Speaker 1: From the heart where Innovation, money and power Collie in
Speaker 1: Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: Now from Lomog's world headquarters in New York.
Speaker 4: I'm Caroline High and I'm me d Lodlow, also in
Speaker 4: New York this week, and this is Bloomberg Technology.
Speaker 3: Coming up.
Speaker 5: We are gotning the full earnings coverage for you. We
Speaker 5: hear from the CEO of Ribbon on the ev makers
Speaker 5: earnings and push ahead to all important Disney results after
Speaker 5: the Bell not to mention a whole host of other
Speaker 5: tech names.
Speaker 4: Plus as we speak, we Work appears in bankruptcy court
Speaker 4: to kick off a month's long debate about how creditors
Speaker 4: should divide the remains of a once high flying company.
Speaker 4: Details ahead and shares of take too attractive.
Speaker 5: They are surging today after the company confirm reports it's
Speaker 5: planning to release details on its hotly un This is
Speaker 5: abated Grand, theft, Auto six, all that and so much
Speaker 5: more coming up.
Speaker 3: The story for me.
Speaker 4: Is about Bob Eiger's turnaround. Right, all of those cuts,
Speaker 4: the cost savings, thinking about reducing the content spend, Well,
Speaker 4: that's how he's going to be judged by on the
Speaker 4: bottom line after market. I think that's where we look
Speaker 4: in a few hours time CARECT.
Speaker 5: Yeah, return to growth, that's what people want to see,
Speaker 5: whether it be on indeed Disney's subscriber growth on Disney Plus,
Speaker 5: but also whether really you can see a turn around
Speaker 5: in the overall numbers. Let's get to it with Chris
Speaker 5: Palm Mary or Bloomberg and are we expecting a bounce
Speaker 5: back to growth?
Speaker 6: Yeah.
Speaker 1: I mean, at least in terms of Wall Street expectations,
Speaker 1: it's going to be a bump in sales, it's going
Speaker 1: to be a higher profit a bottom line. They're expected
Speaker 1: to show lower losses in the streaming business. So yeah,
Speaker 1: all those things that you mentioned, the cost cutting, it
Speaker 1: appears to be paying.
Speaker 4: So I think this is going to be a really
Speaker 4: big earnings Chris pal Mary, you lead our coverage of
Speaker 4: the entertainment industry. Do you go into this thinking about
Speaker 4: Disney is a tech company streaming subscribe as content or
Speaker 4: do you wake up on earnings morning and think theme parks,
Speaker 4: merchandise and traditional TV.
Speaker 1: I always think of Disney Board as a conservative products company.
Speaker 1: This has been a really choppy week in terms of
Speaker 1: entertainment earnings. We saw Paramount Scott jumped last week when
Speaker 1: they reported some better results. Today Warner Brothers dives and
Speaker 1: again some numbers there in the Warner Brothers supports are
Speaker 1: not bad. They show to profit in streaming in the
Speaker 1: most recent quarter, which Disney and Paramount have not are
Speaker 1: unlikely to.
Speaker 6: So you never know what to expect.
Speaker 1: It's been a really difficult market for advertising on the
Speaker 1: traditional TV networks. That's something Disney is very much exposed to.
Speaker 1: And the big questions always surround Disney and what is
Speaker 1: Bob Iyer going to say on the call about divestitures
Speaker 1: of ABC buying Bhulu, you know, other potential deals.
Speaker 6: It's it's always, you know, something to.
Speaker 5: Watch because this is actually where we get the first
Speaker 5: well sports TV part of the business stripped out actually
Speaker 5: showing us what the numbers really look like. When it
Speaker 5: comes to ESPN, how much do you think he'll actually
Speaker 5: answer questions about what he sells, what he buys.
Speaker 6: I certainly hope you get to ask a lot.
Speaker 1: I mean, ESPN is one of the ones they said
Speaker 1: they're looking for a strategic partner.
Speaker 6: We've reported they've talked.
Speaker 1: To everyone tech companies, the sports leagues, it's not really
Speaker 1: clear to a lot of people what Disney gets out
Speaker 1: of the you know, bringing in another investor to ESPN.
Speaker 6: Hearst Corporation owns twenty percent of it. You know.
Speaker 1: One of the takeaways from the numbers they started reporting
Speaker 1: on the sports business is that although it's profitable, you know,
Speaker 1: it's it has really high content costs those NFL rights,
Speaker 1: and that's something that's likely to come into play in
Speaker 1: this quarter, as they reported as well. So getting that
Speaker 1: picture of ESPN and where it goes from here, it's
Speaker 1: going to be.
Speaker 4: Important, all right, bloom best Chris paum Mary, you are
Speaker 4: the editor in charge of our entertainment coverage. Is a
Speaker 4: busy day for you on the West coast. Thank you
Speaker 4: very much. Look a name that I've been watching, Caro
Speaker 4: is Rivian, as you know, has changed my desk for earnings.
Speaker 4: Shares really popped last night again in pre market because
Speaker 4: of two pieces of news. Updated guidance they'll build more
Speaker 4: evs and expected but also Amazon has freed them from
Speaker 4: their exclusivity on vans. They can go and sell vans
Speaker 4: to others, and I'd heard from sources they were well
Speaker 4: underway with that, so I asked the CEO R J. Scarrange,
Speaker 4: have a listen.
Speaker 7: It's not as if we woke up yesterday and we
Speaker 7: signed the exclusivity that changed the exclusivity agreement with Amazon.
Speaker 7: It was a long, long process and through that process
Speaker 7: we're able to use that time to build a pipeline
Speaker 7: of other customers and diverse customers.
Speaker 8: We're not yet announcing any.
Speaker 7: Of those deals, but they'll start by large with pilot
Speaker 7: deployments where we have sort of skilled the skilled number
Speaker 7: of vehicles that go out and test the systems, understand
Speaker 7: how they fit within the network. But what you'll see
Speaker 7: is it's very verse across everything from last mile to
Speaker 7: retail to of course just more general purpose commercial applications
Speaker 7: of vans.
