Speaker 1: From Mahard of Where Innovation, Money and Power.
Speaker 2: Collie in Silicon Vallet NBN. This is Bloomberg Technology with
Speaker 2: Caroline Hyde and Ed Love Love.
Speaker 3: I'm Caroline Hyde at Bloomberg's world headquarters in New York.
Speaker 4: And I'm Ed Lovedlow in San Francisco. This is Bloomberg
Speaker 4: Technology coming up.
Speaker 3: Tesla asked its investors to approve Musk's fifty six billion
Speaker 3: dollar pay package. Again, we discussed the vote on moving
Speaker 3: to Texas and its criticism of the Delaware court that
Speaker 3: voided Musk's twenty eighteen award.
Speaker 4: Chip making equipment orders dive at ASML as Europe's most
Speaker 4: valuable company faces a pullback from its Taiwanese and South
Speaker 4: Korean customers.
Speaker 5: Are chip stockpiles back.
Speaker 3: And meanwhile we bring you a key conversation with the
Speaker 3: CEO of debt laden Autos as the French IT company
Speaker 3: seeks to save itself. That and so much more coming
Speaker 3: up throughout this hour. But let's get your cook check
Speaker 3: on these markets. And I want to shine a light
Speaker 3: and what's happening ultimately an the equity market, which pulls
Speaker 3: back a little bit from where it had been. We're
Speaker 3: seeing a little bit of caution, of course, as we
Speaker 3: digest a more hawkish federal reserve, as we think about
Speaker 3: where JA power is really steering us in terms of
Speaker 3: number of cuts ubs, thinking it'll be two for this
Speaker 3: year starting in maybe September.
Speaker 6: Nevertheless, we're seeing.
Speaker 3: Actually bob markets continuing to outperform, and not as much
Speaker 3: as they were earlier. Red currently seeing a twenty year
Speaker 3: yield just down by about two three basis points to
Speaker 3: remember big auction coming ahead of that all important Beige
Speaker 3: Book as well, and moment we're moving on and have
Speaker 3: a look at what's happening in the world of crypto,
Speaker 3: because Bitcoin has actually been well on the downside, even
Speaker 3: as the US dollar is for once falling now after
Speaker 3: six this is the first time in six days we've
Speaker 3: actually seen the US dollar give up some of its
Speaker 3: strength as we maybe just digest what has been, of
Speaker 3: course an apparent slightly more hawkish shift, where we're looking
Speaker 3: at a bitcoin currently off by two and a half
Speaker 3: percent riskasset's still cautious out there are but what are
Speaker 3: you watching?
Speaker 4: On the micro Tesla continues to dominate headlines and market moves.
Speaker 4: We're down for a four straight session, that's the worst
Speaker 4: run of declines since the beginning of this year, and
Speaker 4: the stock is trading at its lowest level in almost
Speaker 4: a year. And I don't think this is to do
Speaker 4: with the two red headlines on the Bloomberg tumil. I
Speaker 4: think the proxy revealing that investors will vote on that
Speaker 4: original twenty eighteen pay package rejected by a court, and
Speaker 4: the idea of incorporating in Texas. I don't think that's
Speaker 4: the downward pressure. There's indigestion from the events of the
Speaker 4: last four days, executive departures, layoffs, and Elon's comment about
Speaker 4: going all in on ROBOTAXI, and I think a lot
Speaker 4: of people are trying to understand what's happening, what is
Speaker 4: the big picture and when does it happen. But the
Speaker 4: stock's under a lot of pressure, while the talk from
Speaker 4: Elon Musk on his own platform X is fighting talk.
Speaker 5: And I think we've got some pretty good guests to
Speaker 5: go through that with.
Speaker 3: Yeah, let's talk about the fighting talk, let's talk about
Speaker 3: the reaction throughout. Let's start the Bloomberg's Crow Todell, And
Speaker 3: what's so interesting is ultimately coming out fighting to Delaware,
Speaker 3: to the court, to the judge that said initially, this
Speaker 3: twenty eighteen pay package is far too much and new
Speaker 3: board are not doing enough to push back. But I'm
Speaker 3: interested ased why the argument goes that it would cost
Speaker 3: billions more to renegotiate a pay package rather than just
Speaker 3: try and vote through the current one.
