Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hide and Ed Lovelow.
Speaker 2: Live from New York and Caroline Hyde and this is
Speaker 2: Bloomberg Technology coming up. All eyes on Corweed's downsized IPO.
Speaker 2: We shared set to begin trading on the NASPAC. We'll
Speaker 2: discuss with Magnetar, Corweed's largest equity holder. This is AI
Speaker 2: capacity concerns remain yet in the midst of the anxiety.
Speaker 2: The race to invest in AI companies has created a
Speaker 2: slate of new billionaires. Will highlight them and US and
Speaker 2: EU tarras are front and center, with the market share
Speaker 2: of Chinese evs punning to a two.
Speaker 3: Year low across Europe.
Speaker 2: But first we check in on these markets, which are
Speaker 2: ever more in sell off mode. To end this week
Speaker 2: off by almost two percent on the Nasdaq one hundred
Speaker 2: and when you're looking at the points drags lower and
Speaker 2: the fact that we're back to the worst week since
Speaker 2: March the fourteenth, it is the who's who of the
Speaker 2: Magnificent seven that drag us down in terms of key
Speaker 2: points to the lower it is Amazon Meta, the likes
Speaker 2: of Microsoft of course Apple even amongst some of the
Speaker 2: biggest drags today.
Speaker 3: But we want to put this in the light of
Speaker 3: the IPO that we have.
Speaker 2: Of course, on this day, core Weave, one of its
Speaker 2: biggest key clients is Microsoft.
Speaker 3: It's off by more than two percent.
Speaker 2: Amazon, of course key exposure to these hyperscalers, which is
Speaker 2: a cures for anxiety in video off by one point
Speaker 2: six percent, which invests an awful lot now into core Weave,
Speaker 2: but also of course as a supplier of its chips
Speaker 2: across the border in the red.
Speaker 3: Let's get too.
Speaker 2: Core Weave after it raised one and a half billion
Speaker 2: dollars in its IPO, The shares are expected to begin
Speaker 2: training today on the Nasdaq. Look, the latest is that
Speaker 2: they priced at forty dollars. We're seeing that perhaps at
Speaker 2: the moment they're indicated to open at forty five dollar.
Speaker 2: Katie Ruth joins us. Now, this is such a litmus
Speaker 2: test not only for the AI trade, but the IPO
Speaker 2: trade too.
Speaker 4: Exactly, it's been really tough few years for tech IPOs,
Speaker 4: and you know, this is supposed to be the one
Speaker 4: that was going to kick off a slate of you know,
Speaker 4: maybe seven or eight venture backed IPOs for Q two
Speaker 4: and they're all watching this to see how it's going,
Speaker 4: and so far it's not going well at all. They
Speaker 4: downsize the size of the IPO considerably, and they price
Speaker 4: significantly below the range. Both of these things are generally
Speaker 4: seen as very negative indicators.
Speaker 2: So instead of raising four billion dollars, which they're originally
Speaker 2: aimed to, but just a month ago they raised one
Speaker 2: and a half billion, all of this is to continue
Speaker 2: to put more AI data centers out there, but also it's.
Speaker 3: About paying down their debt.
Speaker 2: And this is perhaps one of the idiosyncratic risks that
Speaker 2: it comes to core Weave because it is a unique
Speaker 2: asset to be investing into.
Speaker 4: Sure, and so you know, it's hard to say if
Speaker 4: really this is skepticism about core Weave itself or about
Speaker 4: the marketing, and so it could be yeah, concerns about
Speaker 4: their debt, concerns about you know, maybe even AIM getting overvalued.
Speaker 4: I mean, certainly there's a lot of investor enthusiasm about
Speaker 4: AI broadly speaking still, but maybe they get maybe they
Speaker 4: thought that there would be even more enthusiasm than there is.
Speaker 4: You know, it's hard to say what the market's concerns
Speaker 4: are right now.
Speaker 3: But you know, I mean.
Speaker 4: It's tied to a heart company like in Video, and
Speaker 4: you know it's going public at a time when last
Speaker 4: year's tech ipeas actually went fairly well.
Speaker 3: Timing seems to be the brutal issue here.
Speaker 2: In Vidia had to come and step in basically and
Speaker 2: say I will take two hundred and.
Speaker 3: Fifty million dollars of this.
Speaker 2: I will secure and put a forty dollars price bottom
Speaker 2: in on it because I'm a key client and equally
Speaker 2: I'm a key investor. They've got about six percent of
Speaker 2: the holding of the equity.
Speaker 3: That is such a bad signal. Who else is impacted
Speaker 3: by this?
Speaker 2: Who are the vcs that got in late on this
Speaker 2: particular name?
Speaker 4: Well so so Magnetar Hedge Fund is actually the largest
Speaker 4: shareholder here.
Speaker 3: People in early didn't they They've been sure, But.
Speaker 4: You also have other names like Koto is involved. But interestingly,
Speaker 4: of the top shareholders that I looked at the cap table,
Speaker 4: there were no VC names above five percent in that ownership.
Speaker 4: And so while it is venture backed, certainly you know
Speaker 4: some unusual players here are the owners.
Speaker 2: Some crossover funds, some strategic investors. To say the least,
Speaker 2: Katie Ruff such a great job across.
Speaker 3: The venture sphere.
Speaker 2: You want to tune in later to this out for
Speaker 2: our conversation with Corweed's largest institutional investor, that is Magnetar.
Speaker 2: The senior managing partner, David Snydermann is going to be joining.
Speaker 3: Us to discuss.
Speaker 2: But first let's get back to the markets and what
Speaker 2: this signals for epec Oskar Deshkea is with US senior
Speaker 2: market analysts at Swiss Quote, all eyes from the public
Speaker 2: markets are on this listing, not just private investment that matters,
Speaker 2: but the ongoing AI narrative is kind of in the
Speaker 2: breach here. Oh, I think we have a technical issue.
Speaker 3: Are you muted?
Speaker 5: Oh?
Speaker 3: How technology fails us at times.
Speaker 2: So we'll get back to Epek in just a moment,
Speaker 2: but we want to be discussing with her just how
Speaker 2: we've got this pushes and pulls as to ultimately what
Speaker 2: the demand side is for AI capacity at the moment, but.
Speaker 3: Also demand side for AI generative products.