Speaker 4: You have an announcement but have not announced them, but
Speaker 4: there are deals, deals that are done, and you have
Speaker 4: visibility on new customers on eDV.
Speaker 8: From this point on, what I'd say is we.
Speaker 7: Have very high visibility on customers outside of Amazon, and
Speaker 7: we are excited to talk about those, but we're not
Speaker 7: yet talking about those other those other relationships and partnerships.
Speaker 4: A j Rivian is still losing thirty one thousand dollars
Speaker 4: on every ev that it makes when will you start
Speaker 4: making money on them?
Speaker 7: Yeah, this has been absolutely a core focus for us
Speaker 7: as a business, and quarter of a quarter we've shown
Speaker 7: significant progress. We certainly showed that as we went from
Speaker 7: Q two to Q three and talked about those results
Speaker 7: yesterday and these improvements that are driving us towards the
Speaker 7: long term twenty five percent corossmark that we've talked about
Speaker 7: extensively on our one.
Speaker 8: You can almost think of it.
Speaker 7: As a staircase. There's a whole host of changes that
Speaker 7: are happening in our material costs. That's our bill of materials,
Speaker 7: there's improvements in our plant. There's the fixed cost absorption
Speaker 7: from running at higher of arms in the plant. And then,
Speaker 7: as of course, there's the evolution of our average selling price,
Speaker 7: which continues to trend upwards as we move into newer
Speaker 7: orders and also launch things like our Max Pack, our
Speaker 7: largest battery pack. But importantly, I do want to really
Speaker 7: be clear here this staircase of steps.
Speaker 8: The biggest step.
Speaker 7: Amongst those is what will be putting in place in
Speaker 7: the plant in the second quarter twenty twenty four, where
Speaker 7: there's a consolidated set of changes that go into the
Speaker 7: vehicle that dramatically reduced to bill of materials and also
Speaker 7: allows to run the plant more efficiently. That's not to
Speaker 7: say there's not improvements that are happening leading up to that,
Speaker 7: but we had a similar shutdown that we did on
Speaker 7: our commercial van early part of this year, and coming
Speaker 7: out of that we had a thirty five percent reduction
Speaker 7: in our material costs. So that's the scale of change
Speaker 7: that we're going to be driving with the shutdown for
Speaker 7: R one in the second quarter twenty twenty four.
Speaker 8: And these are contractual.
Speaker 7: These are contractual changes, meaning bill in materials changes. Are
Speaker 7: not like us hoping suppliers are going to charge us
Speaker 7: lest These are hard negotiations with suppliers contractually obligated, but.
Speaker 8: There's effectivity dates that have to be achieved.
Speaker 7: You know, they don't all apply immediately, they come in
Speaker 7: over time.
Speaker 8: Oh ja.
Speaker 4: Our audience has one common question, very straightforward, when will
Speaker 4: they see in R two prototype A prototype.
Speaker 8: We absolutely can't wait to show it.
Speaker 7: We're going to be showing the R two program in
Speaker 7: the first quarter of this coming year, so early part
Speaker 7: of next year. This is a absolutely vital program for
Speaker 7: us as a business. It allows us to take our
Speaker 7: brand and what we built as a company and put
Speaker 7: into a smaller package, but importantly much more a priced vehicle.
Speaker 7: But I've never been this excited about a product as
Speaker 7: I am about R two. It is that exciting it
Speaker 7: and I would say it's that good. We think it's
Speaker 7: just exceptional.
Speaker 4: But quickly, to be clear, you'll whip the canvas off
Speaker 4: on stage or something in the first quarter of twenty
Speaker 4: four on an R two prototype.
Speaker 8: We're going to be showing it their other product next year. Yep,
Speaker 8: that's right.
Speaker 4: That's my interview with r J Scaring Ruvian CEO. Some
Speaker 4: say doppelganger. Now coming up, I'm say, Caroline, says Steve O.
Speaker 4: Coming up on the show. We're going to talk about
Speaker 4: safeguards for artificial intelligence with the CEO of Credo AI,
Speaker 4: who's in town to kick off the Responsible AI Summit,
Speaker 4: which is in New York today. Carra, what you got?
Speaker 5: I Meanwhile, look, there are a whole host of earnings
Speaker 5: that are coming up, some of them relatively new to
Speaker 5: publicly training life once again, arm Key among them. It's
Speaker 5: actually down on the day, as of course, most of
Speaker 5: the spectrum is in terms of tech arm off by
Speaker 5: three percent. But look for their numbers after the bell
Speaker 5: lift as well All Important after Uber managed to outperform
Speaker 5: Instacart as well Key as It's down some four percent.
Speaker 5: And of course, both of these recently listed companies have
Speaker 5: been under pressure since going public. Or keep a close
Speaker 5: eye on all of that From New York, both of
Speaker 5: us today Listen Blue Meade Technology.
Speaker 4: Some news in the social media space and an effort
Speaker 4: to combat misinformation, Meta will soon require advertisers to disclose
Speaker 4: when political or social issue ads have been created or
Speaker 4: altered by artificial intelligence. The rules will go intoffect in
Speaker 4: twenty twenty four and will require advertisers to disclose when
Speaker 4: AI is used in Facebook or Instagram ads on social issues, elections,
Speaker 4: or politics. This according to the company's vice president of
Speaker 4: Global Affairs, Nick Klek.
Speaker 5: And all of that is of course surrounding safeguards ways
Speaker 5: in which you can identify artificial intelligence?
Speaker 3: What about protection from AI?
Speaker 5: More broadly, Today in New York, in the City Credo
Speaker 5: AI will kick off it's Responsible AI Leadership Summit. Basically,
Speaker 5: it brings together the industry pioneers who are kind of
Speaker 5: leading the charge in the adoption of AI governance globally.