Speaker 7: Yeah, I do think it's interesting that the board sort
Speaker 7: of you know, portrayed this as a nuisance, really this
Speaker 7: idea that they would have to take on additional expense
Speaker 7: that you know, the company accounted for having to set
Speaker 7: up these options and set aside this this compensation for
Speaker 7: musk and essentially would have to sort of, you know,
Speaker 7: do it over again. It does also strike me just
Speaker 7: from the language that was used in the filing that
Speaker 7: it was sort of musky in and that Robin Denholm,
Speaker 7: the chair of the company, you know, referred to this
Speaker 7: idea of essentially that the court had taken away shareholder
Speaker 7: or voice. It was kind of a freedom of speech
Speaker 7: esque defense of this pay package. But of course, you know,
Speaker 7: share you know, corporate governance critics are not going to
Speaker 7: look on this very family, this idea of you know,
Speaker 7: this this award being slapped down and the board just
Speaker 7: going back to the world with the same plan.
Speaker 4: Craig, you've been reading the proxy for the last four
Speaker 4: hours and thirty minutes.
Speaker 5: I know you have been at your desk doing that.
Speaker 4: There's some granular detail in it that Tesla explains a
Speaker 4: randy compensation program and the idea of reincorporating in Texas
Speaker 4: in parallel, and my read on it is that they
Speaker 4: basically don't want to be accused of using the Texas
Speaker 4: incorporation as leverage in this ongoing pay issue.
Speaker 7: Yeah, they want to kind of pair these two basically
Speaker 7: get the shareholders backing again. You know, I guess make
Speaker 7: the case really that shareholders, if they didn't already know
Speaker 7: what went into this award, the Delaware court just you know,
Speaker 7: brought to light a lot of these details, made clear
Speaker 7: what was going on here and really sort of put
Speaker 7: it back in the court of the shareholders and say
Speaker 7: are you okay with this or aren't you? And of
Speaker 7: course you know, we have you know, heard rumblings reported
Speaker 7: on this idea that retail shareholders were really sort of
Speaker 7: an uproar, you know, based on just at least the
Speaker 7: volume of complaints about the way this was handled. Also
Speaker 7: Tesla saying in the proxy that four of its ten
Speaker 7: biggest institutional investors wrote to the company or you know,
Speaker 7: somehow communicated that they were in support of this award.
Speaker 7: So there is some reason to think that perhaps this
Speaker 7: stands a chance of being approved, just as it was back.
Speaker 4: In twenty eighteen, it was a load of dents texts
Speaker 4: to go through testas down a percentage point. That way
Speaker 4: of sessions in moos created ow great work, Thank you
Speaker 4: very much. Just keep a conversation going with Pierre Faragu,
Speaker 4: who's head of Tech Infrastructure research at New Street Research.
Speaker 4: Just give me one sentence, what is the story of
Speaker 4: Tesla right now? Just one sentence.
Speaker 8: I'm not very good at doing one sentence, you know that.
Speaker 9: So the one sentence would be Testa is a car
Speaker 9: manufacturer first and for the seable future, they need to
Speaker 9: continue to be successful at manufacturing cars, and that's a
Speaker 9: platform for them to do additional amazing things.
Speaker 8: You have a donomous driving.
Speaker 9: They are the most advanced player in the world on
Speaker 9: supervised autonomous driving, so your car driving by itself under
Speaker 9: your supervision. They're making exceptional progress. There is a very
Speaker 9: long term, like over the horizon goal host of being
Speaker 9: able to do Robert. It's a much more still challenging
Speaker 9: thing to get to very uncertain so and there's also
Speaker 9: the opportunity to develop human and humanoid robots on the
Speaker 9: same technology platform as FIG And these things will take
Speaker 9: us whichever way you look at it.
Speaker 8: And we know Elon Musk is very impatient, wants to
Speaker 8: accelerate that momentum, but it's going to take us.