Speaker 2: Let's just bring you a tweet that I noticed said post,
Speaker 2: as I'll say, coming from one samah Altman, who's been
Speaker 2: discussing the fact that we're also rushing to use the
Speaker 2: latest formation of CHATCHPT and the image generator that we're seeing,
Speaker 2: as he calls it, a melting of.
Speaker 3: GPUs at the moment, so much demand.
Speaker 2: For his compute capacity. Let's get back to epek because
Speaker 2: here in lies the quandary for the market. We are
Speaker 2: questioning AI infrastructure, whether we're in a bubble, and whether
Speaker 2: or not we should therefore be backing call we ive
Speaker 2: or not.
Speaker 3: On the other side, you've got Sam Altman.
Speaker 2: Seeing such success for the latest product announcement from chat
Speaker 2: GPT that his GPUs are melting.
Speaker 3: So what's your take right now?
Speaker 5: I mean, yes, call.
Speaker 3: Means are pure.
Speaker 5: It's clearly not coming at the right time in terms
Speaker 5: of markets at the tite because it's coming at a
Speaker 5: time when investors are increasingly worried about whether there is
Speaker 5: an over.
Speaker 6: Cell light in AI data centers and AI SELP light overall,
Speaker 6: while demand looks like it's not growing as fast as
Speaker 6: many have projected. But on the other hand, the news
Speaker 6: actually come in and they are encouraging. There is a
Speaker 6: great adoption of AI in technology, and this adoption is
Speaker 6: also extending towards the non technology focus off the market.
Speaker 6: It is also happening in China across.
Speaker 1: The world, so yes, there is.
Speaker 6: There are a lot of doubts about whether the AI
Speaker 6: adoption is happening at the desire speed. On one hand,
Speaker 6: the big technology companies, they keep ensuring the markets.
Speaker 7: And investors that this is happening, and on the other
Speaker 7: hand we see some slowing in the pace of in
Speaker 7: the pace what you expects to be a strong realth
Speaker 7: in terms of quantity valuation.
Speaker 5: So there are a lot of guts right now that
Speaker 5: I bore you as actually going public in the middle
Speaker 5: of a jungle of doubt.
Speaker 2: EUPEC will have to leave it there with some technical
Speaker 2: difficulty with your sam but we thank you so much
Speaker 2: for your perspective. Ipec us a guest care of course,
Speaker 2: happy weekend US Swiss quote coming up the tech industry
Speaker 2: warning President Trump's tarifs could undermine his own policy agenda.
Speaker 2: Jason Oxman from the Information Technology Industry Council is going
Speaker 2: to be joining us on that this.
Speaker 3: Is bloomberg technology.
Speaker 2: The tech industry has been warning that trading restrictions on
Speaker 2: chips passed during the Biden administration, the so called AI
Speaker 2: Diffusion Rule, but it could hurt US companies at the
Speaker 2: time when tariff uncertainty is already creating headwinds. Jason Oxman,
Speaker 2: President and CEO of the Information Technology Industry Council, is
Speaker 2: the person to talk to about this because we know
Speaker 2: that Nvidia and Oracle are coming and joining your industry
Speaker 2: group at the moment, hoping that you'll help navigate a
Speaker 2: policy quandary that's upon us right now. Ultimately, they don't
Speaker 2: want the AI diffusion rule. Why is it a bad thing?
Speaker 8: Jason, Well, it's a good concept and the execution is
Speaker 8: enormously complex. As you noted, this was a rule that
Speaker 8: was adopted in the waning days of the Biden administration,
Speaker 8: and under normal circumstances, our communication of the Trump administration
Speaker 8: would be that Biden administration rules need to be rethought
Speaker 8: and redone and this is one of those examples. The
Speaker 8: challenge here is that the concept of denying the Chinese
Speaker 8: Communist Party and the Chinese Army access to the latest
Speaker 8: generation of AI technology for American companies, well, that's a
Speaker 8: good idea, it's a national security issue, and we want
Speaker 8: to do it in the right way. But the Biden
Speaker 8: administration did it in the wrong way. They did it
Speaker 8: without consulting industry, They did it without coming up with
Speaker 8: a roadmap for success, and perhaps most importantly, they did
Speaker 8: it by punishing American allies around the world by denying
Speaker 8: them access to AI technology at the same time. So
Speaker 8: what we're asking the Trump administration to do, Let's start over.
Speaker 8: Let's do this again. Let's consult with industry. Let's get
Speaker 8: this rule done in the right way.
Speaker 2: Did they really not consult industry at all? Or did
Speaker 2: they just consult the wrong people in industry? From your perspective, I.
Speaker 8: Know it's easy for industry to say we weren't consulted properly.
Speaker 8: In this case, it is honestly the case that they
Speaker 8: did not.
Speaker 9: Consult us at all.
Speaker 8: And this rule was really it was released seven days
Speaker 8: before the end of the Biden administration. They really wanted
Speaker 8: to rush it out the door. They've been working on
Speaker 8: in a while, they ran out of time, and they
Speaker 8: did it without consulting industry. And the reason industry consultation
Speaker 8: is important is not just because we think we have
Speaker 8: good ideas. We do, but it's more important to make
Speaker 8: sure that the rule is done correctly so that American
Speaker 8: industry is not punished. And the most important goal of
Speaker 8: ensuring that America continues to dominate AI worldwide, which is
Speaker 8: a key tenet of the Trump administration. That's what we
Speaker 8: want to make sure happens when the rule is redone.
Speaker 2: So let's think about a more perfected rule here. As
Speaker 2: you say, the ultimate goal of ensuring that very sophisticated
Speaker 2: chips doesn't get into Chinese hands, for example, you think
Speaker 2: is the right one. How do we get there without
Speaker 2: ensure hurting the middle men?
Speaker 3: That there wrong middlemen to hurt.
Speaker 9: Yeah, I think there are two things here.
Speaker 8: One is the way in which the rule was put
Speaker 8: place put in place by the Biden administration. It actually
Speaker 8: imposes caps on every country in the world and their
Speaker 8: ability to get access to AI technology. Seventeen countries in
Speaker 8: the EU are in the so called Tier two. There
Speaker 8: are three tiers here. Tier three means anybody can get
Speaker 8: whatever they want. Tier two means there are restrictions Tier
Speaker 8: one and you can't get anything. Tier two, for seventeen
Speaker 8: countries in the EU means they're capped on their ability
Speaker 8: to buy AI technology from the US. Why not because
Speaker 8: we're worried about them, but because we're worried about enforcement mechanisms.
