WEBVTT - Steve Pagliuca Talks Trump, AI

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>Steve Patiuca sat down with US and Lisa Lane's in

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<v Speaker 2>and guys apart from sports.

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<v Speaker 3>Okay, hold on a second, but you've been talking about

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<v Speaker 3>Atalanta for like about three years now, and you're so excited,

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<v Speaker 3>and I know that the whole thing is going to

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<v Speaker 3>be about Atlanta, and.

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<v Speaker 1>I think that that's wonderful.

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<v Speaker 3>But a lot of tules in a lot of places.

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<v Speaker 1>Really, you're going to do.

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<v Speaker 2>This in the capital private equity senior Advice that joins

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<v Speaker 2>US now three wind Steve, Hello, good to see you.

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<v Speaker 1>Great to be here.

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<v Speaker 2>Let's start with sports.

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<v Speaker 1>I thought it was in ESPN.

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<v Speaker 2>We had to get on to night because that's Atlanta

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<v Speaker 2>five NOL. What a story for that team this year.

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<v Speaker 1>You know, I'm still pinching myself. It's just incredible and

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<v Speaker 1>very happy for the team and the coach and the

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<v Speaker 1>Percossi family. It's it's been great for Bergamo and Milan

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<v Speaker 1>and it's just really exciting.

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<v Speaker 2>I don't need to get too excited, but can you

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<v Speaker 2>win the league this year?

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<v Speaker 1>You know the old adage take it one game at

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<v Speaker 1>a time, so we just we've got to do We've

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<v Speaker 1>got to get healthy. We got a couple of guys

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<v Speaker 1>that are hurt, but they're playing fantastic.

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<v Speaker 2>It's amazing to see Barcelona up next and maybe straight qualification.

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<v Speaker 2>So the not the next round, but the one after that, right.

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<v Speaker 1>Big that would be a big big for European would

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<v Speaker 1>go to Barcelona. That's the football.

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<v Speaker 2>Okay, I did the basketball. You should do best.

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<v Speaker 1>Actually, there's a lot of.

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<v Speaker 2>So reports that you're after majority ownership of the Boston Celtics.

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<v Speaker 2>How much can you tell us this morning?

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<v Speaker 1>I can't comment, as you know, on any deals, including.

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<v Speaker 2>That deal, okay that one specifically? Can we talk more

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<v Speaker 2>broadly about the NBA franchises and what's happening there, because

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<v Speaker 2>I have noticed that audience levels TV audience levels have

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<v Speaker 2>fallen off in some parts. What do you think is

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<v Speaker 2>behind that?

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<v Speaker 1>You know, I think I think it's fragmentation of viewing,

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<v Speaker 1>and I think the viewing leaderships are really good when

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<v Speaker 1>they can count it correctly and really find out who's

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<v Speaker 1>watching where. So I don't think there's a concern there

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<v Speaker 1>in the league is really strong and has more stars

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<v Speaker 1>than ever, and you know, it's been fantastic, so I

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<v Speaker 1>think that's a that's kind of a bump in the room.

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<v Speaker 3>So we've covered football, we've covered basketball, any other sports

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<v Speaker 3>that you're going to buy a team in.

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<v Speaker 1>No, I'm not in a cricket so I'm good.

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<v Speaker 3>But there's actually a lot to talk about it and

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<v Speaker 3>whether you're going to buy another team? Are you going

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<v Speaker 3>to buy another team?

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<v Speaker 1>Who knows?

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<v Speaker 3>Okay, all right, well let's move on because right now

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<v Speaker 3>we talk about Davos and Hall has been dominated by

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<v Speaker 3>incredible optimism. America is going to boom and Donald Trump

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<v Speaker 3>what's he going to do? Of course there's also overlay

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<v Speaker 3>of artificial intelligence. What's been your biggest takeaway about what

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<v Speaker 3>people are concerned about with the Trump administration?

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<v Speaker 1>Well, I think first of all, this this Davos is

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<v Speaker 1>all Trump, all AI. That's all people are talking about.

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<v Speaker 1>And the Trump issue is, you know, what's going to

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<v Speaker 1>happen with tariffs? You know, you're worried about tariffs? Is

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<v Speaker 1>worried about tariffs, What's going to happen with the Ukraine,

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<v Speaker 1>What's going to happen with the American economy and protectionism?

