Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: I'm Caroline Hyde at Bloomberg's World headquarters in New York.
Speaker 3: And I'm Ed Ludlow in San Francisco. This is Bloomberg
Speaker 3: Technology coming up.
Speaker 2: We count you down to the FED rate decision and
Speaker 2: get a real look of you on the state of
Speaker 2: the banking system and the FinTechs have helped speed up
Speaker 2: deposit flight adding to crisis concerns.
Speaker 3: We're going to dive deep into the world at Venture
Speaker 3: Capital and speak with Sequoia general partner Constantine Beula and
Speaker 3: Coastladventures founder Vinode Coastler.
Speaker 2: Plus how malware operators are caching in on the AI height.
Speaker 4: To target your businesses.
Speaker 2: We'll talk CHATCHYPT and cybersecurity with let Us.
Speaker 4: Head of Security later this hour.
Speaker 2: Let's turn towards, of course, what else the Federal Reserve
Speaker 2: is really trying to navigate how you can hight rates
Speaker 2: amid what is an ongoing banking crisis in part brought
Speaker 2: through of course higher interest rates. Also, though, is there
Speaker 2: a bit of an acceleration of some of these crises
Speaker 2: because of the ease with which we can pull cash
Speaker 2: out of our deposits. Joining us now to discuss all
Speaker 2: of this cannis known us OURGP management consultant.
Speaker 4: You've got what.
Speaker 2: Sixteen years in career of risk management, you worked at
Speaker 2: the FDIC. Canis I put it to you of how
Speaker 2: much of a worry is at the moment fintech is
Speaker 2: the ability with which we can withdraw our deposits from banks.
Speaker 2: Does that sort of speed up some of the anxiety
Speaker 2: and the crisis cycles we're seeing?
Speaker 5: Yeah, thanks for having me. It certainly plays a role.
Speaker 5: I think we have fintech technology to pull out our
Speaker 5: deposits very quickly. But what really is the problem with
Speaker 5: this particular banking crisis is the high concentration of uninsured
Speaker 5: deposits we have banks. Silicon Valley Bank had over ninety
Speaker 5: percent exposure to uninsured deposits. And by their very nature,
Speaker 5: uninsured deposits are not sensitive to the FED insurance, the
Speaker 5: FDIC insurance. Rather, they're very opportunistic, so they move fast
Speaker 5: on to a better opportunity, or they get spooked, and
Speaker 5: they kind of all move in tandem. And that's what
Speaker 5: we saw in this most recent banking crisis.
Speaker 2: Are you expecting a change to whether all deposits end
Speaker 2: up being ensured by the FDIC.
Speaker 5: Well, if all deposits end up being insured by the FDIC,
Speaker 5: that means that the FDIC bank fees. The fees that
Speaker 5: the FDIC charges for deposit insurance is going to have
Speaker 5: to increase and is going to have to be distributed
Speaker 5: differently among banks. I mean, I suppose that's an option,
Speaker 5: but I think that there are so many more prudent
Speaker 5: decisions that can be made beforehand to improve revision, including
Speaker 5: the use of technology and supervision, such that we don't
Speaker 5: have to ensure all deposits. It kind of really doesn't
Speaker 5: make sense when there are so many other interim things
Speaker 5: that you can do.
Speaker 1: The regulators can do.
Speaker 5: And if you've read their most recent reports by both
Speaker 5: the FED and the FDIC, they admitted their shortfalls. They
Speaker 5: admitted their short but I think that that can be
Speaker 5: ameliorated with the use of technology, among other things.
Speaker 2: Interesting ed almost technology at the heart of this, but
Speaker 2: also what's at the heart is the fact that we
Speaker 2: have neobanks fintech able to offer higher returns. ED to
Speaker 2: that extent, we're seeing a bit of a stampede. It
Speaker 2: keeps being the watchword.
Speaker 3: Yeah, stampede or herd mentality. I mean, kend this. I
Speaker 3: go back to what happened with SVB and more recently
Speaker 3: with First Republic, that it's an issue of confidence, right,
Speaker 3: Depositors lose confidence and pull their money. The point that
Speaker 3: Caroline raised this morning is so smart that now you
Speaker 3: have so many means technologically speaking to transfer funds. I
Speaker 3: just want you to try and give us some granularity
Speaker 3: on how much that has changed the game. How much
Speaker 3: is contributed through the risk of a bank run.
Speaker 5: Oh, I think it's contributed greatly to the risk. I
Speaker 5: mean you can have a bank run from your cell phone,
Speaker 5: as kind of what you're suggesting. Back in the olden days,
Speaker 5: people stood in line and waited for the banks to
Speaker 5: open in order to pull out their physical cash. Now
Speaker 5: you can have a bank run from your living room.
Speaker 5: So I don't think payments are not going to slow down.
Speaker 5: Payment technology, fintech technology, that's not going to slow down.
Speaker 5: I think as a result of that, risk managers need
Speaker 5: to be more prudent with regard to their concentration and
Speaker 5: their distribution to exposures of things like uninsured deposits, so
Speaker 5: you're going to continue to have advances and payments. I
Speaker 5: think they're healthy for the economy in a lot of ways.