Speaker 9: And in the meantime, we also need Tesla to see
Speaker 9: that Tesla is still going to be a very successful
Speaker 9: g manufacturers being able over time to stabilize pricing, to
Speaker 9: continue to gain share with the product they have in
Speaker 9: the market today, and then in the next two three
Speaker 9: years to be able to ramp a large volume, lower
Speaker 9: price platform to continue to grow sustainably, and all that
Speaker 9: should deliver revenue growth and margin expansion.
Speaker 8: And that's really like the near term and the longer
Speaker 8: term is yes. But and robotaxes.
Speaker 4: It was a loaded question, but you did give me
Speaker 4: one sentence just without full stops of punctuation.
Speaker 5: That's okay.
Speaker 4: The reason I ask it is I'm trying to understand
Speaker 4: in the moment the downward pressure on the stock, and
Speaker 4: I don't think it's got much to do with the
Speaker 4: proxy So of all the headlines of the last four days,
Speaker 4: which was of most interest to ups.
Speaker 9: Of the last few days, the most important headlines have heard, well,
Speaker 9: you know, the most important thing of the last few
Speaker 9: days was actually to digest swear the headlines of last week.
Speaker 8: And so we've heard, like, we've read a rota's report
Speaker 8: mode to.
Speaker 9: Being canceled and things like that, and we've had like
Speaker 9: you know, ins and indications from Milan Musk and from
Speaker 9: this last chief designer that the modity is probably not cancered.
Speaker 9: And so the most important breakthrough earlier this week was
Speaker 9: the understanding that probably what's happening to that Tesla is
Speaker 9: that Tesla is going to prioritize designing developing the robot
Speaker 9: taxi in Austin for now, because anyway, the model too
Speaker 9: will need to wait for Mexico to ramp in millions
Speaker 9: of units, and Mexico is still two three years away,
Speaker 9: and so in the meantime, producing only a quarter of
Speaker 9: a million Model twos in Austin doesn't really help.
Speaker 8: It's it's like a very very little help.
Speaker 9: And so my educated guess is that Elan understood that
Speaker 9: and thought, okay, let's go all in on robot taxi.
Speaker 9: Let's get a platform out, let's have a small flet
Speaker 9: on which we can try out tests, improve the technology,
Speaker 9: and then let's get back to the model too a
Speaker 9: bit later. So hopefully next week when the company reports,
Speaker 9: we get a bit more lightly on that. So that's
Speaker 9: really the big thing of the last forty eight.
Speaker 3: I like the fact that you give us your reasoning,
Speaker 3: you interpretation, pr give us your reasoning on whether the
Speaker 3: stock should be down by a third so far this year.
Speaker 9: Yes, so if you look at the potential of the
Speaker 9: company in the long run, that's a nonsense.
Speaker 8: Tesla makes electric cards.
Speaker 9: Electric cars remain I think the future of cards and
Speaker 9: nobody on us can make electric cars as good as
Speaker 9: Tesla and as cost efficiently. And if anything, this gap
Speaker 9: is widening. I just took delivery of my new medal three,
Speaker 9: the high Lander. Like the podcast Testa is making it
Speaker 9: doing grades and very cost efficient.
Speaker 8: Cards is still mind blowing.
Speaker 9: So I think it's still a very powerful company in
Speaker 9: the stock is vastly undervalued if you look at it
Speaker 9: in the long run. In terms of short term developments,
Speaker 9: I have a lot of sympathy for where the stock
Speaker 9: is going has been going in the last three months
Speaker 9: because Tesla has been hitting a wall in terms of growth,
Speaker 9: has been forced to regius pricing lots, you know, like
Speaker 9: finding themselves in a situation where they were raising increasing
Speaker 9: productions faster than demon could could increase. So they have
Speaker 9: to reset the bar and it's not going to happen
Speaker 9: over a few weeks. We still have a lot of
Speaker 9: inventories ri seeing are still low. Demand is still not
Speaker 9: enough to comfortably absorb the production today, so we will
Speaker 9: need some time, you know, to get the start back
Speaker 9: on track, and of course the stock correcting to that
Speaker 9: is the way the market works, and yes, I have
Speaker 9: sympathy for that. TESTA is at a low point, is
Speaker 9: between two gross trajectories, continues to work on you know,
Speaker 9: long terim moonshots like Theroid and a robotaxi, and in
Speaker 9: the meantime, like the next couple of years are going
Speaker 9: to be years of recovery.