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<v Speaker 1>That's that's their worry. And on AI, you know, AI

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<v Speaker 1>is for real. It feels a little bit like you're

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<v Speaker 1>in nineteen ninety nine Internet boom. So there's a lot

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<v Speaker 1>of hype, but there's a lot of reality in AI,

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<v Speaker 1>and AI is going to change everything. I view AI

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<v Speaker 1>as almost building the railroads and the interstate highway system

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<v Speaker 1>in the US. We're going to need to have that

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<v Speaker 1>over the next twenty years or we're going to fall behind.

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<v Speaker 1>So I think it's a legitimate discussion on AI. And

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<v Speaker 1>they came out with the Stargate program, which I think

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<v Speaker 1>is fantastic because other countries are getting ahead. China's investing billions,

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<v Speaker 1>Ue is investing billions, Saudia's investing billions. I think the

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<v Speaker 1>US has to get out ahead of that trend and

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<v Speaker 1>it's going to affect everything over the next twenties. I'm

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<v Speaker 1>really excited about it.

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<v Speaker 2>As an investor. What's your approach to one of this?

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<v Speaker 2>How do you think about the opportunities you mentioned the

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<v Speaker 2>late nineties, it took a while to find out who

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<v Speaker 2>the ultimate winners would be. Are you expecting something similar

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<v Speaker 2>this time around?

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<v Speaker 1>It's going to be a little different because I look

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<v Speaker 1>at AID, you had winners like Google that were kind

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<v Speaker 1>of natural monopolies. There can be many variant of large

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<v Speaker 1>language models, so there can be a global large language model.

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<v Speaker 1>There can be probably four or five of those. But

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<v Speaker 1>now the real use is going to be vertical ones,

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<v Speaker 1>so tailoring models with the data specific data for say

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<v Speaker 1>healthcare specific models for transportation with transportation data in it.

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<v Speaker 1>So I think vertical AI models will be the ones

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<v Speaker 1>that start to impact the economy, and then the other

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<v Speaker 1>ones are going to grow and we need that infrastructure,

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<v Speaker 1>and then what's going to happen is from that you

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<v Speaker 1>need power. Fusion is being talked about and is around

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<v Speaker 1>the corner. All the fusion companies I look at are

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<v Speaker 1>getting close to actually generating energy. The models are showing

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<v Speaker 1>soon they're going to generate energy and build these large

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<v Speaker 1>tokmacs that's going to have to power all the centers

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<v Speaker 1>with all to get as the GPUs, because if you

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<v Speaker 1>look at the power users of AI, it could be

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<v Speaker 1>the entire power right now in the United States. So

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<v Speaker 1>I think this stargate program or program like it is

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<v Speaker 1>needed and we've got to match those other countries, and

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<v Speaker 1>that is going to create a virtual sloop of spending

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<v Speaker 1>building the infrastructure and be great for America and a

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<v Speaker 1>revolutionized healthcare.

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<v Speaker 3>Healthcare as well, I know that you've been very active

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<v Speaker 3>in that space, in particular, particularly in the speed that

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<v Speaker 3>it will take to put new prescription drugs on the

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<v Speaker 3>market using different machine learning techniques. I'm just wondering, is

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<v Speaker 3>that your main focus right now of investment when it

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<v Speaker 3>comes to AI the other regions that you think are

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<v Speaker 3>promising in the application in the near term, not just

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<v Speaker 3>so there's these.

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<v Speaker 1>Long term goals. Well, I'm focused on the health directs.

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<v Speaker 1>I think that's the number one. But it'll be helpful

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<v Speaker 1>in energy and finding energy and processing energy. It'll be

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<v Speaker 1>helpful in transportation, It'll be helpful. It's going to be

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<v Speaker 1>embedded in every business. And I think like liquid I,

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<v Speaker 1>AI were for invested in that doesn't require it's built.

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<v Speaker 1>As we talked about last year, they studied a worm's

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<v Speaker 1>brain in mid like, who would do that? There's three

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<v Speaker 1>hundred neurons in a worm's brain. I think that's fine.