Speaker 5: They make our lives as consumers very convenient. But that's
Speaker 5: not going to change, and we're still going to be
Speaker 5: exposed to the risk of rapid withdrawals from bank and
Speaker 5: financial institutions, given our ease with which we can do it.
Speaker 3: Candice, what have you been advising your clients since Silicon
Speaker 3: Valley collapse, since First Republic was acquired by JP Morgan.
Speaker 3: What have you told them to do from a tech perspective.
Speaker 5: Yeah, I think that you know, this is unlike our
Speaker 5: last crisis, where it was a credit crisis. This is
Speaker 5: an asset liability mismatch. And we always advise our clients
Speaker 5: even despite this, and admittedly we've worked with the more
Speaker 5: larger and mid size clients in my particular space, but
Speaker 5: we always advise them to stay on top of stress
Speaker 5: testing and be very prudent about managing your risk and
Speaker 5: managing your exposures to shift in the macroeconomic market. Look
Speaker 5: for macro hedges to whatever it is that you're taking
Speaker 5: exposure to. We're still giving the same good risk management
Speaker 5: advice despite what's going on here in the market, because
Speaker 5: these things were foreseen and they continue to be able
Speaker 5: to you can you can gauge them, and that's what
Speaker 5: we're revising our big clients to do.
Speaker 6: Right.
Speaker 3: Candice, knowness of our GP, thank you so much for
Speaker 3: your time. Now coming up what to make of the
Speaker 3: rapid evolution in the generative AI space, will bring you
Speaker 3: that conversation with Sequoia Capital partner an AI expert, Constantine Buler.
Speaker 7: Caroline.
Speaker 2: Yeah, and of course we have got to keep our
Speaker 2: eyes on all things chips, on all things MD. After
Speaker 2: a really tepid set of numbers coming out of what
Speaker 2: is the second biggest PC chip maker, and we know
Speaker 2: the woes, we know the concern about the PC market
Speaker 2: we saw in an Intel. We move it to AMD,
Speaker 2: but all eyes there from Qualcom after the bells, as
Speaker 2: that particular chip maker has really diversified, perhaps away.
Speaker 4: From just PCs. We're off by more than eight and
Speaker 4: a half percent.
Speaker 2: As a Bloomberg, let's talk artificial intelligence with AI. Jeffrey
Speaker 2: hidden Hinton leaving Google and adding his voice to a
Speaker 2: growing chorus of experts really warning about the dangers of AI.
Speaker 4: What does this mean?
Speaker 2: His departure for Alphabet's efforts and its Deep Mind AI
Speaker 2: lab or Deep Mind CEO Demis Hasabis sat down with
Speaker 2: Bluemberg Originals and talked about how the industry is not
Speaker 2: just losing people but also attracting a lot of talents.
Speaker 3: To take a listen, it's an incredibly dynamic field right now,
Speaker 3: all sorts of new things happening, research going on, you know, literally,
Speaker 3: I would say in the last six months, probably hundreds
Speaker 3: of thousands of people, very talented engineers and others, have
Speaker 3: got into the field. You know. I think they've come
Speaker 3: from many other fields and they've decided maybe they weren't
Speaker 3: interest in AI for long, you know, until very recently,
Speaker 3: but they've decided this is a this is a great
Speaker 3: growth point. And so that's brought in a lot of
Speaker 3: energy into the space and a lot of dynamic ideas.
Speaker 3: And so even for us, who are you know, right
Speaker 3: in the middle of it, it's hard to keep track.
Speaker 7: Of all of that at once.
Speaker 3: So you have to try and take into account and
Speaker 3: look at the main trends and the main threads and
Speaker 3: sort of focus on that. I would say, but it's
Speaker 3: almost like you need an AI system to help you
Speaker 3: keep track of all of the developments that are going on.
Speaker 3: Google deep Mind CEO Demis Hasavis and you can watch
Speaker 3: more of that interview on Bloomberg's Originals AI IRL and
Speaker 3: stream new episodes Wednesdays eight thirty pm Eastern five thirty
Speaker 3: Pacific time.
Speaker 7: Let's keep the.
Speaker 3: Conversation going about AI with Sequoia Capital partner Constantine Buler,
Speaker 3: who's been immersed in the world of AI for a
Speaker 3: decade already. We've got some catching up to do with you.
Speaker 3: That was an interesting move because the history of AI
Speaker 3: is very closely tied with deep Mind. They've kind of
Speaker 3: brought Google and deep Mind together. You heard Demis there.
Speaker 3: Can I just get your reaction to the landscape and
Speaker 3: that in particular.
Speaker 8: Absolutely, First, thanks for having us to pleasure to be
Speaker 8: here always. So we are in the middle of an
Speaker 8: incredible revolution in AI. It is probably most similar to
Speaker 8: the personal computer revolution of forty years ago, and Demis
Speaker 8: alludes to this briefly in his comment when he says
Speaker 8: we're in the middle of something very big here. Why
Speaker 8: do I say personal computer revolution because of the impact
Speaker 8: it's having. Imagine, right before the personal computer revolution, you
Speaker 8: were a typist and every time you made a mistake
Speaker 8: or you had to make a change, you'd throw away
Speaker 8: the paper. You have to put the type exactly exactly.
