more valuable and dear,
Speaker 11: and so having a real time decision engine sitting at
Speaker 11: the front end of X I think is a really
Speaker 11: interesting and compelling value proposition for XAI.
Speaker 4: Brett.
Speaker 5: As you know, last night, I learned a lot about
Speaker 5: the venture fund, the mechanics of how it works. It's actually,
Speaker 5: I told you, very confusing. If you're a retail investor,
Speaker 5: you can access through Fidelity Titan and I'm blanking.
Speaker 4: There's a third one.
Speaker 5: So fine, but my point so far, give me a
Speaker 5: sense of how your announcement that you've built a pretty
Speaker 5: small stake in open Ai has moved the needle for
Speaker 5: that fund overnight this morning. Have you seen new customers
Speaker 5: an investment try to rush in because they now know
Speaker 5: that they can have some exposure there.
Speaker 11: I mean, the honest answer is, I don't know, because
Speaker 11: we don't get flows with you know that high degree
Speaker 11: of frequency, and the decision to invest in these companies
Speaker 11: is not a decision based upon how it's gonna attract attention.
Speaker 11: It's because we underwrite the positions and we think they
Speaker 11: deliver you know, outsized returns even relative to public market exposures.
Speaker 11: So one of the benefits of this fund is, you know,
Speaker 11: we can look at, hey, this is an interesting company,
Speaker 11: and there's a comparable public company that that this is
Speaker 11: actually cheaper than. And so I think that the the
Speaker 11: you know, the potential for returns across all these technology
Speaker 11: platforms is really profound, and we want every investor, not
Speaker 11: just accredited investors, to be able to have access to
Speaker 11: those returns.
Speaker 3: R going back to the open AI thesis as one
Speaker 3: of the winners of the six trillion dollar market. One
Speaker 3: are themtions of it going up into the right because
Speaker 3: there are concerns about ultimately supply chain this coalition that's
Speaker 3: being built because we're worried about energy not only just
Speaker 3: the amount of chips that are necessary that are going
Speaker 3: to be building this future of generative AI, but also
Speaker 3: is a competitive space right now. And also there's a
Speaker 3: weird corporate governance structure that goes on over over AI.
Speaker 3: What are the risks for you on that name?
Speaker 12: Sure, I mean are.
Speaker 11: There are corporate governance structures risks, and you know you
Speaker 11: can underwrite those, so we've gone through and assess them,
Speaker 11: but there is a degree of uncertainty there. There are
Speaker 11: regulatory risks across all of technology exposures. I think that
Speaker 11: we look back to even like nuclear power is an
Speaker 11: amazing technology that was effectively derailed because of kind of
Speaker 11: the regulatory burdens put upon it back in the nineteen seventies,
Speaker 11: and there's the potential that that could happen with AI
Speaker 11: as well, where we're worried about something and so we
Speaker 11: deny ourselves all the benefits of it, but still take
Speaker 11: on all of the risks.
Speaker 12: And we think that there's a room for commercial.
Speaker 11: Models like open AI and anthropics and open source models
Speaker 11: like what Meta is developing.
Speaker 12: I think that the market will have a.
Speaker 11: Handful of solutions, any one of which could be profoundly valuable.
Speaker 11: And when you have this much market opportunity ahead of you,
Speaker 11: you know, you go for that asymmetric return where kind
Speaker 11: of like the one or two winners here are going
Speaker 11: to be profoundly valuable. And so we think an exposure
Speaker 11: is appropriate and actually necessary.
Speaker 5: Brett Winston, the Bench Investmental Walk Investment Management is great
Speaker 5: to have you on the program.
Speaker 4: Thank you very much for your time. We'll be right back.
Speaker 4: Stay changed.
Speaker 5: This is butting Back Technology.
Speaker 3: New York based adicle. It's just announced it's raised two
Speaker 3: hundred and fifty million dollars in taking on external investors
Speaker 3: for the first time. The person behind Ali Corn is
Speaker 3: known as the godfather of VC here in New York,
Speaker 3: Kevin Ryan, founder CEO of that business. We welcome into
Speaker 3: VC Spotlight. And before you spent a lot of time
Speaker 3: and focus on small sized businesses investing your own money
Speaker 3: because you had a huge exit back in the day,
Speaker 3: having of course been the CEO co founder of double
Speaker 3: Click sold it to Google. Now, what is the reason
Speaker 3: you're bringing on external LPs.
Speaker 10: Yeah, it's more thinking long term.
Speaker 13: You know, I'm still a very important LP in this
Speaker 13: fun But when I think over the next twenty twenty
Speaker 13: five years, I think ALLI Corp. Will be a firm
Speaker 13: that is here, that is very present, that is going
Speaker 13: to be one of the leading firms. And to do that,
Speaker 13: you want to have sustainable source of money for the
Speaker 13: next seven funds.