Speaker 5: Please to welcome to the show. Credo AI CEO Nvna
Speaker 5: Singh right here in New York with us. Wonderful to have.
Speaker 3: You with us.
Speaker 9: Thank you so much for having me so Ultimately, are.
Speaker 5: The right people, the right voices, exerting their voices and
Speaker 5: having changed is made at the moment because everyone's wildly
Speaker 5: trying to adopt AI. Are they getting the governance and
Speaker 5: the rules in place quickly enough?
Speaker 9: What a great question, Carolyn.
Speaker 10: You know, the past ten days, if there are any
Speaker 10: signal of the urgency in adopting artificial intelligence. We've seen that,
Speaker 10: you know, from the executive order from President Biden all
Speaker 10: the way to the UKI summit, to a lot of
Speaker 10: discussion around how do we now actually make this real?
Speaker 9: And this is why.
Speaker 10: We are here in New York today because we are
Speaker 10: hosting Industries First Responsible, the premier event where we are
Speaker 10: going to be bringing in partners customers from Amazon to
Speaker 10: Microsoft to Google, Boozal and MasterCard and many others who
Speaker 10: are already operationalizing a lot of those guardrails within their
Speaker 10: organizations today. So I think we've moved beyond the talk
Speaker 10: and now it's time for action. And we are already
Speaker 10: seeing that within the enterprises.
Speaker 4: That is a who's who list of participants. It might
Speaker 4: seem like a sort of strange question, but are there
Speaker 4: any stakeholders in the world of AI that declined your
Speaker 4: invitation that you wish hey sit down with us and
Speaker 4: talk because you're a big part of.
Speaker 10: This Good news is no, everyone that we invited is
Speaker 10: showing up. But as you can imagine that, there are
Speaker 10: certain policymakers as well as startups and companies in Europe
Speaker 10: that are heads down right now with the EUAI Act,
Speaker 10: So they weren't able to join us in person, but
Speaker 10: they are joining us virtually.
Speaker 5: It's the frustration that well, ultimately laws aren't being made
Speaker 5: quickly enough, because it does for everyone wants to say
Speaker 5: this time it's different visa v crypto visav social media.
Speaker 4: And it's a regional thing, right Europe versus US. What's
Speaker 4: happening in and.
Speaker 5: They do all seem to be coming together and talking
Speaker 5: a lot about it, but ultimately it takes time to
Speaker 5: make policy. Is self regulation, as some of our guests
Speaker 5: have say, basically marking your own homework the way that
Speaker 5: it has to be for the naytime.
Speaker 10: You know, Carolyn, I think in the world of AI
Speaker 10: and if you just think about what really powers this
Speaker 10: entire ecosystem.
Speaker 9: It's trust.
Speaker 10: So certainly regulators and upcoming compliance needs are a driving force.
Speaker 10: But right now what we are seeing is the reason organizations,
Speaker 10: policy makers, different stakeholders scare about governance is because you
Speaker 10: want to engender trust in this powerful technology which is
Speaker 10: luckily shaping our lives.
Speaker 9: Day in day out. So I think, if you step.
Speaker 10: Back from the regulatory compliance today, how can we make
Speaker 10: that trust happen. It is through transparency, it is through oversight,
Speaker 10: and it is through actual guardrails.
Speaker 4: On that transparency issue. You heard the story that we
Speaker 4: covered on Meta right, if it's a political or social
Speaker 4: issue add and it's been altered or created by AI,
Speaker 4: then you're you have to disclose it As an advertiser.
Speaker 4: Does that work? Is it a powerful tool to your mind?
Speaker 3: You know?
Speaker 10: I think it's a starting point. One of the things
Speaker 10: that is really nerve racking for me as well as
Speaker 10: a technologist is there's so much information out there and
Speaker 10: we're already entering this phase where we don't know what's
Speaker 10: made by human versus what's made by AI versus what's
Speaker 10: made by human plus AI combination. So I think we
Speaker 10: are entering this phase where need for you know, watermarking,
Speaker 10: need for provenance, need for really understanding the entire lineage
Speaker 10: is going to be critical and we are just at
Speaker 10: the starting point. It's a very complex issue and a
Speaker 10: lot of technological innovation but also policy innovation is needed.
Speaker 5: Can you just walk us through how you at Creto
Speaker 5: ultimately help a company get the right rails in place?
Speaker 3: How have you thought about writing.
Speaker 5: The war book ahead of anyone else, She's setting them
Speaker 5: from a regular shap perspective.
Speaker 10: Yeah, so I think this is where Creto AI our
Speaker 10: mission has always been, how do you make sure AI
Speaker 10: is in service of humanity? And instead of just us
Speaker 10: creating our rules, we first what we did was build
Speaker 10: very strong partnerships in the ecosystem with the regulators, policy makers,
Speaker 10: standard setting bodies like nist IO and others. So our
Speaker 10: first step was really bringing all that knowledge in but
Speaker 10: operationalizing that through software, through technology, and as you can imagine,
Speaker 10: most of our team is AI experts, risk experts. So
Speaker 10: now we are bringing in best practices from CREDOAI to
Speaker 10: really help transform Just a quick.
Speaker 9: Example, today's a big day.
Speaker 10: We are launching our trust reports and trust scorecards, because
Speaker 10: if you've been following the Open AIS dev day, they've
Speaker 10: introduced the marketplace. Now, how do you actually make sure
Speaker 10: that all these new applications that are showing up in
Speaker 10: this marketplace are actually trusted and are governed. And this
Speaker 10: is where Cretois trust layer comes in. We've learned a
Speaker 10: lot in the enterprise world that we are now bringing
Speaker 10: to startups so that they can compete but also win.
Speaker 9: In the stage of.