Speaker 8: You throw away the paper, you have to put a
Speaker 8: new one in and you have to start all over again.
Speaker 8: And then the personal computer comes around and everything is faster,
Speaker 8: it's easier, it's way more streamlined. But there are some changes,
Speaker 8: there's some retraining that needs to be done. You have
Speaker 8: to learn this new technology. Same kind of thing is
Speaker 8: happening here in AI. So there's this massive potential. We're
Speaker 8: right in the middle of it. It's been the cornerstone
Speaker 8: of my career for thirteen years. Sequoya, it's been a
Speaker 8: cornerstone for us for thirty years, and it is just
Speaker 8: the early innings of what's going to be very.
Speaker 6: Brings us to hear in now though.
Speaker 3: So you are principally a seed stage and series A investor. Yes,
Speaker 3: you know there are many that echo your sentiments. How
Speaker 3: do you actually invest? Yes in that moment.
Speaker 6: So the first thing is founder driven, Okay.
Speaker 8: Founders are always the lifeblood of the venture capital industry,
Speaker 8: the technology industry at large, and definitely the AI industry.
Speaker 8: So think back to when Sequoia started its venture in ai,
Speaker 8: which was nineteen ninety two when we backed at the
Speaker 8: Series A, the first investment in arguably, if not the
Speaker 8: most important AI hardware company in the world in Nvidia.
Speaker 8: That was a founder driven investment. That was a founder
Speaker 8: driven investment because Jensen Wang was an exceptional engineer from
Speaker 8: a previous Sequoia company, So founder driven as always with Sequoia,
Speaker 8: and then in nineteen ninety nine, arguably the most important
Speaker 8: at maturity AI company, Google was also a Sequoia investment,
Speaker 8: and that brings us all the way to today, which
Speaker 8: is a lot of great AI companies that are coming up,
Speaker 8: hundreds at this point that we're meeting. We're excited to
Speaker 8: get to know and finding the most brilliant founders for
Speaker 8: what they're building in the future is what Sequoia is
Speaker 8: all about.
Speaker 3: You know, Caroline's Constantine's point. We see that activity on
Speaker 3: the show every single day, the hundreds of new companies
Speaker 3: that he's talking about.
Speaker 6: That energy.
Speaker 3: It came from open Ai in November of last year,
Speaker 3: and then Microsoft's investment at the beginning of the year.
Speaker 4: And of course the Quoia backs open Ai.
Speaker 2: But I'm interested to dig in hugging Face and then
Speaker 2: others in your portfolio. Constantine, it feels as though the
Speaker 2: rest of the VC community is rushing. It feels that
Speaker 2: regulators are having to be forced to rush. It feels
Speaker 2: as though this has taken us all by complete surprise.
Speaker 2: But you've been studying at Stanford AI. As you say,
Speaker 2: it's been Cornerstone for thirteen years. Why have we suddenly
Speaker 2: been sort of had the rug pulled a bit?
Speaker 6: Okay, so you're exactly right, Caroline.
Speaker 8: This is actually decades in the making, and for us,
Speaker 8: it's sekoya for me, for our team.
Speaker 6: There's.
Speaker 8: This is something that we've been training for and excited
Speaker 8: for for decades. But there is a big, exciting change
Speaker 8: and it is exactly what you described, which is this
Speaker 8: new user interface. When I talk about the user interface,
Speaker 8: I'm harkening back to the personal computer when you had
Speaker 8: the graphical user interface come out, and that was the
Speaker 8: advent of the first Microsoft Windows, that was the advent
Speaker 8: of a lot of the first Apple computers. And the
Speaker 8: point of the first graphical user interface in the personal
Speaker 8: computer revolution is that anyone could just use their mouse
Speaker 8: and click, as opposed to the old terminal based MS
Speaker 8: doss that only engineers could use. Similarly, the lms that
Speaker 8: open Ai and others have introduced make it so that
Speaker 8: anyone can use AI.
Speaker 6: You don't have to be an AI engineer.
Speaker 8: That's why we're in an incredibly important moment because all
Speaker 8: of a sudden, AI is accessible to everyone, and that's
Speaker 8: what shows.
Speaker 2: The data which it runs on is still in many
Speaker 2: ways not perfect. BI sees within how are you thinking
Speaker 2: about the startups you invest in and the overall regulatory
Speaker 2: environment that's going to have to play catch up in
Speaker 2: some way.
Speaker 8: Yes, no doubt, it's the data and you're referring to
Speaker 8: hallucination is the term that's often used. This is absolutely
Speaker 8: top of mind for the enterprises that we're talking to,
Speaker 8: and there's several ways that are currently being addressed from
Speaker 8: an engineering and a company building perspective to improve that.