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<v Speaker 1>I mean neurons do you think is in your brain?

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<v Speaker 1>Three hundred and one? I'm just kidding. The average person

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<v Speaker 1>has eighty six billion. You guys probably have eighty seven each.

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<v Speaker 1>But you can come on again. If they come out

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<v Speaker 1>with an AI system that requires eighty percent less power

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<v Speaker 1>to load it, and that means you can put it

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<v Speaker 1>on edge device, so to be on your phone. So

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<v Speaker 1>you're going to have, you know, your assistant on your phone.

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<v Speaker 1>This is going to start to be in all the phones.

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<v Speaker 1>It's going to kind of revolutionize the way our lives are.

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<v Speaker 3>One aspect of this Davos is so interesting is that

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<v Speaker 3>there's some real tensions to be resolved, especially as everyone's

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<v Speaker 3>talking about artificial intelligence. On the flip side, Donald Trump

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<v Speaker 3>talking about national security. He's talking about the chips in

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<v Speaker 3>the US that could potentially transmit data back to China

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<v Speaker 3>or one of our other adversaries or competitors. And I'm

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<v Speaker 3>just wondering as an investor, how you understand what's national

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<v Speaker 3>security and what isn't.

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<v Speaker 1>Well, it's difficult. You got to follow the government and

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<v Speaker 1>it changes all the time. I think in general, we

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<v Speaker 1>do need national security, but it has to be focused,

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<v Speaker 1>it has to have a purpose, and hopefully they'll have

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<v Speaker 1>rational people that decide, you know what that is.

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<v Speaker 2>Do you worry that some voices we'll get a biggest

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<v Speaker 2>site in the future in the private sector.

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<v Speaker 1>No, I don't worry because we have a system that

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<v Speaker 1>I think will work in the long term, and there's

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<v Speaker 1>going to be a lot off. There always has been

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<v Speaker 1>fighting of different companies for different things, and so we'll

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<v Speaker 1>get through it and hopefully we'll do the right thing.

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<v Speaker 1>We've got to Congress, We've we've got the court system

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<v Speaker 1>show in the United States is very stable. So I

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<v Speaker 1>do think we need cybersecurity and we need security in general.

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<v Speaker 1>Hopefully we can have a datante with China so we

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<v Speaker 1>don't have that going on. And I think Trump, you know,

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<v Speaker 1>wants to cut deals, you know, to move the economy forward,

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<v Speaker 1>and I think that'll be a good thing.

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<v Speaker 2>I'm showing a lot of Europeans have asked you on

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<v Speaker 2>your opinion on what the next four years it's going

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<v Speaker 2>to look like. What have you tell the Europeans when

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<v Speaker 2>you ask that question?

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<v Speaker 1>You know, I think the next four years the Europeans,

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<v Speaker 1>I've been in many meetings here with health ministers and

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<v Speaker 1>all sorts of ministers, and what they say is the

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<v Speaker 1>EU really isn't a full union. They use the same money,

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<v Speaker 1>but there's not an integrated capital market. There's not integrated

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<v Speaker 1>in anything. In terms of starting a business, you need

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<v Speaker 1>to fill out, you know, one hundred pages of forums

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<v Speaker 1>in Germany and different ones in Portugal. So many of

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<v Speaker 1>them talk to me and say they need to create

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<v Speaker 1>a twenty eighth state with a set of rules, a

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<v Speaker 1>virtual state with one set of rules to start a

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<v Speaker 1>business and one set of of a bankruptcy. Bankruptcy is

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<v Speaker 1>different in every country. You can't have a great capital

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<v Speaker 1>market if you're dealing with twenty seven different bankruptcy kills

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<v Speaker 1>or twenty different ways of doing things. So I think

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<v Speaker 1>it's a great idea to start a twenty eighth virtual

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<v Speaker 1>European state, and businesses can opt to be in that

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<v Speaker 1>or being one of the twenty seven. But it's hard

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<v Speaker 1>to be in both of those at the same time.

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<v Speaker 1>So the big advantage the US as is it is

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<v Speaker 1>one market. It is as one set of regulations, so

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<v Speaker 1>we have a leg up and hopefully we will make

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<v Speaker 1>that even better in the next four years.