Speaker 4: AI Verrina saying Creato Aic, it's good to be here
Speaker 4: in person with you, sony conversation we've had remotely keep
Speaker 4: in touch on what actually happens in your summit. Okay,
Speaker 4: time for talking tech and use out just before the show.
Speaker 4: AI startup and Fropic will be one of the first
Speaker 4: companies to use new chips from Google, deepening their partnership
Speaker 4: after a recent three billion dollar cloud computing agreement. And
Speaker 4: Thropic will deploy the chips to help power its large
Speaker 4: language model clause. Remember they also have a deal with
Speaker 4: AWS and Amazon speaking of is offering Prime subscribers discounted
Speaker 4: one medical memberships. The new deal will cut a one
Speaker 4: medical membership by one hundred dollars to ninety nine dollars
Speaker 4: a year. One Medical is a centerpiece of Amazon's healthcare operation,
Speaker 4: and Microsoft is offering US politicians and campaign groups at
Speaker 4: all aim to help fight the rise of deep fakes
Speaker 4: ahead of the twenty twenty four presidential election. The new
Speaker 4: tool will allow parties to authenticate their videos and photos
Speaker 4: who are so called watermark credentials using cryptography car.
Speaker 5: Meanwhile, ed we move away well from the future of
Speaker 5: AI to what's happening in the here and now, the
Speaker 5: downfall of we work. It's making its first bankruptcy court
Speaker 5: appearance today seeking to advance that restructuring proposal that could
Speaker 5: cut three billion dollars in debt and actually shrink the company's.
Speaker 3: Real estate footprint.
Speaker 5: Then once really high flying real estate business far from
Speaker 5: bankruptcy just two years after going public and springing Bloomberg's
Speaker 5: Ellen Hewitt, who was there for the highs, who were
Speaker 5: there for the crash, and ultimately we see the repercussions
Speaker 5: for those left holding what is the assets thus far, Ellen,
Speaker 5: who's really being implicated by this bankruptcy filing?
Speaker 11: Well, the people who are really being affected, I mean,
Speaker 11: it seems like reputationally Starffink is really being hurt by this.
Speaker 11: You know, they've obviously poured billions of dollars into this
Speaker 11: company over the years, and now it's almost like a
Speaker 11: crown jewel of their bad calls. Right, it's going to
Speaker 11: be the one that people always refer to and say like, wow,
Speaker 11: that was really not a good bet. And I think
Speaker 11: although there's a future for We Work, you know, depending
Speaker 11: on how this bankruptcy process goes, I think reputationally, it's
Speaker 11: been really hard for SoftBank and for a Masochi son.
Speaker 4: You have chronicled every step basically of we Work. You
Speaker 4: have a peace out, look back at the ten defining moments.
Speaker 4: We don't have time for all ten. But what are
Speaker 4: the kind of top twos your mind?
Speaker 11: Well, people forget how fun We Work was in the
Speaker 11: sort of the period between like twenty fourteen and twenty nineteen.
Speaker 11: I mean it was first this extremely energetic, raw, raw,
Speaker 11: super fun company that was really trying to make work fun.
Speaker 11: So if you can picture it, you know, going to
Speaker 11: summer camp, which was their big annual blowout both for
Speaker 11: all their employees as well as a bunch of members.
Speaker 11: They would come gather for a weekend in these like
Speaker 11: beautiful settings in nature and have basically a music festival.
Speaker 11: There were speakers like Deepak Chopra, there were headlining musical acts,
Speaker 11: there was alcohol everywhere. And if you talk to people
Speaker 11: who used to work at Weework, they were like, yeah,
Speaker 11: that was really fun, and it's imagine going to Coachella,
Speaker 11: but it's thrown by your boss. It's like one of
Speaker 11: these weird things that I think captures the thing that
Speaker 11: we Work was trying to do, which was blur the
Speaker 11: lines between work and your personal life.
Speaker 5: What's interesting is Masioshi's son sort of almost took on
Speaker 5: sort of some of the blame over Adam himself Newman,
Speaker 5: sort of realizing them perhaps by thrusting so much money,
Speaker 5: so much disire for him to go out build be ambitious,
Speaker 5: it pushed Adam too far. Do you think that has
Speaker 5: credence to it?
Speaker 3: I think it does.
Speaker 11: I mean, in some ways, one way to look at
Speaker 11: Adam is that he's someone who was very good, intentionally
Speaker 11: or not, at taking advantage of the venture capital financial
Speaker 11: ecosystem of the mid to late twenty tens. Like he
Speaker 11: realized that there were people out there like Masa who
Speaker 11: were willing to write enormous checks for people who were
Speaker 11: willing to put so much energy into growing a company
Speaker 11: as fast as Adam was able to grow. We work
Speaker 11: so you end up with someone who you know already
Speaker 11: had the tendencies to want to go big and go crazy,
Speaker 11: and then there's someone like Masa who really came along
Speaker 11: and enabled that with enormous amounts of money. It does
Speaker 11: seem like both of them, you know, they're not certainly
Speaker 11: they'll have futures in business. Adam's future and business certainly
Speaker 11: seems quite strong. He's been able to raise hundreds of
Speaker 11: millions of dollars for his new ventures and his reputation.
Speaker 11: Of course, this will always be part of his story,
Speaker 11: but I think he's emerged pretty unscathed.
Speaker 4: Bloomberg, Zell, and hut all over. We work for years.
Speaker 4: Today's day one of bankruptcy court. More to come. Thank
Speaker 4: you so much.
Speaker 3: Welcome back to Blue Meg Technology. I'm Caroline Hyde.