Speaker 8: And in terms of policy, there's a couple responses. One
Speaker 8: is to step back and say hey, too powerful, too dangerous,
Speaker 8: not me. Another is to just say hey, let it run.
Speaker 8: And the third way, which is what we take at Sequoia,
Speaker 8: what I believe is the right approach, is to say, hey,
Speaker 8: this is incredibly powerful, let's be in evolved let's take
Speaker 8: actions to help form it safely. Let's let's be a
Speaker 8: part of this evolution of this technology so that it
Speaker 8: can be a powerful force of good for humanity.
Speaker 2: You're sounding positive, you're sounding optimistic. In fact, we went
Speaker 2: to our own viewers. We did a Twitter poll, as
Speaker 2: we tend to do every single day, conserting. Just take
Speaker 2: a look at the results, because we ask them whether
Speaker 2: they're pessimist or optimists around AI great for humanity.
Speaker 4: Actually, Ed.
Speaker 3: Said yes, yeah, yeah, And look, they're too early to tell.
Speaker 3: We hear it so often, so constant. You've been in
Speaker 3: this field for a long time. Broadly society is catching up.
Speaker 3: His guest Caroline's point. There's a parallel I want to
Speaker 3: draw with crypto because you are been an active investor
Speaker 3: in the crypto industry. I think the latest was edX markets, right,
Speaker 3: that is a froth and bubble burst cycle. Why will
Speaker 3: we not see the same thing play out here in AI?
Speaker 8: Yes, so first I am a believer in crypto as well,
Speaker 8: But that is a separate trend for you know, further discussion,
Speaker 8: because there's a lot of depth there too on AI.
Speaker 8: This too early to tell point is a critical point,
Speaker 8: and I encourage your audience to use AI and to
Speaker 8: actually start making it a part of their lives. You know,
Speaker 8: there's this kind of trite quote which is AI is
Speaker 8: not going to take your job.
Speaker 6: A human using.
Speaker 8: AI will, and I think that is a lot of
Speaker 8: there's a lot of truth to that. The action that
Speaker 8: should be taken is to start harnessing the power of AI.
Speaker 8: If you're not using AI tools, try them out, see
Speaker 8: how they can make you better internally.
Speaker 6: It's aquoia.
Speaker 8: We talk a lot about augmented intelligence as opposed to
Speaker 8: artificial intelligence.
Speaker 2: Constantine absolutely great to have you. Thank you, Saquiah Capital
Speaker 2: partner Constantine Bula with the optimistic point of view.
Speaker 9: There.
Speaker 7: Time for Tokien tech.
Speaker 3: Across the pond, the United Kingdom's Competition of Markets Authority
Speaker 3: has officially started a merger inquiry into Adobe's twenty billion
Speaker 3: dollar purchase of startup Figma. The agency set a June
Speaker 3: thirtieth deadline for its phase one decision. The deal, of course,
Speaker 3: also ander scrutiny from regulators here in the US. Now,
Speaker 3: TSMC is drawing up plans to build its first chip
Speaker 3: fabrication plant in Europe. According to sources, the chip maker
Speaker 3: is in talks with partners to spend as much as
Speaker 3: eleven billion dollars on the new plant, which would be
Speaker 3: based in Saxony, Germany. And finally, Goldman Sachs is just
Speaker 3: named Kim Posnet as Global head of TMT Banking. According
Speaker 3: to a company memo, she is a veteran deal maker
Speaker 3: whose recent work includes Endeavors Group Indeavor Group's nine point
Speaker 3: three billion dollar takeover of WWE Carrot.
Speaker 4: A great array of news there.
Speaker 2: Meanwhile, let's dig into another part of the news agenda
Speaker 2: that we've got to touch. Because the latest in the
Speaker 2: war on Ukraine, Russia actually saying it is able to
Speaker 2: avert an attack by a pair of drones aimed to
Speaker 2: hit President Vladimir Putin's residence in Most Tuesday night, and
Speaker 2: blame was immediately placed on Ukraine, but without providing evidence.
Speaker 2: State Department Secretary Anthony Blincoln said that he couldn't validate
Speaker 2: the reports and warned to take any Kremlin claims with.
Speaker 4: A large shaker of salt. For now.
Speaker 2: Selinsky has said that this is untrue. Welcome back to
Speaker 2: Blue Blow Technology. I'm Caroline Hyde and New.
Speaker 3: York and I met Lovelo in San Francisco.
Speaker 2: Turning back now to AI ed, of course, we've got
Speaker 2: to do it. Microsoft chief, in fact, the chief economist
Speaker 2: for that particular company, Michael Schwartz, was out with a
Speaker 2: warning about the extent to which artificial intelligence will actould
Speaker 2: be dangerous in the hands of bad actors. He spoke
Speaker 2: earlier at the World Economic Forum panel in Geneva.
Speaker 10: I'm quite confident that yes, AI will be used by
Speaker 10: bad actors, and yes it will cause real damage, and
Speaker 10: yes we have to be very careful and very big
Speaker 10: to avoid they all the means possible, we have to
Speaker 10: put saveguards.