Speaker 8: So what the Trump administration could do is work and
Speaker 8: negotiate with our allies around the world to make sure
Speaker 8: those enforcement mechanisms are in place to deny the Chinese
Speaker 8: Communist Party access to this technology. That's the first thing
Speaker 8: I think is important. The second thing I think is important,
Speaker 8: and again this is why industry consultation is important, is
Speaker 8: China is a market that is huge. It's one and
Speaker 8: a half billion people. A lot of stuff is made there,
Speaker 8: a lot of stuff is sold there. If we deny
Speaker 8: China access to all American technology, the only message that
Speaker 8: delivers to China and frankly to other countries around the
Speaker 8: world is maybe China should make this technology because they're
Speaker 8: going to make it available without restriction to the rest
Speaker 8: of the world. So we want to make sure we
Speaker 8: don't ironically incentivize the Chinese technology industry to start making
Speaker 8: inroads and harm American interests around the world as a result.
Speaker 2: Jason has that holes already bolted from what we see
Speaker 2: with deep seek. That was in the case of lack
Speaker 2: of access to sophisticated chips, they found a workaround.
Speaker 8: Well they did, and I think there are a lot
Speaker 8: of questions about deep seak and just how well it
Speaker 8: was put together, how functional it is, and whether it
Speaker 8: was programmed in part with American technology, and we'll see
Speaker 8: more about that going forward. But I think there's no
Speaker 8: question that US technology isn't dominant and doesn't continue to
Speaker 8: be dominant. The real only open question is how long
Speaker 8: will that last? And if we deny American technology companies
Speaker 8: access to international markets and partners, that handicaps our ability
Speaker 8: to continue positioning the United States as a world.
Speaker 9: Leader in AI.
Speaker 2: Jason, it's not just the AI diffusion rule that has
Speaker 2: many investors concerned. It's also just tariffs more bluntly coming
Speaker 2: in as a weapon. We've just seen what's being Oh,
Speaker 2: I think we've just got some breaking news that I
Speaker 2: want to go to that President Trump and indeed now
Speaker 2: the leader of Canada, Karney, have agreed to meet after
Speaker 2: Canada's election, where.
Speaker 3: Mark Carney is now the leader.
Speaker 2: So just a bit of breaking news there from the
Speaker 2: geopolitical front with Trump and Carney meeting, Jason. And this
Speaker 2: is to do with that very thing of tariffs. At
Speaker 2: the moment, we've seen how autos have been in the
Speaker 2: eye of the storm when it comes to Canadian tariffs,
Speaker 2: when it comes to Mexican tariffs. But we understand that
Speaker 2: semiconductors are going to be coming into place. When we
Speaker 2: think of Liberation Day in early April, how much is
Speaker 2: that a fixation of the market.
Speaker 8: Well, the President has suggested the semiconductors perhaps won't be
Speaker 8: subject to tariffs, and I think that this raises the
Speaker 8: broader question of certainty for business.
Speaker 9: That's what business needs.
Speaker 8: It needs certainty. And we're only what nine weeks into
Speaker 8: the Trump administration, A lot has happened. He's moving very quickly,
Speaker 8: and the tech industry is responding very favorably to the
Speaker 8: Trump administration's call, the president's call to bring manufacturing back
Speaker 8: to America. The very first business announcement made in the
Speaker 8: White House, literally less than twenty four hours after President
Speaker 8: Trump's inauguration, was three ITI member companies, SoftBank, Oracle and
Speaker 8: Open Ai announcing a five hundred billion dollar manufacturing project
Speaker 8: in the United States. We've seen TSMC announce another one
Speaker 8: hundred billion dollar investment, Apple five hundred billion dollars. Even
Speaker 8: international companies Siemens and Soft and Schneider Electric have announced
Speaker 8: hundred multi hundred million dollar investments just in the last
Speaker 8: few days.
Speaker 9: So it is happening.
Speaker 8: The tech industry really more than any other industry is
Speaker 8: responding to the President's call. But to your question about tariffs,
Speaker 8: I think it's really about certainty. Tariffs can be a tool,
Speaker 8: and we'd like to see the President continue to exercise
Speaker 8: his skill as a business negotiator, which he does very
Speaker 8: well well and strike deals and trade deals in particular
Speaker 8: are important. Tariffs are paths to trade deals. The President
Speaker 8: during his first administration did a terrific job of entering
Speaker 8: into trade deals around the world with China, with Mexico,
Speaker 8: with Canada, with Japan, and others. We'd like to see
Speaker 8: those trade deal negotiations move forward and replace the need
Speaker 8: for tariffs so we can have that business certainty and
Speaker 8: access to US markets and international markets that American companies need.
Speaker 2: Jason Oxman, thanks so much for joining Usday from the
Speaker 2: Information Technology Industry Council.
Speaker 3: Meanwhile, as time now for.
Speaker 2: Talking Tech and First Up, India reveals a two point
Speaker 2: seven billion dollar plan to subsidize the production of electronics components,
Speaker 2: covering parts using displays and camera modules.
Speaker 3: And some circuit boards.
Speaker 2: The Indian government says the program is expected to attract
Speaker 2: ne lyast seven billion dollars in investment and could help
Speaker 2: some companies pivot away from China plus shares of Oracle.
Speaker 2: They're trading on the downside today along with the rest
Speaker 2: of the market. But the US Department and Defense said
Speaker 2: it's terminating a plan to use Oracle software in maintaining
Speaker 2: its civilian work force as part of the Pentagon's cost
Speaker 2: cutting efforts. Defense Secretary Pete Hegseth says the program ran
Speaker 2: six years behind schedule and was more than.
Speaker 3: Two or eighty million dollars over budget.
Speaker 2: Speaking on Fox News, Elon Musk says his DOGE team
Speaker 2: is well on the way to slash the US deficit,
Speaker 2: and we'd out forward to listen who.
Speaker 9: Reduce the deficit by a trillion dollars.
Speaker 10: The government is not efficient and there's a lot of
Speaker 10: a lot of waste forward. So we feel confident that
Speaker 10: fifteen percent reduction can can be done without affecting any
Speaker 10: of the critical government services.