Speaker 8: So ahead of that, seeing the stock quickening makes sense
Speaker 8: to me, even.
Speaker 9: If I would disagree with that blatantly with evaluation implied,
Speaker 9: if she will get it over like a three to
Speaker 9: five year horizon, yeah.
Speaker 3: Giving us short term and the long term, we thank you,
Speaker 3: Head of Tech infrastructures, research of a new street research.
Speaker 6: Some of the longest sentences in the house, but we
Speaker 6: love it.
Speaker 3: Meanwhile, coming up tech earnings, they're upon us will dive
Speaker 3: deeper into what to expect and the current state of
Speaker 3: tech market's more broadly aired.
Speaker 6: What are you looking at ahead of that conversation?
Speaker 4: Philadelphia Semiconductor Index or SOCKS twenty seven names in the red,
Speaker 4: three in the green.
Speaker 5: Biggest drop on ASML.
Speaker 4: The story chip contract manufacturers are not ordering chip making equipment.
Speaker 5: What does that tell us? We'll explain next. This is Bloomberg.
Speaker 3: Technology ASML chip equipment maker, having its worst day since
Speaker 3: June twenty twenty two. Now put it into context, this
Speaker 3: is a company that's up about twenty five percent so
Speaker 3: far this year. Nevertheless, we see a pullback because it's
Speaker 3: earnings really disappoint on the quarter that we've just seen
Speaker 3: in terms of revenue. But also pointing to this quarter
Speaker 3: we're already in saying it's going to be low where
Speaker 3: the market had anticipated. Why, Well, we're seeing TSMC Samsung
Speaker 3: pull back on perhaps some of the orders that we
Speaker 3: thought for some of their overall chip equipment.
Speaker 6: Now, this still shows a chip sector that's.
Speaker 3: In recovery when you're thinking of our own purchases of
Speaker 3: electronic goods, and they're like, but what of the AI
Speaker 3: revolution ed? This is what's so interesting is the fact
Speaker 3: that actually their number one market, it's China. Basically half
Speaker 3: of their revenue is coming from China at the moment,
Speaker 3: even though we see those sanctions, those curbs on such
Speaker 3: very high EUV chip equipment going to China, they can't
Speaker 3: get their hands on that, but actually they're still relatively
Speaker 3: strong orders for the lower elements of where that chip
Speaker 3: equipment has been going.
Speaker 4: But notably, look their own revenues that China historically is
Speaker 4: big market. The story of the anxiety is about not China, TSMC, Taiwan,
Speaker 4: Samsung in South Korea, all this CAPEX commitment, but they're
Speaker 4: not fronting up in the short term. The drop was
Speaker 4: called on quarter sixty one percent for EUV lithography. Basically,
Speaker 4: they ain't buying machines that make chips. Why let's dig
Speaker 4: deeper into these markets tech earning seasons also around the
Speaker 4: corner epek Oscar Diskay, a senior market analyst over at
Speaker 4: Swiss quote. You know, there's the headlines governments in Europe
Speaker 4: and the United States right in big checks, saying come
Speaker 4: and build chip factories.
Speaker 5: It's going to be great.
Speaker 4: And Samsung and TSMC gave us better capex outlooks for
Speaker 4: this year, and then we've got ASML and things aren't
Speaker 4: going so rosy.
Speaker 5: What was your read on that?
Speaker 10: Well, Actually, ASML Earning is really disappointed this morning in
Speaker 10: Europe and kind of raised a couple of ibros regarding
Speaker 10: the sustainability of the demand growth from chip makers and
Speaker 10: the sustainability.
Speaker 2: Of the AI.