Speaker 2: Let's talk about that mix of cyber and AI. Meta
Speaker 2: out with its quarterly threat report, which showed that malware
Speaker 2: operations using for example, chat GPT, AI help tools as
Speaker 2: phishing links to target businesses and consumers. Joining us now
Speaker 2: as metas head of Security Policy, Nathaniel Gleischer, I just
Speaker 2: want to dig into how new malware strains you're finding
Speaker 2: are basically including posing as chatchypts, browser extensions or productivity tools.
Speaker 2: It builds as though malware bad actors are getting in
Speaker 2: on the AI hype.
Speaker 1: Yeah, thank you so much for having me. I'm here
Speaker 1: today because we are releasing a series of threat reports
Speaker 1: on threats we've countered around the world will help keep
Speaker 1: people safe. One of the threats that I think is
Speaker 1: particularly useful for this business audience is malware, and to
Speaker 1: be thinking about malware are malicious tools that are designed
Speaker 1: to look innofant, but focus on compromising personal devices, compromise
Speaker 1: in your accounts, and we know that they target businesses.
Speaker 1: And as you say, malware developers always try to get
Speaker 1: it on buzzwords. They're looking for ways to trick people
Speaker 1: into downloading malware. We've seen to do it with cryptocurrency
Speaker 1: in twenty twenty two. They try to get people to
Speaker 1: click on links suggesting that you would get access to
Speaker 1: new cryptocurrency apps. Today they're trying to use generative AI,
Speaker 1: suggesting you could click on a link, you might get
Speaker 1: access to chat, GPT or another genderate AI tool, and
Speaker 1: actually you'd be downloading malware.
Speaker 2: Fascinating just who within a business is the most vulnerable,
Speaker 2: who are going to be being sent these links.
Speaker 1: I think businesses should be conscious that malware actors target indiscriminately.
Speaker 1: They will target across the business, including maybe people who
Speaker 1: are connected to prominent leaders or individuals that might just
Speaker 1: be operating in the business and for example, maintaining or
Speaker 1: administering the businesses social media pages. The good news for
Speaker 1: all of this, though, is that there's a number of things,
Speaker 1: fairly simple things that people can do and businesses can
Speaker 1: do to keep themselves safe, whether that's turning on two
Speaker 1: factor authentication or using strong and unique passwords across their
Speaker 1: online accounts. And we are rolling out a series of
Speaker 1: new protections for businesses to help them strengthen their defenses
Speaker 1: on meta and also to help them protect against malware
Speaker 1: wherever it might target them, whether that's on their devices,
Speaker 1: on their other online accounts, or on our platforms.
Speaker 3: The fact out this is a story about bad actors
Speaker 3: posting ururls that purport to take you to attract GPT
Speaker 3: like product. Right, that's what you've detected. What I want
Speaker 3: to know is have you detected threat actors who are
Speaker 3: actually using the technology using generative AI to make the
Speaker 3: content they post on your platforms harder to detect.
Speaker 1: We haven't seen significant sophisticated campaigns relying on genitive AI today.
Speaker 1: We do know that bad actors try to abuse every
Speaker 1: new piece of technology, so we expect that they're going
Speaker 1: to try to abuse generative AI, just like they've tried
Speaker 1: to abuse other innovations in recent years. That's why it's
Speaker 1: particularly important that defender teams at Meta and at other
Speaker 1: companies around the world, including in government and civil society,
Speaker 1: are thinking about how these abuses might happen and steps
Speaker 1: we can take that protect people and counter the bad actors.
Speaker 3: Cisco warned that AI would make phishing attacks harder to detect.
Speaker 3: Do you share Cisco's concern.
Speaker 1: We've seen some limited examples of people using AI based
Speaker 1: tools to, for example, create profile pictures that of people
Speaker 1: who don't exist but look realistic. We've seen some cases
Speaker 1: of people trying to use generative AI tools to produce
Speaker 1: deep fake videos. So these threats are certainly out there,
Speaker 1: and it's important to be ready to counter them. That's
Speaker 1: why you need to have analyst teams that hunt for
Speaker 1: this type of thing. And the other side of generative
Speaker 1: AI is that generative AI has a lot of incredibly
Speaker 1: positive potentials, and one of them is helping defenders who
Speaker 1: are looking to protect public debate improve their detection and
Speaker 1: response systems so we can keep people safe.
Speaker 2: Does it particularly matter where it's coming from, Nathaniel, you
Speaker 2: identify Ductail in particular, that's a Vietnam based cyber criminal operation.
Speaker 4: Is a lot coming from there.
Speaker 2: Can you see where a lot of this attack is
Speaker 2: stemming from?
Speaker 1: Malware development happens all over the world, and it can
Speaker 1: be hard to tell exactly where the actors are where
Speaker 1: they're coming from. When we are able to identify a
Speaker 1: particular company or a particular actor who's behind it, we'll
Speaker 1: take additional steps to deter them and impose cost on them. So,
Speaker 1: for example, for some of the people developing this malware,
Speaker 1: we referred them to law enforcement for further investigation, and
Speaker 1: we send cease and assist letters. We often see or
Speaker 1: sometimes see companies that try to seem legitimate but also
Speaker 1: operate on the dark side of all of this and
Speaker 1: try to share malware. And for companies like that, you
Speaker 1: can impose a lot of cost on them by highlighting this,
Speaker 1: by exposing what they're doing, and by bringing law enforcement
Speaker 1: and government to bear against them.