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<v Speaker 3>I want a return to where we began, which is sports,

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<v Speaker 3>and my sport.

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<v Speaker 1>Which is auctions.

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<v Speaker 3>I'm looking at bond auctions, which I think is like

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<v Speaker 3>a R caught it time. Well, I know, hold on

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<v Speaker 3>a second, No, I'm serious, because I wonder how much

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<v Speaker 3>you're watching what so many people here are worried about,

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<v Speaker 3>which is that all of this optimism, all of this

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<v Speaker 3>you know, happy talk about getting together and really focusing

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<v Speaker 3>on growth could get really stein made if you start

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<v Speaker 3>to see bond yields climb and you start to see

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<v Speaker 3>the fiscal pressures really come into play. How concerned are

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<v Speaker 3>you about that.

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<v Speaker 1>I'm very concerned. You know, all the data would show

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<v Speaker 1>when you have an increase in the money supply as

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<v Speaker 1>big as it's been in the last five years and

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<v Speaker 1>a large deficit, that's going to cause higher interest rates

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<v Speaker 1>and inflation. Those kind of go hand in hand. So

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<v Speaker 1>my biggest worry is inflation going to get out of

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<v Speaker 1>control and keep those interests up there. I think house

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<v Speaker 1>mortgages are costing seven percent. We definitely have to increase

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<v Speaker 1>the supply and they're looking at programs to do that.

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<v Speaker 1>But with seven percent mortgages, that's not great for growth.

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<v Speaker 3>You mentioned nineteen ninety nine, and we all know what

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<v Speaker 3>happened after nineteen ninety nine, and there is this feeling

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<v Speaker 3>that there needs to be a washout and some of

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<v Speaker 3>the startup companies to say deal with technology that continues

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<v Speaker 3>to evolve. Is that the big concern that this kind

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<v Speaker 3>of increase in rates could really catalyze that kind of washout.

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<v Speaker 3>Is that what you're keeping your eye on.

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<v Speaker 1>Increase in rates definitely catalyzes washouts because when money is free,

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<v Speaker 1>there are no washouts. Right, we had free money for

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<v Speaker 1>a long period time. Now. The good news is for

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<v Speaker 1>most of my life, too long life, most of my life,

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<v Speaker 1>regist rates have been t bills have been five percent,

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<v Speaker 1>five and a half percent, So it's not anomalist. But yeah,

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<v Speaker 1>that is the fear. We've already seen a lot of

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<v Speaker 1>the company's valuations go down a good white boats, So

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<v Speaker 1>I think we're kind of through that. I think there

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<v Speaker 1>is a lot of hype on AI and probably some

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<v Speaker 1>some fundings at very high levels. But I don't I don't.

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<v Speaker 1>I don't see it like it was in ninety nine,

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<v Speaker 1>where everything across the board was crazy. I used to

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<v Speaker 1>walk into a room in San Francisco. They give me

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<v Speaker 1>a term sheet and they say, we have a company

0:10:17.679 --> 0:10:19.839
<v Speaker 1>that's going to internet. Company is going to reduce the

0:10:19.880 --> 0:10:23.240
<v Speaker 1>supply chain cost of medical equipment. That we're valuing the

0:10:23.240 --> 0:10:25.360
<v Speaker 1>company at one hundred million and has no revenues. This

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<v Speaker 1>is the idea, and you have two hours to decide

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<v Speaker 1>do you want to invest ten million, one hundred million valuation.

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<v Speaker 1>I'll pass. I was, I was fall out of my chair.

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<v Speaker 1>This is a real story. I said, thank you very much.

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<v Speaker 1>And nine and ninety nine of those went bankrupt, and

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<v Speaker 1>then we had Google and a few other ones that

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<v Speaker 1>did well. That's not that's not the situation we're in

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<v Speaker 1>right now.

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<v Speaker 2>Stay you know, John, It's going to say great to

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<v Speaker 2>see you, good luck to all your sports teams. As

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<v Speaker 2>we say for without a doubt, Steve Palu can Bank

0:10:49.600 --> 0:10:50.800
<v Speaker 2>Capital and Force of Milian