Speaker 4: And I Med Ludlow, and it's time for a quick
Speaker 4: check on markets in Team Technology. I've got some devastating
Speaker 4: new After eight straight days of gains on the Nasdaq
Speaker 4: one hundred, the longest streak of gains going back to
Speaker 4: November twenty twenty one. As it stands, the Nasdaq one
Speaker 4: hundred in this session is down by a few tens
Speaker 4: of one percent. The hot streak is over. But what's
Speaker 4: so astonishing, Caroline? This week, while I've been in New
Speaker 4: York with you, we talked about how much of the
Speaker 4: heavy lifting the megacaps have done in the context of earnings.
Speaker 4: Some upside their Nvidia still to report, but some of
Speaker 4: the higher multiple software names they've been in the red.
Speaker 4: And we've seen this situation where the vast majority of
Speaker 4: names in the Nasdaq one hundred have been in the
Speaker 4: red in any given session, while few of the megacaps
Speaker 4: keep the index overall buoyant. The focus, of course, is
Speaker 4: switching to the macrod is switching to the geopolitics and
Speaker 4: what the Fed will or won't do at the start
Speaker 4: of twenty twenty four. But watch this screen going towards
Speaker 4: the end of the session. Will we snap eight days
Speaker 4: of gains or will we get a ninth day? I'm
Speaker 4: ever the optimist you always are.
Speaker 5: You have to be in the world attach quite often.
Speaker 5: But meanwhile, will someone's got reason to be optimistic? The
Speaker 5: IT infrastructure provider Kindrel celebrated second anniversary. If it's spin
Speaker 5: out from IBM, Better than expected financial results. Lik shares
Speaker 5: have actually been popping at one point, up as much
Speaker 5: as fifteen percent, biggest in to.
Speaker 3: Day rise since August.
Speaker 5: The company boosted its earnings outlook for the full year
Speaker 5: post a second quarter revenue and adjusted EBIT DAH ahead
Speaker 5: of street consensus. Kendrol CEO Martin Schroeder is with us
Speaker 5: just down in midtown Manhattan. It's good to have some
Speaker 5: time with you, Martin. And look, this is a turnaround story.
Speaker 5: You seem to be doing it quicker than expected. Revenue
Speaker 5: is still falling. You anticipate that you could get that
Speaker 5: into positive territory, maybe by what next year.
Speaker 12: We do thank you for the opportunity. Look, we've said
Speaker 12: already for two years now that we will get this
Speaker 12: business to grow again in calendar twenty five, and now
Speaker 12: two years into the journey, we feel better about that
Speaker 12: than ever before. This year and a little bit next
Speaker 12: year as well, is going for us to be continued
Speaker 12: focus on engineering, if you will, decline around things that
Speaker 12: just don't make sense for our business, and we see
Speaker 12: the benefit of that in the profit progress that we've
Speaker 12: made now. At the same time, we are seeing growth
Speaker 12: and strong revenue growth in areas that we want to
Speaker 12: continue and we expect to continue over the long haul.
Speaker 12: So our Kindrell consult business is growing quite well. Elements
Speaker 12: elements of our business where we are aligned with our customers,
Speaker 12: long term secular trends around investing in data in AI
Speaker 12: and hybrid cloud and et cetera, et cetera, they're all
Speaker 12: showing great, great growth.
Speaker 6: So we're in a position as we said.
Speaker 12: We would be, where we're engineering declines in part of
Speaker 12: our business which just didn't make sense for us, and
Speaker 12: on all the while building businesses. So we get back
Speaker 12: to long term sustainable growth in calendar twenty five.
Speaker 5: When I think about tech infrastructure, when I think about data, AI, security,
Speaker 5: they sound pretty necessary. Ultimately, there are any macro headwinds
Speaker 5: that affect you and the growth that you're currently seeing
Speaker 5: or no, Yeah.
Speaker 6: It's a great question.
Speaker 12: Look that the nature of what we do is running
Speaker 12: the mission critical infrastructure of the companies that run the world,
Speaker 12: the banking systems, the airline systems, the telecom systems, the
Speaker 12: supply chains, and so in that nature of that work
Speaker 12: is that regardless of the macro environment, you need to
Speaker 12: run your infrastructure. And fortunately, as you would expect from
Speaker 12: the world's largest infrastructure services provider. We're also helping our
Speaker 12: customers not only make sure they are infrastructure stays secure,
Speaker 12: stays resilient, but we're also helping them position themselves for
Speaker 12: those long term secular trends that they want to continue
Speaker 12: to invest in, regardless of the macro environment, so that
Speaker 12: they're ready for what comes next. So we spend a
Speaker 12: lot of time with our customers helping them. For instance,
Speaker 12: with AI, we spend a lot of time with our
Speaker 12: customers getting the data architectures right so they can take
Speaker 12: advantage of that innovation. And obviously we spend a lot
Speaker 12: of time with our customers helping them move on to
Speaker 12: clouds to take advantage of the innovation they see there
Speaker 12: to run their businesses. So while while the nature of
Speaker 12: the work remains sort of resilient, if you will, to
Speaker 12: the macro, because we're not really we're not really a
Speaker 12: something that you decide if you need or you don't
Speaker 12: need you have to have an infrastructure, the nature of
Speaker 12: what the work we do also helps them position themselves
Speaker 12: for the future. We're just not a discretionary item, and
Speaker 12: the nature of the work we do is not discretionary
Speaker 12: for their future.
Speaker 4: Either the nature of the work you do and those
Speaker 4: doing it. What put Kindre on the map for me
Speaker 4: at the beginning of the year, Martin, was that you
Speaker 4: confirm to our own brody Ford you would cut a
Speaker 4: small amount of headcount, but that in tern put on
Speaker 4: the map that you had ninety thousand.
Speaker 8: People working for you.
Speaker 4: How has the progress of those reductions been and why
Speaker 4: do you need ninety thousand stuff? That's a lot of people.