Speaker 2: Of course, what's thing is, we're wondering about a very
Speaker 2: global cyber attack threat. We're thinking and talking to a
Speaker 2: global company that of course has rechanged its name, talking
Speaker 2: itself about the metaphors, but also deeply ingrained in investing
Speaker 2: in AI in some way.
Speaker 8: Ed.
Speaker 3: Yeah, I mean if Aaniel I covered Meta earnings, Mark
Speaker 3: Zuckerberg really emphasizing Meta's competence in the field of AI. Right, So,
Speaker 3: how do you and the security team use artificial intelligence
Speaker 3: as a tool? How can it help you?
Speaker 1: GENERAI is a novel and fast development technology. There are
Speaker 1: a lot of places where I can have real impact medicine, education,
Speaker 1: But I do think one of the interesting opportunities is
Speaker 1: in what we would call integrity, trust and safety, keeping
Speaker 1: people safe. You can quickly be able to identify and
Speaker 1: track and counter threats around the world. When we're moving
Speaker 1: in a global environment where there are many many countries,
Speaker 1: and there are billions of users, and there are many
Speaker 1: threat actors. Everything we can do to help move more
Speaker 1: quickly encountering these threats is effective. We work to pair
Speaker 1: those types of automated tools with expert human investigators who
Speaker 1: can track and counter the most sophisticated threat actors and
Speaker 1: tinys together. Pairing them up has been most effective encountering
Speaker 1: the bad Guess all.
Speaker 3: Right, Nathaniel Gleischer and Meta, thank you for bringing us
Speaker 3: your latest report. Another story that we're following TikTok's head
Speaker 3: of trust and safety for the US is leaving the company.
Speaker 3: The senior official in charge of ensuring user safety is
Speaker 3: departing amid increased pressure for the US government to ban
Speaker 3: the app. Eric Hahn had been one of the most
Speaker 3: prominent officials in TikTok's efforts to convince lawmakers that the
Speaker 3: app is safe for US users.
Speaker 6: Carolyne I.
Speaker 2: Meanwhile, look coming up, we're more on tech, more on
Speaker 2: competition between China and the US.
Speaker 4: With someone who calls it the.
Speaker 2: Most important war in the next two decades, the techno
Speaker 2: economic war would of course be joined one another than
Speaker 2: Koslaventure's founder Venov Kosla. Time now for our VC round
Speaker 2: up and starting with LinkedIn co founder and Read Hoffman
Speaker 2: and DeepMind co founder Mastuffa Sulliman, who have their own
Speaker 2: AI startup. Who would have thought, And they're rolling out
Speaker 2: a chatbot called PIE, which stands for Personal Intelligence and
Speaker 2: it's intended to serve as a supportive personal companion that
Speaker 2: gives friendly advice.
Speaker 4: Meanwhile, let's look at the VC firm Accel.
Speaker 2: It's refocusing its India Accelerator program on who.
Speaker 4: Guessed at AI startups?
Speaker 2: Now the firm will choose as many as half a
Speaker 2: dozen early stage startups to fund, to mentor in that
Speaker 2: starting this month, is also targeting companies that use technology
Speaker 2: to make conventional industrial processes all the more efficient.
Speaker 3: Ed let's stick with all things bench capital, things AI.
Speaker 3: With Coast the ventures founder Vinode Coaster, who joins us
Speaker 3: for today's VC Spotlight here in San Francisco, Let's go
Speaker 3: to AI. It's all that anyone wants to talk about.
Speaker 3: I mean open ai was the first big check that
Speaker 3: he wrote, right, and.
Speaker 9: We wrote the first very large check in open ai
Speaker 9: that we've done, Yes, first venture capital firm, along with
Speaker 9: some individuals.
Speaker 3: So fast forward to present day. There is a hype
Speaker 3: cycle around US Fisher Intelligence and half of your field
Speaker 3: of vcpaers talk about, well, we've been doing this for
Speaker 3: a decade, and then half getting into it, and you
Speaker 3: how do you assess what's happening?
Speaker 9: Well, everybody wants to get on the bandwagon because it
Speaker 9: is a major trend, and it is a major trend,
Speaker 9: so not surprising people claiming they've been doing it for
Speaker 9: a decade. I wrote about it extensively about ten years ago,
Speaker 9: and then four years ago we invested in open ai.
Speaker 9: Five six years ago, we had a whole bunch of
Speaker 9: other startups we invested in in the same area.
Speaker 7: And so it is an exciting trend.
Speaker 9: It is hard to predict exactly how fast it is
Speaker 9: developing or how fast it will develop. Every day you
Speaker 9: see new changes, but it is exciting, and it's exciting.
Speaker 7: From both a business point of view.