Speaker 10: Really now, it's important to note that ASML said that
Speaker 10: the second half of this year is going to see
Speaker 10: a rebound and they actually kept their full year outlook unchanged,
Speaker 10: but obviously because now we are used to have fantastic
Speaker 10: results from chip makers while the ASML's disappointment. Disappointment has
Speaker 10: been a sour taste in investors well mouth this morning.
Speaker 10: And I'm actually we actually think that at some point
Speaker 10: reasonably the growth and growth expectations for chip makers will
Speaker 10: be leveling out, and it's just to see if this
Speaker 10: is the quarter that we will see these expectations slow down,
Speaker 10: and there is a possibility that we do see them
Speaker 10: slow down, and that's going to be able to trigger
Speaker 10: actually a sizeable downside correction and profit taking. But more
Speaker 10: broadly regarding AI, well, ASMA also said that they expect
Speaker 10: AI to continue to contribute to their revenues, and we
Speaker 10: do also expect AI really to continue, maybe not in
Speaker 10: the same way because we expect some changes within the
Speaker 10: AI segments. So what I mean by that is we
Speaker 10: saw so far the first phase, what we call the
Speaker 10: first phase of the AI really benefit to companies, to
Speaker 10: chip makers, data centers, cloud businesses, all these companies that
Speaker 10: do provide AI tools other companies. But we are now
Speaker 10: thinking that there will be second phase in this AI
Speaker 10: really which is expected to benefit two companies that actually
Speaker 10: invest in massively in AI technologies and tools and which
Speaker 10: should shortly start well seeing the return on their AI investments.
Speaker 6: So I think that even though we see.
Speaker 10: Some disappointment in terms of chip maker earnings Squart, while
Speaker 10: the AI really is not ready to end, you.
Speaker 3: Pack brun that out to the rest of earning season
Speaker 3: for us, because well, there's a lot of optimism that
Speaker 3: AI is already going to be helping with costs for example.
Speaker 10: Well, actually, the AI has been the major talking point
Speaker 10: and the expectations are quite high.
Speaker 5: Mind you.
Speaker 10: I mean looking at the magnificent seven socks expectations around
Speaker 10: learning's growth of around forty percent for the first quarter.
Speaker 10: That's huge number. That's still down from fifty five percent
Speaker 10: printed a quarter earlier. But if we single out stocks
Speaker 10: like Tesla and Apple who have been in trouble in
Speaker 10: the first quarter, will the expectation of earnings growth goes.
Speaker 6: All the way up to eighty percent.
Speaker 10: So now we're talking about a handful of AI sucks,
Speaker 10: namely Nvidia, Microsoft, but also Google, and we're sold by
Speaker 10: Facebook and Amazon. So I think that there is a
Speaker 10: huge optimism out there. But what we will be really
Speaker 10: interested in is who within this AI segment is going
Speaker 10: to be profiting from the AI developments, whether it's going
Speaker 10: to be the provider of AI tools or are we
Speaker 10: going to shift towards well the user of the AI tools.
Speaker 6: IMPAC great to have your voice in the show. Thank you.
Speaker 3: Ipek Oscar Deshka, Senior market analyst, Swiss quote giving us
Speaker 3: the context. JP Morgan, Chase c Jamie Dinan. He makes
Speaker 3: no secret of his firm than it is all in
Speaker 3: on artificial intelligence. Now the head of the world's biggest bank,
Speaker 3: when he's laying out his vision for the future money
Speaker 3: in this AI world.
Speaker 6: He spoke with Bloomberg Original's.
Speaker 3: Host Emily Chang about that and so much more in
Speaker 3: the premiere episode of The Circuits second season, particul Listen.
Speaker 2: The best needs be prepared for any business.
Speaker 11: I think when you think about really think about things
Speaker 11: that can go terribly wrong, can you survive them? You know,
Speaker 11: it could be technology, it could be government regulations, it
Speaker 11: could be it could be the literally the weather. If
Speaker 11: you're a restaurant, you know that might close you down.
Speaker 11: If you have if you lose this week's business, you're
Speaker 11: out of business. Get enough cash. So you should think
Speaker 11: all that through.