Speaker 12: Yeah, yeah, it just look it is a lot. But
Speaker 12: we're big. We're a big company. We're the largest infrastructure
Speaker 12: services provider, and our customers rely on us again to
Speaker 12: run their most important mission critical what I would call
Speaker 12: hearts and lungs. Now out of the ninety which is
Speaker 12: the number we were spun out with, about that number
Speaker 12: spun out of IBM, so we you know, you don't
Speaker 12: get to pack your own suitcase on this journey.
Speaker 6: So that was what we had.
Speaker 12: Now out of that, you know, roughly ninety about two
Speaker 12: thirds of those people are delivering every day to customers.
Speaker 12: And that's what's so important to customers that they have
Speaker 12: the people that they trust delivering every day. And so
Speaker 12: we spend a lot of time making sure that our
Speaker 12: customers and the teams they trust have the right skills,
Speaker 12: they're in the right place, and they're delivering every day
Speaker 12: we have Earlier this year as we came out of IBM,
Speaker 12: as we hit our one year anniversary, we were able
Speaker 12: to start to simplify some of the processes we inherited,
Speaker 12: and we took a big step last weekend, which was
Speaker 12: actually the two year anniversary date, took a big step
Speaker 12: by moving off of now all of the transition service
Speaker 12: agreements that IBM created for us, so we are now
Speaker 12: on an all cloud platforms. We've reduced the application count
Speaker 12: from what we inherited, which was over eighteen hundred to
Speaker 12: now in the dozens and that allows us now to
Speaker 12: rethink how the processes that we inherited, how can they
Speaker 12: really be changed and transformed.
Speaker 8: To support a services business.
Speaker 12: So for us, while we were delta hand, we've been
Speaker 12: able to use AI automate workloads so that we're not
Speaker 12: as needful to go out and build skills with external hires.
Speaker 12: We can use the people we free up and put
Speaker 12: them into the more important, quite frankly, more valuable work
Speaker 12: that we're doing now, and we now have an opportunity
Speaker 12: as we get through as we are now through the TSA's,
Speaker 12: we have an opportunity to really think how we run
Speaker 12: the business and how do we build how do we
Speaker 12: build fit for purpose processes for the kind of services
Speaker 12: business we run as opposed to the more product orated
Speaker 12: business that we came from.
Speaker 4: Martin Shares up eleven percent, on track for their biggest
Speaker 4: jump since August. A big part of that is the
Speaker 4: AI story. As you outlined, you know, in the cloud space,
Speaker 4: there's evidence that companies being small kind of dialed it
Speaker 4: back in some areas and reallocated spend for compute on
Speaker 4: the AI side. Does that show up in infrastructure as well?
Speaker 12: The work that we do and we're helping our customers
Speaker 12: with is really getting their infrastructure ready to undertake first
Speaker 12: the science projects that they want to try. And I'll
Speaker 12: call it generative you know what they call generative AI now.
Speaker 12: But we've been working with customers for quite a while
Speaker 12: on helping them implement machine learning and all the things
Speaker 12: that we use to run our business because they take
Speaker 12: advantage our customers take advantage of our AI today by
Speaker 12: helping them stay at the high end of world class
Speaker 12: based on all the technology you say of implemented and
Speaker 12: we automate all of that for them so that they
Speaker 12: have the best in class implementations of Microsoft and all
Speaker 12: the other all the other technologies that they're using. So
Speaker 12: they've been relying on us to give them insights about
Speaker 12: their infrastructure and now that now that they see we
Speaker 12: are kind of customtomer zero if you will, for AI
Speaker 12: and for the use of machine learning. We're also helping
Speaker 12: them now with our partners, get ready to implement their
Speaker 12: own machine learning, getting ready to implement generative AI and
Speaker 12: all the work that you need again with our workloads,
Speaker 12: all the work you need to do around data architecture
Speaker 12: and security and resiliency.
Speaker 4: Yes, kendro Ceo Martin Schroezer in the market buying that
Speaker 4: with shares on track for the bigges jump since August,
Speaker 4: Thank you so much. Now, coming up on Boomboy technology,
Speaker 4: we'll talk more about AI, but particularly investing in AI
Speaker 4: with Sequoia a capital partner, Constantine Buer that's coming out,
Speaker 4: carc well.
Speaker 5: I'SOK another company where shares are popping. If you're looking
Speaker 5: in the ADRs of ady And and Dutch Payments company,
Speaker 5: which is absolutely battered in August when it came with
Speaker 5: its numbers that just twenty two percent growth wasn't going
Speaker 5: to be cunning anymore.
Speaker 3: The competition, the worry.
Speaker 5: They needed to convince investors to buy in Today as
Speaker 5: their investor Day, they seem to be doing that. Shares
Speaker 5: rocketing some thirty one percent looks still half of where
Speaker 5: they traded back in August, but they are showing that
Speaker 5: there's going to be aiming for low twenties to high
Speaker 5: twenties percentage annual revenue growth up to twenty twenty six,
Speaker 5: improving ebidal margin to levels above fifty percent in that
Speaker 5: year too.
Speaker 3: This is a room met technology.
Speaker 5: Time now for our VC roundup first up, Hillhouse chairman
Speaker 5: Zanglie said that the next few years could produce quote
Speaker 5: the best vintages for private equity in Asia and that
Speaker 5: corporate management teams are maturing in the region now. Hillhouse
Speaker 5: is known for investing in traditional companies which use technology
Speaker 5: to improve business efficiency. Meanwhile, Coso Management has marked down
Speaker 5: it's stake in Opense by ninety percent. It's implying the
Speaker 5: company is now valued at one point four billion or
Speaker 5: less on paper. According to the information that's signing a document,
Speaker 5: coach you slashed the value of its one hundred and
Speaker 5: twenty million steak in the NFT marketplace just thirteen million
Speaker 5: as of the second quarter of this year.
Speaker 3: I mean, while Cheryl.