Speaker 9: As well as the technology capability point of view.
Speaker 3: Is open AI the only game in town? Is it
Speaker 3: just a clear leader in this field right now?
Speaker 9: No, in America, there's a lot of interesting startups in
Speaker 9: this area. Google of course is a very credible player,
Speaker 9: and then there's other startups that are credible too, trying
Speaker 9: to make a go at it. I think the leader
Speaker 9: always has a huge advantage.
Speaker 2: What about leadership coming from China, because I know you
Speaker 2: keep a keen eye on what you really see as
Speaker 2: a competitive threat, the new war in the next couple
Speaker 2: of decades, techno economic.
Speaker 9: Oh absolutely, I probably worry more about a Chinese AI
Speaker 9: doing bad things than anything to do with AI itself
Speaker 9: going sentient or the kinds of things a lot must
Speaker 9: talks about. Not that that's not a concern. China is
Speaker 9: going to be a big enemy in this. I believe
Speaker 9: we are in a technoeconomic war with China for economic
Speaker 9: dominance and hence dominance of political systems to go with it.
Speaker 2: Okay, So do the risk reward for us here at
Speaker 2: the moment or balance the risks when you're talking to
Speaker 2: regulators as you have done if you talk to people
Speaker 2: in power. You've been over there in Washington. You had
Speaker 2: coming together of course the Hell and Valley Forum, where
Speaker 2: you gathered vcs and tech community to talk to Well, government,
Speaker 2: do you want them to regulate how we use AI
Speaker 2: in the wild in the US at the moment? Or
Speaker 2: are you more worried about the regulation of China and
Speaker 2: money flowing there to build their own AI.
Speaker 9: Well, I'm much more worried about the competitive picture with
Speaker 9: China than about regulation here. I think it's too early
Speaker 9: to regulate AI. We don't know enough about it. I
Speaker 9: do think we should heavily fund safety research, especially in
Speaker 9: the universities and third parties, but regulating it would be
Speaker 9: a real mistake and put us behind China in the race.
Speaker 2: And the race it does feel is something that vcs
Speaker 2: that Peter til that Venola you're talking about ed and
Speaker 2: also a relationship that's being built a little bit more
Speaker 2: firmly between DC and Silicon Valley.
Speaker 4: Where you sit, Yeah, I think for me.
Speaker 3: You know, the question Vinode is what was the upshot
Speaker 3: of the Hill and Valley forum. You know that we
Speaker 3: reported on it. We discussed about the relationship between DC
Speaker 3: and Silicon Valley.
Speaker 6: What has happened as a result.
Speaker 9: Well, there's clearly a lot of interest in this question,
Speaker 9: not only AI and AI regulation, but equally importantly on
Speaker 9: our AI race with China. My interest is highlighting how
Speaker 9: important that issuers and how much we should focus on
Speaker 9: the race with China for technology supremacy here. I do
Speaker 9: think there'll be multiple players, but I do think there
Speaker 9: will be winners that take a disproportionate part of the
Speaker 9: economic pie. And I think the US model is well
Speaker 9: set up for it. But it's not obvious that we
Speaker 9: can win or we will win in twenty years from now.
Speaker 3: He said economic pie. So I'm going to do a
Speaker 3: small pivot. There is a FED meeting today. We expect
Speaker 3: a twenty five basis point hike. We talk daily about
Speaker 3: tighter financial conditions. VC of your experience in your scale,
Speaker 3: how does that impact the ecosystem that you are operating?
Speaker 7: In well fed.
Speaker 9: Rate hikes affect short term things. You know what we
Speaker 9: invest in open AI four years ago. We don't expect
Speaker 9: liquidity for six, seven, eight years, So I'd have to
Speaker 9: predict the market in twenty thirty and the federate in
Speaker 9: twenty thirty to really have it impact our.
Speaker 7: Very popular within this organization, if you could.
Speaker 9: So, my goal is really to focus on what adds
Speaker 9: substantial societal value and because of that economic value and
Speaker 9: what will be true in terms of real value active
Speaker 9: society in twenty thirty if I'm going to make good investments.
Speaker 9: So our focus is much longer term than short term
Speaker 9: interest rate types and not it's not that enable more
Speaker 9: or less financing to happen in the interim, So we
Speaker 9: do pay attention to it, but mostly we ignore it.
Speaker 3: Yeah, financing an interim, I mean caroline for all the
Speaker 3: volatility in public markets, and from a policy perspective, we
Speaker 3: see checks getting written by vcs to venture founded startups.
Speaker 2: And largely in the realm of AI at the moment
Speaker 2: of VINOD To that extent, are you writing a lot
Speaker 2: of checks? What sort of size of company you're most
Speaker 2: looking for at the moment? In this new.
Speaker 7: Environment, we are writing a lot of checks. We are
Speaker 7: being aggressive.
Speaker 9: But I would say there's many more bad AI startups
Speaker 9: than good startups, and it's very hard to differentiate if
Speaker 9: you're not experienced with AI. So I do think lots
Speaker 9: of bad investments will be made, but overall more money
Speaker 9: will be made than lost. What even if ninety percent
Speaker 9: of the startups failed, which they.