Speaker 10: And so this is the beginning step for.
Speaker 3: That beginning step in taking bets on beginning businesses seeds
Speaker 3: and theeries. A.
Speaker 13: Yeah, it's not changing what we're doing yet. We do
Speaker 13: two things. We start companies from scratch, so I start
Speaker 13: six to eight companies a year, and then we invest
Speaker 13: in probably fifteen to twenty. So we have a portfolio
Speaker 13: of over one hundred companies and I have a twenty
Speaker 13: four person team, and so we've been doing that. We're
Speaker 13: going to continue to do that, and we're still seeing
Speaker 13: incredible opportunities out there.
Speaker 3: Many would know you for helping seed Mongo d B,
Speaker 3: which of course Big Exit traded hair in New York.
Speaker 3: But is that still the kind of company you want
Speaker 3: to be getting into. We're all talking about general to
Speaker 3: AI at the moment, but you're also focused on healthcare.
Speaker 3: Tell us the theses that you want to get.
Speaker 13: Yes, we have a couple different industry groups that we're
Speaker 13: focused on, so AI is definitely important thing. I just
Speaker 13: started a company with some people on my team called
Speaker 13: Radical that is a company focused on AI for material science.
Speaker 13: There's a very specific, very technical area and an enormous,
Speaker 13: enormous area, so that's a fundamental trend. Last year we
Speaker 13: started a company in assisted fertility. You and I both
Speaker 13: know that twenty years ago, none of our friends were
Speaker 13: having their eggs frozen or IVF. That's growing, it will
Speaker 13: continue to grow for the next ten years. We have
Speaker 13: a big healthcare portfolio, so president in a lot of
Speaker 13: different areas, mental health areas in particular, psychedelic in particular.
Speaker 13: Started one company that's raised over fifty million dollars already,
Speaker 13: and I'm looking to start another company in that space.
Speaker 13: So the point is there are pockets and things to
Speaker 13: be done. Technology is continuing to change the world and
Speaker 13: make it a better place, and we just want to
Speaker 13: think of these ideas or recognize them and help build
Speaker 13: these companies.
Speaker 5: Kevin, you called them pockets, but I kind of recognize
Speaker 5: outliers of activity. You know, you see a lot of
Speaker 5: rounds being done in AI. Actually I'm starting to see
Speaker 5: some in industrial technology. But I guess the commonality of
Speaker 5: the last four months is that each round, the check
Speaker 5: size is getting bigger. Yeah, and I wondered if you
Speaker 5: needed that two hundred and fifty million from outside investors
Speaker 5: because you've got to write bigger checks.
Speaker 13: No, our check size isn't really changing that much, you know,
Speaker 13: I had invested over two hundred fifty million dollars in
Speaker 13: the last several years, so this is a continuation of that.
Speaker 13: These some of the you know, some of the companies
Speaker 13: like Mango. You know, we started at fifteen years ago
Speaker 13: with a million dollars. Dwight Merriman and I put that
Speaker 13: money in, but we raised four hundred million dollars as
Speaker 13: a private company and then spend another six hundred million
Speaker 13: dollars as a public company to get to break even.
Speaker 13: So large companies do take a lot of capital. We're
Speaker 13: not going to provide all of it. Early stage investors
Speaker 13: are taking the most risk and getting the most return
Speaker 13: by coming up with that idea in the very beginning.
Speaker 13: But luckily there are lots of late stage funds that
Speaker 13: step in to help fund these.
Speaker 5: Were you able to be selective with LPs or were
Speaker 5: these LPs that were kind of coming to you and saying,
Speaker 5: I want some exposure to what's happening in AI right now,
Speaker 5: can you offer that to me?
Speaker 13: Yeah, we were. Fortunately, we were able to be pretty selective.
Speaker 13: We really just went out to family offices. It's a
Speaker 13: pretty small list of people. We wanted families that would
Speaker 13: add value. So these are all people that had come
Speaker 13: from the healthcare industry, the technology industry, something else. We
Speaker 13: can call on them if we want to do some
Speaker 13: due diligence. So we're pretty happy with that list of investors.
Speaker 13: We didn't go very widely. There aren't large institutions. We
Speaker 13: don't have pension funds, because at least at this point,
Speaker 13: they would add less value than some of the family offices.
Speaker 3: I started this conversation by calling the godfather of NYC Tech,
Speaker 3: and it is because NYC Tech is now getting really serious.