Speaker 5: Sandberg is back when she's backing women's health tech startup Circle,
Speaker 5: one of the first investments in the former Meta COO
Speaker 5: is making through her new venture capital fund. Circle is
Speaker 5: a San Francisco based startup using AI to analyze biomedical
Speaker 5: and genomics data with the goal of improving women's healthcare.
Speaker 8: ED.
Speaker 4: All right, let's stick in the world adventure today's VC
Speaker 4: spotlight and bring in Sequoia capital partner Constantine Buler.
Speaker 3: And it's a good.
Speaker 4: Time to catch up, right, Caroline. And I think of
Speaker 4: Sequoia as this juggernaut of capital deployment, venture back deals
Speaker 4: and with you we think about AI. And I know
Speaker 4: you've actually been very busy since last we spoke. What
Speaker 4: have you been writing checks for? Absolutely?
Speaker 1: Ed?
Speaker 13: Caroline, thanks so much for having me back on. It's
Speaker 13: wonderful to be here. So last time we caught up,
Speaker 13: you asked the question, how is Sequoia going to lean
Speaker 13: into this moment of investing? Because Sequoya has been in
Speaker 13: the AI space for decades, now, But there's this amazing
Speaker 13: inflection in the generative AI revolution, and I'm very excited
Speaker 13: to share that we've leaned in by backing excellent founders
Speaker 13: that are solving real customer problems. So this year alone,
Speaker 13: we've made twenty investments in the AI space. That's about
Speaker 13: sixty percent of our early stage net new investment.
Speaker 4: Well, real quick, how does that differ from what you
Speaker 4: did last ya for example? How is that a rampop
Speaker 4: inactivity in investing in AI?
Speaker 13: It's even more than last year. We've always had a
Speaker 13: focus on AI, back to nineteen ninety three with Nvidio,
Speaker 13: which is one of these absolute cornerstones of the entire
Speaker 13: AI field. We've always had an eye on AI, but
Speaker 13: there's been this exciting inflection point with generative AI that's
Speaker 13: allowed us to lean into even more companies in twenty
Speaker 13: twenty three, and this has allowed us to actually see
Speaker 13: users leaning into these products and using them actively. So
Speaker 13: now we're seeing lawyers leveraging AI and our product Harvey
Speaker 13: in order to generate contracts. We see teams using dust
Speaker 13: in order to make personal assistance that automate mundane tasks,
Speaker 13: and we see developers using hugging face to implement open
Speaker 13: source into hundreds thousands of projects. Overall, it feels like
Speaker 13: AI has landed and we've moved out of hype and
Speaker 13: into reality.
Speaker 5: Well, was any of the valuations of which you were
Speaker 5: writing the checks feeling a little hype?
Speaker 13: No doubt, valuations can be very high in the AI space.
Speaker 13: We've tried to stick with fundamentals, and one of the
Speaker 13: things that we've found really helpful is a lot of
Speaker 13: AI builders, especially the ones we work with, appreciate the
Speaker 13: fact that building an AI company is building a company.
Speaker 13: So they look to Sequoia and they look at the
Speaker 13: track record and they realize a Sequoia backed company is
Speaker 13: four times more likely to go from seed to Series
Speaker 13: A than if it weren't backed by Sequoia, it's twice
Speaker 13: as likely to go from A to Series B.
Speaker 6: Why do I say this?
Speaker 13: The point is that an AI company is a company,
Speaker 13: and so the fundamentals of company building that we've learned
Speaker 13: over the past many decades with AI companies and Internet
Speaker 13: companies and cloud companies and mobile companies are translating very well.
Speaker 13: And that's led to a lot of our founders realizing
Speaker 13: the COO advantage and valuations that are much more reasonable
Speaker 13: within the ones that there's an interesting triangle here. We
Speaker 13: started the week with open AI's developers conference. You Sequoia,
Speaker 13: we're an earlier investor in open ai, and a big
Speaker 13: part of their pitch was kind of creates your economy.
Speaker 13: In other words, they're going to start offering stuff that
Speaker 13: will help others build an AI company. Is that your
Speaker 13: assessment as well? Yes, So we've been investors in open
Speaker 13: ai for a while. We invested back in twenty twenty one,
Speaker 13: before this amazing movement really started to inflect. And what
Speaker 13: they've done exceptionally well is leaning too the developer, per
Speaker 13: your point ed, So they understand that the creator has
Speaker 13: that power, and yes they can actually augment it with
Speaker 13: this type of staff that you're describing, but they still
Speaker 13: want to take that and put the power in the
Speaker 13: hands of the creator, which is another decades long trend.
Speaker 13: So we've always known the developer the creator has been key.
Speaker 13: This harkens back to Stripe, which is the developer tools
Speaker 13: company for payment a decade ago, Mango dB right here
Speaker 13: in New York, developer Tools Company for databases, or even Unity,
Speaker 13: the developer tools companies for game creation. One of the
Speaker 13: things that open ai has nailed is focusing on the developer,
Speaker 13: focusing on the creator and helping that creator, including with
Speaker 13: these assistants and services.
Speaker 5: I'm interested you mentioned us, for example, a way in
Speaker 5: which we can all suddenly be augmented basically with our
Speaker 5: own very helpful chatbot.
Speaker 3: But how did GPTs.
Speaker 5: That open eye is going to be suddenly making more
Speaker 5: abundant Not just eat into that mote, how do you
Speaker 5: decide which one to mac?
Speaker 13: Yes, so GPTs are going to be I think a
Speaker 13: wonderful addition to the ecosystem. And as I see it,
Speaker 13: as we see it, the world is not going to
Speaker 13: be a zero sum game in AI. All boats are
Speaker 13: rising because of this amazing wave. You can do so
Speaker 13: much more with so much less.
Speaker 5: But not all value is going to accrue to set
Speaker 5: to some of the ones that you've backed. I mean,
Speaker 5: not all of these ones are going to survive the
Speaker 5: competition coming from the Juggernauts.