Speaker 2: But the swift action by President Trump and DOGE to
Speaker 2: fireworkers cut costs at the IRS, for example, are creating
Speaker 2: temptation amongst.
Speaker 3: Taxpayers to cheat. Tax professionals and.
Speaker 2: Former IRS commissioners are sounding the alarm bells, saying the
Speaker 2: administration's actions could actually embolden people to commit forward on
Speaker 2: their taxes.
Speaker 3: Or simply not paid.
Speaker 2: Chinese EV automakers actually saw a market shared drop to
Speaker 2: a two year low in Europe. It'scording to research a
Speaker 2: data force, less than seven percent of EV's registered in
Speaker 2: February were made in China. That's despite an overall jump
Speaker 2: in European EV demand. Blomberg spoke with Secret Devies, director
Speaker 2: General of the European Automobile Manufacturer's Association, about the impact
Speaker 2: of tariffs on the auto's industry.
Speaker 11: This comes on top of already very challenging times. We're
Speaker 11: at a watershed moment or industry in the midst of
Speaker 11: a huge transformation and fierce competition, and yeah, this is
Speaker 11: very disruptive and we really hope this can still be averted.
Speaker 3: For more, Let's go to Boomberg's Anthony Palazzo.
Speaker 2: Anthony, I thought that Chinese EV makers were being brought
Speaker 2: up a storm over in the UK and Europe, but
Speaker 2: it seems as though the tarifs having an impact.
Speaker 9: Yes, that's right.
Speaker 12: In with all the news around President Trump and his chariffs,
Speaker 12: it's easy to forget that there's trade tension between the
Speaker 12: EU and China, and uh yeah, so so the the
Speaker 12: Chinese companies have been really making really making an impact
Speaker 12: here in Europe.
Speaker 13: Uh.
Speaker 12: They've been doing it for probably the past five years,
Speaker 12: and all of that, all of that came to a
Speaker 12: halt around the middle of last year when the EU
Speaker 12: introduced tariffs on Chinese made electric vehicles.
Speaker 9: And that's put it, that's put a.
Speaker 12: Dent in in that growth and really held it at
Speaker 12: a stalling rate for about the last past six months.
Speaker 12: And UH for February we see that it's actually gone down.
Speaker 14: UH.
Speaker 9: And as you said, despite.
Speaker 12: An increase in the number of EV's being sold in Europe,
Speaker 12: the number of Chinese made EV's has gone down.
Speaker 2: What's interesting is we know Tesla hasn't been benefiting either,
Speaker 2: the salesn't been on the downwards to jectory. But is
Speaker 2: it local European makers of evs that do well therefore?
Speaker 12: Right, And that's that's the other irony of this whole
Speaker 12: situation is that Europeans have largely started to turn her
Speaker 12: away from Tesla. They don't like the way Elon Musk
Speaker 12: has been conducting himself and UH intervening in German politics
Speaker 12: and UH, and so that created.
Speaker 9: An opening in the Chinese automakers.
Speaker 12: By and large have not been able to to fulfill it.
Speaker 9: Uh.
Speaker 12: And at the same time, the European automakers have come
Speaker 12: out with some new models. There's some smaller ones made
Speaker 12: by Renault, there's a there's a larger one made by.
Speaker 9: By Volkswagen. That's that's really come out and done well.
Speaker 12: And so the local carmakers have have really done well.
Speaker 2: Anthony Platzo, thanks for the update and all things ev Meanwhile,
Speaker 2: returning to the White House is dismissing the disclosure of
Speaker 2: who the attack plans being exposed in messages through.
Speaker 3: Signal as a glitch.
Speaker 2: But experts are arguing information in those chats could have
Speaker 2: given priceless information to foreignniversaries, you know. Most Jake Breiberg
Speaker 2: is here to really articulate what is it within these
Speaker 2: messages that are clearly detrimental to us and indeed that
Speaker 2: spies kind of wait to get their hands on.
Speaker 15: Yeah, it's a good question, and it takes really sort
Speaker 15: of a close parting of these messages. It's something we've
Speaker 15: seen you know, current and former security officials doing and
Speaker 15: one of the most important things that has raised questions,
Speaker 15: you know about the security. Here is this reference from
Speaker 15: National Security advisor Mike Walls to sort of surveillance or
Speaker 15: some type of view into the movements of a particular
Speaker 15: HOOTI sort of you know, military.
Speaker 3: Leader, top missile guy.
Speaker 15: Yes, exactly who Waltz refers to as a top missile guy.
Speaker 11: And what.
Speaker 15: He said, as suggests when we talk to current informer
Speaker 15: intelligence officials, is that the US had some sort of oversight,
Speaker 15: whether it be UH signals intelligence or aerial oversight, or
Speaker 15: actually someone on the ground who was observing this person,
Speaker 15: and that that's a really valuable clue to foreign adversaries
Speaker 15: who might be trying to understand US military operations.
Speaker 2: Meanwhile, Attorney General Panbonni goes on time and time again
Speaker 2: to say sensitive information not classified was inadvertently released. We
Speaker 2: go back to the technology side of all of this, though,
Speaker 2: Is it music to adversaries? Is that signal is being
Speaker 2: used whatsoever?
Speaker 15: I think it probably is, especially for this type of
Speaker 15: highly sensitive operational information. The thing to understand is that
Speaker 15: while signal makes it you know, strong and quite credible,
Speaker 15: crolaims about its end to end encryption, where that where
Speaker 15: that information ends is on a device, and if that
Speaker 15: device is infiltrated, if that device might be in a
Speaker 15: foreign country where it can be attacked by foreign spy agencies.
Speaker 3: It's still vulnerable there. It might be.
Speaker 15: Secure in transit, but once it arrives on your phone,
Speaker 15: it's still vulnerable. In the way anyone's phone is vulnerable.
Speaker 2: It's a story that's going to continue, and we thank
Speaker 2: you for tracking it for us. Jake Riiberg on the
Speaker 2: security implications of using that signal device. Welcome back to
Speaker 2: Blue Meg Technology. I'm Caroline hid in New York. Let's
Speaker 2: get a check on these markets. We are once again
Speaker 2: in sell off mode.
Speaker 3: To end this week. It is a down week.