Speaker 3: People do feel that there's an about change. And you've
Speaker 3: been there for a long time saying there are businesses
Speaker 3: to be built here, in businesses to invest in. Are
Speaker 3: we just drinking our own kool aid here at the moment?
Speaker 10: You know, it's incredibly clear.
Speaker 13: It's the fastest growing and has been the fastest growing
Speaker 13: tech center in the United States. Because people forget today
Speaker 13: that twenty five years ago there was no tech in
Speaker 13: New York. People would ask me, why is Doubleicke in
Speaker 13: New York and why not in Boston.
Speaker 10: No one would say that today.
Speaker 13: So today in New York already employees as many people
Speaker 13: in tech as San Francisco. There is no doubt in
Speaker 13: my mind that when we're sitting here. Ten years from now,
Speaker 13: New York will be a much bigger center of employment
Speaker 13: for tech and will start to have some of the
Speaker 13: very biggest companies out here. This is a place that
Speaker 13: has human talent, the top graduates from the entire IVY League.
Speaker 10: Mit. Everyone where do they want to live? To live
Speaker 10: in New York City?
Speaker 13: And that's what drives our industry and will continue to
Speaker 13: drive the industry.
Speaker 3: Sorry, Ed, I'm pretty sure they're still run for both
Speaker 3: of us. Kevin Ryan of Ali Cole absolutely wonderful to
Speaker 3: have you here on the show.
Speaker 5: When Adobe released its Firefly image generating model last year,
Speaker 5: the company said the artificial intelligence model was trained mainly
Speaker 5: on Adobe stock Images, its database of hundreds of millions
Speaker 5: of licensed images, but behind the scenes, Adobe was relying
Speaker 5: in part on AI generated content to train Firefly, including
Speaker 5: from those same AI rivals that we've been talking about
Speaker 5: for many months. Blue both Rachel Mets broke that story
Speaker 5: with Brody Ford and joins us. Now, so let's focus
Speaker 5: very clearly on what the reporting on Earth Tier, what
Speaker 5: the new part is, and I think it's that we
Speaker 5: learned a lot more about how Firefly trained, but it's
Speaker 5: different to what Adobe had originally told us precisely.
Speaker 1: So.
Speaker 14: Adobe has spoken a lot very publicly about how Firefly
Speaker 14: is really different from the east rival image generators. And
Speaker 14: it turns out that it included a bunch of AI
Speaker 14: generated images, some of which are from mid journey in
Speaker 14: the training of Firefly. This was something I uncovered in
Speaker 14: my reporting. Brody and I work together to pull this
Speaker 14: story together and found that the company had done this.
Speaker 14: I mean, it was clearly done on purpose. It is
Speaker 14: not a huge amount of its training data, but it's
Speaker 14: in there.
Speaker 3: Nonetheless, what's important is, of course that this was deemed
Speaker 3: the ethical version of AI that you're paying for IP.
Speaker 3: And there's been some murkiness, to say the very least
Speaker 3: in some of the other rival foundational models and generative
Speaker 3: models that we've seen. I'm interested as to what Adobe
Speaker 3: said in response, because I'm sure they're aware of some
Speaker 3: of these synthetic images that they were bringing in. Is
Speaker 3: there any risk of IP in this one?
Speaker 8: Adobe was totally aware of what it was doing.
Speaker 14: I mean, we were looking at discord groups that the
Speaker 14: company runs.
Speaker 8: It was talking.
Speaker 14: It had people from the company talking on discord groups
Speaker 14: about including these images. They paid out a bonus in
Speaker 14: September to other people whose images were used to train
Speaker 14: the first version of Firefly, and that included people such
Speaker 14: as one of my sources who was in the story,
Speaker 14: who only contributed AI generated images to Adobe stock and
Speaker 14: most of those were mid journey made with mid journey.
Speaker 3: Fascinating as to therefore, how far back that we'll go?
Speaker 3: Rachel Metz is a great story, just so much coming
Speaker 3: out on Adobe at the moment. We appreciate her for it.
Speaker 3: That does it for this dedition of blumotechnology. What a
Speaker 3: wide ranging set of conversations we've had ed.
Speaker 5: Yeah, it's been a pretty intense week newsflow and markets wise.
Speaker 5: Now earning season comes and hits you in the face.
Speaker 5: What a lot of fun we still have to have
Speaker 5: recap the show. There was a lot of great Bloomberg
Speaker 5: reporting on Apple on Adobe's just heard in some pretty
Speaker 5: insightful interviews Brett Winton from ARC in particular on that
Speaker 5: unusual investment in Open Ai. Recap Apple, Spotify, iHeart, and
Speaker 5: we put the pod on the Bloomberg platforms.
Speaker 4: Happy Friday. This is Bloomberg Technology