Speaker 12: Bill Gates once said banking is necessary, banks are not
Speaker 12: to what extent could AI or fintech replace traditional banks.
Speaker 11: So I think, first of all, I remember him saying
Speaker 11: banks of dinosaurs. I spoke to about it in nineteen
Speaker 11: ninety seven, and obviously he was dead roll. We probably
Speaker 11: agree to that, but he's not wrong. The technology changes everything.
Speaker 11: And if anyone is complacent or arrogant or think that
Speaker 11: because you have a big position to day, you get
Speaker 11: a big position tomorrow, that's a mistake. But the end
Speaker 11: of this fine what is banking. Someone's going to have
Speaker 11: to hold the money. Someone's got to move the money,
Speaker 11: someone's got to raise the money, someone's got.
Speaker 2: To do research, you know, around money.
Speaker 11: Those services will still be around, and you know, hopefully
Speaker 11: we're doing it and using a lot have to do
Speaker 11: a better job at it. But I've always thought it's
Speaker 11: very possible that some tech thing, you know, distant intermediates
Speaker 11: a piece of that. And I've been writing about you know,
Speaker 11: big tech going to our business. We've got fintech. We
Speaker 11: also have big tech, and they will embed payment systems
Speaker 11: in there. Some we're going to white label banks kind
Speaker 11: of what Apple did.
Speaker 13: Uh.
Speaker 2: You know, they have the right to do that. I'm
Speaker 2: not against that.
Speaker 11: I would be against unfair use of their position to
Speaker 11: dominus in a business.
Speaker 12: Well, Apple is going deeper into financial services.
Speaker 6: Do you worry about the bank of Apple.
Speaker 11: Well, we'll get to compete, so they have a tough competitor.
Speaker 11: But you know they hold money, move money. Yeah, they're
Speaker 11: a form of a competitor. You know, we also partner
Speaker 11: with them, but I'm very used to partnering and competing
Speaker 11: with lots of people.
Speaker 12: Existential threat.
Speaker 2: I don't think it's an existential threat. But I think
Speaker 2: if we were complacent about it.
Speaker 4: Yes, that was JP Morgan, Chase CEO, Jamie Diamond, and
Speaker 4: right here on set, this is being back in the
Speaker 4: regional so it's Emily Chang. Jamie Diamond is kind of
Speaker 4: one of the most upset about people like high flying
Speaker 4: executive in the person yep, the circuit series too.
Speaker 5: That's kind of what's cool.
Speaker 4: About it is you get people in a chair but
Speaker 4: being themselves. How did you do it this time around?
Speaker 14: Oh boy?
Speaker 12: And this was my first time meeting him. You know,
Speaker 12: it was all about London, right in London, and he
Speaker 12: was just there for a tech conference really quick. It
Speaker 12: was all about just making the most of every single minute,
Speaker 12: the handshake, the walk to the interview room, the chit
Speaker 12: chat that you know before we actually got quote unquote
Speaker 12: on camera for you know, the formal sit down interview,
Speaker 12: and you know, we talked about how many days he's
Speaker 12: on the road a year, one hundred and twenty days.
Speaker 6: We talked about childhood, family. I asked, you know, how
Speaker 6: do you do it? He was like, what do you mean,
Speaker 6: how do you juggle it all?
Speaker 12: And I think he kind of appreciated that question because
Speaker 12: it's you know, you normally ask that to a woman,
Speaker 12: and you don't ask that to someone like date Jamie Dimond,
Speaker 12: and he was like, look, I don't I don't socialize,
Speaker 12: I don't go on red carpets. It's it's work and
Speaker 12: family and that's what it is, and family actually comes first.
Speaker 12: And so that's kind of where we started, and we
Speaker 12: tried to open up from there.
Speaker 3: You then, of course peel away not only about his
Speaker 3: family and keutles for continuing to ask that of both
Speaker 3: men and women, but ultimately about how AI is changing
Speaker 3: his business. You're going to be thinking about AI for
Speaker 3: the rest of the season as well.
Speaker 6: I'm pretty sure AI is a.