Speaker 2: We're currently off by one point seven percent, but those
Speaker 2: declines are accelerating. On this Friday, we're currently off by
Speaker 2: almost two percent on the Nasdaq one hundred, Amazon, Microsoft, Apple,
Speaker 2: and Video Meta Google basically or who's who of the
Speaker 2: magnificent seven are leading us to the downside.
Speaker 3: Very few stocks are currently in the green and.
Speaker 2: This, of course on a key day and test for
Speaker 2: the market when it comes to IPO appetite, but also
Speaker 2: artificial intelligence appetite.
Speaker 3: Let's get back to core weave and police to say.
Speaker 2: Blue Meg's Ryan Gauld joins us, who has been tracking
Speaker 2: this IPO, the intricacies of the pricing that looks like
Speaker 2: it's going to price at about maybe forty two dollars
Speaker 2: fifty maybe forty five dollars as well. It's indicated at
Speaker 2: priced at forty, but might trade higher. But this has
Speaker 2: been a torrid time and you've just spoken to the CEO.
Speaker 16: Yeah, So I just got off the phone with Michael
Speaker 16: and Trader, the CEO of Core. We've obviously a very
Speaker 16: in mentual week to them. I think they're alieved to
Speaker 16: kind of get to this point now where you know
Speaker 16: that the letters have been signed, they're looking to open shortly,
Speaker 16: as you say, indicated forty five ish. Some of the
Speaker 16: big takeaways I would say he's saying, Michael and Trader
Speaker 16: is saying that you know, we saw yesterday and video
Speaker 16: came out, and so that they're going to anchor this
Speaker 16: IPO a two hundred and fifty million dollars order without
Speaker 16: in video coming in. Mike and Trader says that this
Speaker 16: IPO will probably not got over the line, which I
Speaker 16: think is quite a statement. I mean, you know, I
Speaker 16: think there's obviously a lot to be said here about
Speaker 16: them coming in and validating sort of care weave strategy.
Speaker 16: They're clearly a big customer, but I think just putting
Speaker 16: that out there, it gives you a sense as a
Speaker 16: kind of a market dynamic. Ye to have a customer
Speaker 16: like in Vidia coming in and saying, Okay, we're going
Speaker 16: to get behind you. Without them this out here wouldn't happened.
Speaker 2: I hate to be cynical, but in Video could be
Speaker 2: seen to be just protecting a its demand but also
Speaker 2: protecting its own investment. They were already a six percent
Speaker 2: holder of call Weave, right, I.
Speaker 16: Think that's I think that's probably fair. Yeah, And I
Speaker 16: think you know, in a week where in Video has
Speaker 16: also been down and under some pressure. I mean, I
Speaker 16: don't want to sort of put words in anyone's mouth,
Speaker 16: but it's kind of like, you know, let's help out
Speaker 16: a friend. That's what it comes across a way in
Speaker 16: some way. And I think, you know, just given how
Speaker 16: fundamental call Weave or Invidia is to care Weave, I
Speaker 16: think it probably makes a lot of sense to them
Speaker 16: to have come in with with that kind of statement. Yeah,
Speaker 16: but I think you know, there were some other headlines
Speaker 16: as well as we talked about this week. I mean,
Speaker 16: the Microsoft headlines sort of distancing themselves from some data center.
Speaker 3: Infrastructure from td COW.
Speaker 16: And yet yeah, I mean, you know, it's been a
Speaker 16: rough week. It's been bruising, and I think the guys
Speaker 16: over at a core Wave are very believed to get
Speaker 16: to this moment.
Speaker 2: Perhaps some of the bankers are too. Question is how
Speaker 2: the rest of the IPO's unfold ran Gold. It's been
Speaker 2: a busy day for him. We thank him for joining us. Meanwhile,
Speaker 2: let's just talk about a company that did recently have
Speaker 2: an IPO not too long ago, social media platform Reddit.
Speaker 2: They can't actually shake off its gloomy sentiment right now.
Speaker 2: Shares the company have falling fifty percent from February highs
Speaker 2: as it struggles to recover from its earning support that
Speaker 2: revealed it lagged in digital advertising among peers. The company
Speaker 2: also said it took a hit in traffic due to
Speaker 2: changes in Google searchers algorithm. Now, Reddit also faces some
Speaker 2: additional scrutiny as as early investors reached the end of
Speaker 2: their lockup periods, basically putting further selling pressure on the stock.
Speaker 2: We'll see as and when that lockup ends if they
Speaker 2: do indeed sell now, the race to invest in AI
Speaker 2: companies is actually still on amidst this anxiety about too
Speaker 2: much capacity, we're.
Speaker 3: Seeing new billionaires being minted.
Speaker 2: According to analysis from Bloomberg, pid to tell us about
Speaker 2: it's Bloomberg's Tom Maloney.
Speaker 3: Put aside Core Weave and the anxiety.
Speaker 2: No matter what, Michael and traitor is now a billionaire,
Speaker 2: so as the co founder, and there's a long list
Speaker 2: of new AI billionaires.
Speaker 14: Three billionaires, three billionaire founders coming out of core Weave.
Speaker 14: And looking at that, we decided to use it as
Speaker 14: an opportunity to look at other fortunes being made in
Speaker 14: AA right now with these sky higher evaluations. So twenty
Speaker 14: nine founders we looked at across eight companies collectively, they
Speaker 14: own stakes that are worth or soon to be worth
Speaker 14: seventy one billion dollars.
Speaker 2: The who's who of the startup, some of them unsurprising,
Speaker 2: some of them like I mean, we know perplexity for examples,
Speaker 2: got that sort of evaluation. What's interesting is some of
Speaker 2: them are open AI alums setting up their own companies,
Speaker 2: not yet.
Speaker 3: Even with products, and they're worth so much money. Maria
Speaker 3: Marati for example.
Speaker 14: Yeah, absolutely, you know, I look a couple of these
Speaker 14: companies I'd never heard of thinking Machines Lab you just mentioned.
Speaker 14: I mean that's a brand new company, no product, Open
Speaker 14: Ai alone looking to raise a billion at a nine
Speaker 14: billion valuation and then save superintelligence again. Open Ai alums
Speaker 14: less than a year old. They're already sitting on a
Speaker 14: thirty two billion dollar valuation. So just kind of really
Speaker 14: insane numbers out there.
Speaker 2: Clearly there's a lot of love for the use of
Speaker 2: Generator AI, even if perhaps the capacity for it is
Speaker 2: not being too loved.