Speaker 2: Will interesting and of course that's often the bet, no,
Speaker 2: that you will have failures, but you'll then have from
Speaker 2: those absolutely extraordinary success that gives the money and the
Speaker 2: returns to vcs. But you know, in this current environment,
Speaker 2: we're talking a lot about so called zombie companies, the
Speaker 2: companies that have massive valuations that can't vindicate the growth
Speaker 2: at the moment, having to make cutbacks, having to think
Speaker 2: more about revenue driving, profit driving. What are you doing
Speaker 2: with those companies at the moment that just had huge
Speaker 2: valuations that perhaps don't have the run rate that they
Speaker 2: used to.
Speaker 9: Well, there are clearly founder choices to be made. Good
Speaker 9: founders are responding to the environment by saying, let's ignore
Speaker 9: what happened in the past, let's ignore our old valuation
Speaker 9: and focus in on how we create value for the
Speaker 9: next few years. And not worry about what the valuation was.
Speaker 9: So founders that fundamentally decide whether to cater to investors
Speaker 9: or to the reality of the business they're in. And
Speaker 9: most of the good founders I know are really focusing
Speaker 9: in it in on what they need to do to
Speaker 9: build a great business and hope that investors will get
Speaker 9: on board later and not worry about short term perception
Speaker 9: of valuation.
Speaker 3: There are other deeply technical areas that you are passionate
Speaker 3: about and that you are investing in climate or energy
Speaker 3: related and one of them is fusion. You've written op
Speaker 3: eds about this because AI is dominated headlines. We talked
Speaker 3: about it less, but can you just explain why you're
Speaker 3: so focused on that area.
Speaker 9: Well, if you look at Commonwealth Fusion, which is an
Speaker 9: investment we made about four years ago, five years ago
Speaker 9: before there was a company. Actually we started working with
Speaker 9: Bob Mumguard when he was a senior fellow at the
Speaker 9: MIT Fusion Lab.
Speaker 7: It was very clear if you cracked.
Speaker 9: Fusion as a technology, it was one of the largest
Speaker 9: markets in the world, much much larger than for example,
Speaker 9: Google's market. Because energy markets are very large, and so
Speaker 9: that is exciting. You can lose one time, So your
Speaker 9: money you can make a thousand times your money.
Speaker 7: That's a pretty good trade off.
Speaker 3: Then I brew up against commercial breaks very quickly. Is
Speaker 3: it a good time to be a bench catalyst.
Speaker 7: I think it's a great time to be an a
Speaker 7: venture capitalist.
Speaker 9: Most of the large companies are cutting off their advanced projects,
Speaker 9: and so the best people leave start companies. That's the
Speaker 9: raw material. We need great talent, and there's plenty of capital.
Speaker 9: So it's a great time. The next five years will
Speaker 9: look really, really good.
Speaker 4: You've got to be optimistic in this game. It's great.
Speaker 4: Tows in time with you. Thank you.
Speaker 2: Vernodekoes of Kosler Ventures, the founder there. Of course, it's
Speaker 2: been going viral. Nordstrom plans to give up its store
Speaker 2: in downtown San Francisco. The company will vacate more than
Speaker 2: three hundred thousand square feet of space at Westfield San
Speaker 2: Francisco Center that's on Market Street, shopping and tourist area
Speaker 2: in the heart of downtown. It also plans to get
Speaker 2: this shut it's nearby Nordstrom Rack Now. The move follows
Speaker 2: others like Office Depot Anthropology also shutting down the Market
Speaker 2: Street adjacent locations. It says the city just struggles with
Speaker 2: empty office buildings and crime concerns, and ed I felt
Speaker 2: that like having lived there briefly in twenty sixteen and
Speaker 2: then coming back to see you as I love to do,
Speaker 2: Market Street is just an extraordinary place. Nowadays, there is
Speaker 2: nothing to go to, nothing to buy, and when you
Speaker 2: do go into the Macy's there, for example.
Speaker 4: It's empty.
Speaker 3: Yeah, and you know it follows on from the Whole
Speaker 3: Food's decision right to close that downtown store around a
Speaker 3: year after it opened. There is a big discussion in
Speaker 3: this city about what went wrong on Market Street. Remember
Speaker 3: they tried to bring in tech Twitter and Uber's offices.
Speaker 3: They gave them incentives to do so to regenerate the area,
Speaker 3: but it hasn't worked.
Speaker 4: What do you make though of the cynicism that you see.
Speaker 2: In social media as it goes viral, everyone sort of
Speaker 2: wringing their hands. Do we need to be as desperate
Speaker 2: as some of the sentiments seems?
Speaker 3: Yeah, Look, I think that there is a lot of
Speaker 3: people calling on the mayor in the DA to take
Speaker 3: action at street level to fix that part of town.
Speaker 3: But there is definitely a tech and broader economic story
Speaker 3: there that will continue to cover on this program.
Speaker 4: And that does it for this edition of Bluebow Technology.