Speaker 12: Huge part of the season, as it is a huge
Speaker 12: part of your show. I mean, it's a huge part
Speaker 12: of our world. We can't avoid it. One of the
Speaker 12: interesting questions I had for him is, you know, Chat JPM,
Speaker 12: will something like that exist in the future where we
Speaker 12: could ask, you know, I've got thirty years, what should
Speaker 12: I do with my money? And he said, essentially yes,
Speaker 12: it's already doing that. We've got AI embedded and everything.
Speaker 12: It's gonna learn more and more about you. Will I
Speaker 12: be able to say to Chat JPM. I want to
Speaker 12: get rich quick, and he was like, I hope it
Speaker 12: tells you that you're crazy, because that's just.
Speaker 6: Not possible.
Speaker 5: Really quickly. What can we expect this season?
Speaker 8: Oh?
Speaker 12: Well, I hope you love it. We're traveling. We're taking
Speaker 12: you to Latin America, going on Netflix sets. That's sort
Speaker 12: of the next leg of their global expansion. After South Korea,
Speaker 12: we go to see Mary Bara and Troy. We spend
Speaker 12: a lot of time with her and really get to
Speaker 12: know her behind the scenes. Palmer Lucky, the founder of Oculus,
Speaker 12: and of course Anderild now making drones and satellites, AI
Speaker 12: and warfare.
Speaker 6: I hope you love it, sure.
Speaker 5: Well, Bloomberg Original's host Emily Change.
Speaker 4: You can catch the full first episode tonight on Bloomberg
Speaker 4: six pm Eastern.
Speaker 6: Welcome back to Bloombog Technology. I'm Caroline Hyde in New.
Speaker 5: York and I'm as our Vote in San Francisco.
Speaker 4: A very quick check in on the markets and when
Speaker 4: it comes to publicly traded technology names. I'm taking a
Speaker 4: look at Tesla sevent tens four percent. It's paired its decline,
Speaker 4: but we're still down for a fourth straight session. We
Speaker 4: talked about the reasons why earlier in the show with
Speaker 4: Pierre Ferugu it's a sock that's below five hundred billion
Speaker 4: dollars now in market cap, and you know, I'm looking
Speaker 4: for stories. I'm looking for clear downward direction in the market.
Speaker 4: Tesla was one name that contributes to that. Bitcoins so
Speaker 4: really interesting. Actually during the course of this show, Carrow,
Speaker 4: you highlighted it earlier. But we're now down nearer to
Speaker 4: sixty thousand US dollars per token on bitcoin, a drop
Speaker 4: of four percent in the session of an asset that
Speaker 4: trades twenty four to seven on the Bloomberg terminal. There's
Speaker 4: a lot of writing about the real world use case
Speaker 4: ATMs in Latin America becoming more mainstay, but also the
Speaker 4: industry bracing for the harving loads of people saying they're ready.
Speaker 4: But if you look at some of the technology related
Speaker 4: stocks linked to crypto, those are also seeing some downward pressure.
Speaker 5: And we other pieces of news from that industry too.
Speaker 3: We do, and let's dive in because Gray Scale Investment
Speaker 3: CEO Michael the Sonosheine. He says that the market for
Speaker 3: US spot bitcoin ETFs, still relatively new, hasn't seen.
Speaker 6: Wide scale institutional adoption at least.
Speaker 3: In an exclusive conversation with blouobg TV, the CEO also
Speaker 3: spoke about the SEC's approval of bitcoin ETFs and the
Speaker 3: long road to regulatory approval.
Speaker 6: Is what we have to say.
Speaker 15: Even though they've been in market now for three and
Speaker 15: a half months, we still do not have listed option
Speaker 15: unspot bitcoin et apps. This is a really important feature
Speaker 15: that investors want and they deserve. This can help investors
Speaker 15: to manage their positions, manage risk. Ultimately, I do believe
Speaker 15: that the SEC should be approving these so that they're
Speaker 15: once again not in a position to be treating spot
Speaker 15: bitcoin et apps disparately from you know, bitcoin futures based UTPs.
Speaker 4: Let's stick with regulation. Moving on to stable coins now.