Speaker 3: On this day, Tom Maloney, great to have him.
Speaker 2: Meanwhile, coming up, Silicon Valley veterans set their sites on outsiders.
Speaker 2: The co founders of Long Journey Ventures join us to
Speaker 2: talk about their firm strategy. There's a little bit of
Speaker 2: magic apparently. This is Blue met Technology time now for
Speaker 2: VC Spotlight. Today we're talking to investors with long histories
Speaker 2: in the sector who say they are looking for founders
Speaker 2: who don't fit the typical Silicon Valley model. Cyam Banister
Speaker 2: Lee Jacobs are co founders of Long Journey Ventures.
Speaker 3: It's got four hund and fifty million dollars.
Speaker 2: Massets under management and a little bit of magic, it seems.
Speaker 3: And I Lee, I start with you, your second believers
Speaker 3: in the magically weird. What does a second believe a
Speaker 3: bit mean?
Speaker 13: Yeah, great question, Thanks for having us. The second believer is, uh, Look,
Speaker 13: it takes the founder to have a lot of belief
Speaker 13: in themselves and what they're up to, and our role
Speaker 13: is to identify that belief and just be right there
Speaker 13: next to them at the very earliest stages. We're talking
Speaker 13: about backing companies before they really have a product. In
Speaker 13: a lot of cases, it's just two people in a room,
Speaker 13: and our role as the second believer is to be
Speaker 13: there for them and believe and believe with everything we
Speaker 13: have and have them build the future that they imagine.
Speaker 2: You have phenomenal background scion coming from Founder's Fund. You
Speaker 2: say you were addicted to this early stage investing.
Speaker 3: But you also talk about sort of backing entrepreneurs that are.
Speaker 2: Absurd or have at least absurd and unconventional ideas. I
Speaker 2: have ever backed anyone whether idea remains absurd or do
Speaker 2: they all end up becoming conventional wisdom?
Speaker 17: Well, obviously you don't get everything right, and so some
Speaker 17: things do maintain being absurd, is.
Speaker 3: There eventually, Well, there's.
Speaker 17: A lot of examples that continue to be absurd. You're
Speaker 17: basically too early, and you're not right about timing. But
Speaker 17: some things, you know, they end up becoming consensus investments
Speaker 17: and you end up seeing them on your show on
Speaker 17: the Bloomberg Terminals. But we like to get ahead of
Speaker 17: it and invest in them early when it's not a thing.
Speaker 17: And there hasn't been a term coined for the whole
Speaker 17: space yet. Yeah, but eventually it does.
Speaker 2: I mean, Lee, I think of many would have thought
Speaker 2: sending gigantic rockets and then you can reuse and even
Speaker 2: catch the boosters of would have seemed absurd a long
Speaker 2: time ago, but you helped with early checks into the
Speaker 2: likes of SpaceX.
Speaker 3: Uber Andrill Lee.
Speaker 2: Is there a consistent factor in the companies that you're backing.
Speaker 9: Yeah.
Speaker 13: All the business is that we back at the stage
Speaker 13: when they're really absurd, before they become consensus.
Speaker 9: Are independently derived.
Speaker 13: The founder has followed their own curiosity to something that
Speaker 13: no one else sees. I like to say they're in
Speaker 13: a room by themselves, and that's a really good sign.
Speaker 13: So our job is to be in that room with
Speaker 13: them and to show us the future they see. So
Speaker 13: Yes andrel and all these businesses that Cyan and us
Speaker 13: have all back have were absurd, It sounded crazy, but
Speaker 13: now they're here on on on Blueberog TV.
Speaker 9: So yeah, they're they.
Speaker 13: Enter the mainstream over time, and our role is to
Speaker 13: be there for them as they as they tell us
Speaker 13: the future. So the main theme is just independently derived
Speaker 13: and derived with curiosity.
Speaker 5: San.
Speaker 3: We were just seeing a list of portfolios.
Speaker 2: Companies that you've backed in prior funds, Companies that you
Speaker 2: back now, I'm interested in Cruso in particular because this
Speaker 2: is about data center capacity, AI infrastructure, but doing it
Speaker 2: with the climate and mind what drew you to that
Speaker 2: company in particular.
Speaker 17: You know, I'm actually going to toss this one to Lee.
Speaker 17: I think he deserves most of the credit for Crusoe.
Speaker 17: He was the first check into Crusoe ever and saw,
Speaker 17: you know, this company before anyone else did. And he
Speaker 17: actually brought it to me at Founder's Fund, and it's
Speaker 17: how Lee and I actually developed some of our working relationship.
Speaker 17: I think it would be best for him to answer this.
Speaker 17: He deserves all the credit.
Speaker 3: Lee.
Speaker 2: Go into this moment, given you know, we've got a
Speaker 2: day where core Weave is going to the market. Many
Speaker 2: are questioning the need for AI infrastructure are you questioning it?
Speaker 9: No, not at all.
Speaker 13: Cruso's a really special business. Yes, we were the second
Speaker 13: believers in that business of the earliest stage. What they
Speaker 13: saw with Chase and Kully saw initially was a real
Speaker 13: need for energy and a real need for actually building
Speaker 13: these data centers in very difficult places. And that you know,
Speaker 13: Corewave is a great business. We're really excited about the
Speaker 13: space in general. We believe Crusoe has a different business
Speaker 13: model and a different opportunity ahead of it where they
Speaker 13: really focused on energy from day and as we know,
Speaker 13: energy is the real bottleneck for what it takes to
Speaker 13: build a great AI application and build these data centers.
Speaker 13: So we're really we're really thrilled.
Speaker 2: Sin You've built a very unique space within which you work,
Speaker 2: you built a unique philosophy on the way you invest,
Speaker 2: and you've got your fourth fund, I think is one
Speaker 2: hundred and eighty one million dollars in excess of How
Speaker 2: are you thinking about where the talent is that you back?
Speaker 3: Are you all about West Coast where you currently sit?
Speaker 2: Are you thinking about outside of that particular area of
Speaker 2: Silicon Valley.
Speaker 17: Yeah, we're a location agnostic. We have venture partners all
Speaker 17: over the world. We have a venture partner, Pascal Levy Garbua,
Speaker 17: who's in France. We have Justin Mayers who's in Austin, Texas.