Speaker 8: No doubt.
Speaker 13: And what we've learned time and again at Sequoia and
Speaker 13: these technology innovations is that it's survival of the most nimble.
Speaker 4: Well, the big concentrative open AI is that they can
Speaker 4: stomach the mega compute costs, the talent costs, so they
Speaker 4: end up being the strongest and any game in town.
Speaker 4: Is that a fair argument. I don't think it's going
Speaker 4: to play out that way. And first of all, we
Speaker 4: love open air. We want them to succeed and continue
Speaker 4: to perform. They've actually contributed a lot to the AI ecosystem.
Speaker 4: But we're in the middle of a decade's long AI revolution.
Speaker 13: This is a point in time. Let's think back to
Speaker 13: the three things that make up AI. Its algorithms, of course,
Speaker 13: written by people, it's compute, and its data. In the
Speaker 13: early two thousands, we saw the first sparks and that
Speaker 13: was in the form of predictive AI that powers everything
Speaker 13: from your Facebook news feed to your Netflix recommendations. Then
Speaker 13: more compute, more data. We had the perceptive AI revolution.
Speaker 13: That's everything from computer vision to self driving cars, which
Speaker 13: are now commercially available on the streets of San Francisco
Speaker 13: and amazing. This wave, the generative AI wave, is just
Speaker 13: more data, better algorithms, more compute, and we're going to
Speaker 13: continue to go from here. It's going to be video,
Speaker 13: it's going to be multimodal, which they're investing into as well,
Speaker 13: and it's going to be AI controlling complex systems just
Speaker 13: another point in time, and our job is to focus
Speaker 13: on the underdog so that they can actually come in
Speaker 13: and usher in the next wave of AI in what's
Speaker 13: going to be many more decades of innovation.
Speaker 5: Many would say, actually the worker is the underdog right now,
Speaker 5: so we'll see how that has implications on the labor
Speaker 5: for will have to get you back for another conversation
Speaker 5: on that. SEQUEA Capital partner Constantine Muler always great to
Speaker 5: have him right here in New York can discuss all
Speaker 5: these things.
Speaker 8: Okay.
Speaker 4: After the runaway success of the animated Super Mario Bros. Film,
Speaker 4: Nintendo is planning a live action movie based on the
Speaker 4: legend of Zelda video game series. The company announces that
Speaker 4: Too Analysts is planned to release one movie every year,
Speaker 4: building on the success of Mario, which generated one point
Speaker 4: thirty six billion dollars in global ticket sales. Nintendo said
Speaker 4: it will produce the Selda picture with Arad Productions, which
Speaker 4: has also worked in some of the Marvel film's cara.
Speaker 5: Meanwhile, sticking with video games, said shares a take two
Speaker 5: interactive surging today on news at the company look it's
Speaker 5: gearing up to announce the Resa Grand Theft Auto six age.
Speaker 5: I know that you're one interesting title exactly, completely a
Speaker 5: wild title for them. But let's get to the water
Speaker 5: behind the scoop. Bloomberg's Jason, Jason, we were anticipating. We're
Speaker 5: excited for what's going to be released in December, the
Speaker 5: teasers to come. How important is this for the world
Speaker 5: of game land?
Speaker 9: Yeah, it's you, muongus.
Speaker 2: I think I don't even think people fathom just how
Speaker 2: big a release this is going to be. The previous game,
Speaker 2: GRANDT five has sold one hundred eighty five million copies, which,
Speaker 2: just to put that in perspective, the entirety of the
Speaker 2: Assassin's creat series from Ubisoft, the Umungas series that has
Speaker 2: been a cornerstone of a major video game publisher, has
Speaker 2: sold two hundred million copies. GTA five is sold once
Speaker 2: again one hundred eighty five It is the second best
Speaker 2: selling game of all time, second to only Minecraft. But
Speaker 2: Minecraft has kind of an unfair advantage because it's on phones.
Speaker 2: GTA is just on PC and consoles, so it's pretty
Speaker 2: mind boggling.
Speaker 4: When I think about GTA, I think about the fan base, right,
Speaker 4: it's an intense global fan base. What can you tell
Speaker 4: that fan base based on your reporting to expect from
Speaker 4: GTA six.
Speaker 2: Yeah, so we've been reporting a bloomberg on this game
Speaker 2: for a little while. Now we know it is set
Speaker 2: in a fictionalized version of Miami. We know it is
Speaker 2: going to have two protagonists, one male and one female.
Speaker 2: This is the first time in quite a long time
Speaker 2: that Rockstar has had a female protagonist, so that I
Speaker 2: think is going to be exciting. It'll offer a different
Speaker 2: perspective than your average kind of male centric Rockstar game.
Speaker 2: And yeah, it's really exciting. I mean, I'm very excited
Speaker 2: to check it out. I'm also excited about the fact that,
Speaker 2: as we've also reported, rock Star has really done a
Speaker 2: lot of work and trying to improve their culture over
Speaker 2: the last few years. They came under some controversy during
Speaker 2: the release of their last game, Red Dead Redemption two
Speaker 2: over their work life balance and the kind of tough
Speaker 2: hours that they put their workers through, and it sounds
Speaker 2: like from what I'm hearing inside the company, things have
Speaker 2: really been getting better there, and we'll have to see
Speaker 2: if that remains the case throughout the final year or
Speaker 2: two of development on GTA six.
Speaker 4: Jason just terrific reporting and Carrie. Twenty twenty three has
Speaker 4: been a year about video games, video games and films.
Speaker 3: Video games, What are you doing at the moment?
Speaker 4: I'm playing right now Spider Man two. That's great.
Speaker 5: Ah, we like it when he's a superhero. I meanwhile,
Speaker 5: that does it. From this edition of Bloombag Technology.
Speaker 4: Check out the pod wherever you get yours from New
Speaker 4: York City. This is Bloomberg Technology.