Speaker 17: We're always looking to expand the team. We punch above
Speaker 17: our weight for our fund size. You know, magical founders
Speaker 17: exist everywhere, and you know what we're looking for people
Speaker 17: who are just you know, thinking about how they're going
Speaker 17: to fundamentally transform the future for humanity, and they're thinking
Speaker 17: about very big ideas and so we like to think
Speaker 17: six to seven years ahead. You know, going back to Crusoe,
Speaker 17: we identified the energy was going to be needed for
Speaker 17: a crypto as well as AI before AI.
Speaker 9: Was even a space.
Speaker 17: And so that's what we're doing right now, is we're
Speaker 17: thinking about what comes next. And so while everybody's investing
Speaker 17: sort of in the Cambrian explosion of the application layer,
Speaker 17: we're thinking about what does this enable six to seven
Speaker 17: years from now. And so we're already looking at like,
Speaker 17: you know, things like biotechnology, nanotechnology, et cetera. And you know,
Speaker 17: you can always count on long journey to be thinking
Speaker 17: about the future, because it's a long journey before they
Speaker 17: ever end up on NAZAC. You know, we have to
Speaker 17: be able to see this idea when it's just a
Speaker 17: napkin and a bunch of people in a house potentially,
Speaker 17: and give them their first check and believe in them.
Speaker 2: How scarage room, You've got roughly one hundred and thirty
Speaker 2: companies yan that you've backed thus far.
Speaker 3: That's a lot.
Speaker 2: And I'm thinking about how you're attracting the LPs into
Speaker 2: fund after fund. What do you think is the ability
Speaker 2: to weather well has been a tough time in the
Speaker 2: VC market.
Speaker 17: Well, we're very differentiated. I think that our LP base
Speaker 17: sees that when they look across you know, all of
Speaker 17: their fund managers, they're seeing that there's not a lot
Speaker 17: of duplication. Because we're looking into the future, we're finding
Speaker 17: people that look absurd, and so everybody's passing on them.
Speaker 17: And so you know, when you have a crazy idea
Speaker 17: about the future. When you think about Uber, when they
Speaker 17: went out to pitch Uber, everyone said to me when
Speaker 17: I tried to pass that deal on to my co investor,
Speaker 17: you know, my colleagues, no one's gonna get in a
Speaker 17: stranger's car. If you look at Airbnb, they said, no
Speaker 17: one's gonna stay on a stranger's couch. If you look
Speaker 17: at Niantic, they said, no one's gonna catch invisible Pokemon.
Speaker 17: If you look at SpaceX, they said, no individual in
Speaker 17: the private sector deserves to launch rockets in the space
Speaker 17: The list goes on and on. So I'm looking for,
Speaker 17: you know, one of my ex colleagues, Jeff Lewis, like
Speaker 17: to call it a narrative violation, and that's how he
Speaker 17: coined it. But that's what I'm looking for. Are you know,
Speaker 17: things where I have a firm belief and I can
Speaker 17: see future and no one else can. You know, you're
Speaker 17: going to get a pricing advantage, And we continuously bat
Speaker 17: above average and we're doing incredibly well on our LPC
Speaker 17: that and so I know it's a competitive and a
Speaker 17: tough landscape to raise right now, but I think our
Speaker 17: LPs are very excited and continue to be in what
Speaker 17: we're doing.
Speaker 18: Who doesn't love a little bit of absurd sign Minister
Speaker 18: Lee Jacobs to the co founders a long journey, Thanks
Speaker 18: so much for joining us today.
Speaker 2: Let's return to call Weave's IPO. I'm very pleased to
Speaker 2: say we're welcoming David snyderm a managing partner of Magneta.
Speaker 2: It is the biggest institutional investor of care Weave long
Speaker 2: term backer. I've got to ask today, I mean the timing,
Speaker 2: how do you feel about it?
Speaker 19: Well, first, thank you so much for having me, and
Speaker 19: this is an exciting day for Magnetar, for our investors,
Speaker 19: and especially for our partners sa Core Weave. You know,
Speaker 19: for us, this is one step in all long process
Speaker 19: and a beginning step in that process of sentiment and timing.
Speaker 19: You know, it's really about execution of the company.
Speaker 2: Today and will you therefore remain a long term committed
Speaker 2: holder even as it goes public. I know we've exited
Speaker 2: a little bit on this particular liquidity moment.
Speaker 19: We actually have not exited at all. We've bought in
Speaker 19: every round prior to this, and we remain committed to
Speaker 19: the company. You know, this company is they're the gold
Speaker 19: standard now for AI infrastructure. So as this transformation happens,
Speaker 19: they're the people, they're the picks and shovels of this industry.
Speaker 19: You know, when we invested in them, I think that
Speaker 19: had twelve million dollars of revenue at the time.
Speaker 3: What year was this?
Speaker 19: This was only four years ago. This year, this past
Speaker 19: year was almost two billion of revenue and climbing quickly.
Speaker 19: So it's pretty incredible what they've done. It's a great
Speaker 19: management team.
Speaker 2: In many ways, the timing hurts because of the narrative
Speaker 2: that we get bombarded with Joe Sai.
Speaker 3: Saying there's a bubble in AI capacity.
Speaker 2: We've got TD Cowen trying to point to Microsoft and
Speaker 2: moving away from day to send to leases.
Speaker 3: How do you feel about AI capacity right now?
Speaker 19: You know, I'm sorry, we read and hear the same stories,
Speaker 19: but it's not what we see in the actual business.
Speaker 19: The business itself has insatiable demand. They can't keep up
Speaker 19: with the demand of the business, which is why it's
Speaker 19: so exciting for us. And you know, I'll walk you
Speaker 19: back to how we think about it at Magnetar. You know,
Speaker 19: we watch we watch Earninge's reports of all the major
Speaker 19: companies and we add up capex. Well, where does the
Speaker 19: capex actually go. It goes into these innovative companies like
Speaker 19: open ai and then open Ai. You see the revenue traction.
Speaker 19: You know, they announced I think a couple of days
Speaker 19: ago on Bloomberg that they were four billion last year,
Speaker 19: and I think it's twelve billion this year and twenty
Speaker 19: seven billion next year. I think that's one company in
Speaker 19: one sector. You start to add up all of that revenue.
Speaker 19: And what people don't understand about compute is it's the
Speaker 19: single biggest driver of the expense structure of these companies.
Speaker 19: Thirty to seventy percent of revenue goes directly to pay
Speaker 19: for compute. Right now, core, we've the old standard for
Speaker 19: that market.
Speaker 2: Before I've got to ask you about open AI a
Speaker 2: little bit more. But what's so interesting is the way
Speaker 2: you've done it is your lending and your background's fixed income,
Speaker 2: so you know all about lending your equity provider. Why
Speaker 2: go so across the capital structure of a company like
Speaker 2: this that ultimately only has a limited amount of ultimate customers.
Speaker 19: The hyperscals sure we well, first, their customer base is
Speaker 19: growing quite quickly, so we'll hit on that in a second.
Speaker 19: But for Magnetar, what we're really good at is lowering
Speaker 19: the cost of capital for capital intensive companies, and so
Speaker 19: we haven't been in technology near as much in the past,
Speaker 19: but now we're seeing them cross Now technology is capital
Speaker 19: intensive technology. For AI to be effective, you need GPUs,
Speaker 19: you need energy, and you need real estate.
Speaker 2: Three of the.
Speaker 19: Most capital intensive industries on the planet. And people like
Speaker 19: Magnetar can come in and really help companies and partner
Speaker 19: with them and lower their cost of capital for us,
Speaker 19: where we want to participate across the capital structure of
Speaker 19: these companies.
Speaker 2: You mentioned customers. A big lease was signed with open
Speaker 2: Ai by Core Weave. Interestingly, open Ai now has exposure
Speaker 2: to core Weave shares on the back of that as well.
Speaker 2: But I want to bring you the latest post out
Speaker 2: of Sam Altman because he's saying, look the frenzy to
Speaker 2: get hold of the latest image generation chatupt is quote
Speaker 2: GPUs are melting. Tell us about open Ai and your
Speaker 2: bet there you are coming in when their valuation is
Speaker 2: three hundred billion dollars with a sizeable investment, is it
Speaker 2: about one billion you're coming in?
Speaker 19: So that was reported that we're looking at the investment
Speaker 19: and we are looking. We love the company, we love management.
Speaker 19: They're doing a great job. That's in our investment committee
Speaker 19: right now. But we're also looking at many other companies
Speaker 19: across the sector, so that investment has not been made
Speaker 19: to date.
Speaker 2: Tell us, therefore, where you are looking and where the
Speaker 2: value a cruise. You say you're about capital expenditure, so
Speaker 2: it must be on the AI infrastructure there and the
Speaker 2: large language model air, but everyone's getting excited about the applications.
Speaker 3: Would you go there?
Speaker 1: Yeah?
Speaker 19: For us, we're really focused on capital intensity businesses that
Speaker 19: need to drive down their cost of capital. That's where
Speaker 19: we can be a value added partner, and we can
Speaker 19: be a valuated partner not just to companies, but to
Speaker 19: venture firms who aren't used to looking at this type
Speaker 19: of capital intensity.
Speaker 2: You've obviously been in CAREW for example, for a long time.
Speaker 3: We have four years and.
Speaker 2: You're going to stay with it through the public markets. Yes,
Speaker 2: how do you think they now need and mic and
Speaker 2: Trader now needs to talk to the market about insatiable demand.
Speaker 2: At the moment, we're worrying a little bit about the
Speaker 2: amount of leverage. We're worrying a little bit about ultimately
Speaker 2: how they have financial controls. This moment of being public,
Speaker 2: what does it mean in terms of how the business
Speaker 2: is run.
Speaker 19: Yeah, I think there's been some misconceptions in the marketplace
Speaker 19: about the debt load. You know, if we go back
Speaker 19: to real capital intensive businesses, people take quarters and bring
Speaker 19: it to the bank, and the bank lends them money
Speaker 19: to fulfill the orders, and they pay back when the
Speaker 19: orders come That's exactly what Mike and his team have
Speaker 19: done on their financing journey. And so in order to
Speaker 19: get the most efficient cost of capital, if you get
Speaker 19: long term contracts which they have with companies like Microsoft
Speaker 19: and open Ai, those are readily financiable in the marketplace.
Speaker 3: And Microsoft's not pulling away Micro.
Speaker 19: Not only is Microsoft not pulling away. These are take
Speaker 19: or pay contracts. So Microsoft has contracts for many years
Speaker 19: and they'll continue to pay every month. You know, It's
Speaker 19: in my mind, it's sort of like we go and
Speaker 19: release a car, right and of course it appreciates the
Speaker 19: day you leave, you leave the lot, but you still
Speaker 19: owe for four years on your car lease. And that's
Speaker 19: the same thing here. And I think again, these companies
Speaker 19: need a ton of compute right now. The best provider
Speaker 19: of compute for all of these companies is core Weave.
Speaker 3: I'm so interested in Magneta.
Speaker 2: You're in everything at the moment that's interesting to our audience.
Speaker 2: So where do you know focus you just telld us about.
Speaker 2: It's about the cappal expenditure element. Are there regions that
Speaker 2: you look to what is the next company? What is
Speaker 2: the next open ai for you?
Speaker 19: Sure, we have a lot in our pipeline, and we've
Speaker 19: made hundreds and hundreds of investments. This is our twenty
Speaker 19: year anniversary. But it's really about a consistent, methodical process
Speaker 19: to invest. We want to understand assets, we want to
Speaker 19: understand cash flows, we want to understand downside scenarios. So
Speaker 19: we look a lot different than a normal equity investor.
Speaker 19: We're very focused on analyzing assets, the cash flows they produce,
Speaker 19: and making sure companies have the right runway.
Speaker 2: Will you promise when it's out of your investment committee
Speaker 2: you'll come.
Speaker 3: Back with open AI.
Speaker 9: I'd love to. I'd love to.
Speaker 3: It's great to have you. David Sneiderman, MAGNETI managing partner.
Speaker 3: We hope to have him back. Now.
Speaker 2: That does it for this edition of bloombag Technology. You
Speaker 2: don't want to forget to check out our podcast. You
Speaker 2: can find it on the terminal as well as online
Speaker 2: on Apple, Spotify and iHeart from New York from San Francisco,
Speaker 2: wishing you a very happy weekend.
Speaker 3: This is bluembg Technology als what he doing haply when
Speaker 3: he don't happy, when he don't happen