Speaker 4: I'm to push in the House and the Senate to
Speaker 4: pass such legislation as soon as next month. Senators Loomis
Speaker 4: and Gillibrand are proposing a measure that would ban algorithmic
Speaker 4: stable coins and say that bill would protect consumers in
Speaker 4: US dollar while enabling innovation in payments. Scout to DC
Speaker 4: with Bloombers Kaylee Lyons. I saw a headline on the
Speaker 4: terminal this morning that says the legislation has momentum from
Speaker 4: one of those senators, does it.
Speaker 2: Yeah.
Speaker 16: This is an effort by Gillibrand and Lummis, who have
Speaker 16: had cryptoinitiatives in the past. They've introduced in the past
Speaker 16: much wider legislation to kind of set regulatory standards for
Speaker 16: the industry as a whole. This is a much narrow effort,
Speaker 16: and perhaps the narrowness of it is what could actually
Speaker 16: get this across the finish line in the way that
Speaker 16: other efforts have not. Essentially, what we're talking about here
Speaker 16: is a framework for stable coins, as you mentioned, that
Speaker 16: would ban algorithmic stable coins. Perhaps the example of an
Speaker 16: algorithmic stable coin that looms largest in our head is
Speaker 16: terry USD, which of course was supposed to be pegged
Speaker 16: one for once and the dollar, but instead of being
Speaker 16: backed by reserved to use smart contracts to try to
Speaker 16: keep that peg, which worked until it did not and
Speaker 16: then collapsed in fabulous fashion with forty billion dollars being
Speaker 16: wiped out. So they want to avoid that in the future.
Speaker 16: What this regulation instead would do is not allow those
Speaker 16: and require one to one reserve requirements for stable coin issuers,
Speaker 16: so making sure there actually is a dollar for every
Speaker 16: one dollar stable coin that is out there, would set
Speaker 16: some other guidelines as well as to the authorities that
Speaker 16: federal and state regulators would have. And interestingly, it also
Speaker 16: would establish the FDIC as being able to recover lost
Speaker 16: assets these stable coins collapse. Obviously, again, that's probably a
Speaker 16: product of what we have seen in the past. Will
Speaker 16: this initiative actually move forward is kind of a question
Speaker 16: that will be left to the Democratic Senator from Ohio
Speaker 16: and chair of the Banking Committee, Shared Brown. He is
Speaker 16: largely a cryptoskeptic, but in an interview this week he
Speaker 16: did suggest that he could see the stable coin measure
Speaker 16: attached to other measures that have gone through his committee,
Speaker 16: including safe banking for marijuana companies in the clawbacks of
Speaker 16: compensation for executives of collapse banks. So we'll see if
Speaker 16: this initiative does move forward in the Senate. And I
Speaker 16: would note as well that in the House, the Chair
Speaker 16: of the Financial Services Committee, Patrick McHenry, along with the
Speaker 16: ranking member Maxine Waters, are working on a stable coin
Speaker 16: effort of their own.
Speaker 3: Yeah, I mean already meeting with Senate to Majority Leader
Speaker 3: Chuck Schumer about this and Kayleie more broadly, how necessary
Speaker 3: is is for the industry to have some sort of
Speaker 3: robust set of rules of god rails. We've already been
Speaker 3: speaking with the European Commissioner, for example, about how they've
Speaker 3: been trying to enforce regulation, and at least it's clarity
Speaker 3: of some sort.
Speaker 16: Clarity is what this industry is often asking for, Caroline,
Speaker 16: and certainly this probably does not go as far as
Speaker 16: the industry would like, but it would address us a
Speaker 16: certain part of it. We've already heard from some industry
Speaker 16: lobbying groups, like the Blockchain Associations that they are supportive
Speaker 16: of the stable coin effort, and when I've talked to
Speaker 16: people here in Washington, a lot of them have expressed
Speaker 16: much more optimism that stable coin legislation is the most
Speaker 16: likely thing to get through this Congress, versus more wide
Speaker 16: sweeping legislation that would actually perhaps delineate what, for example,
Speaker 16: the SEC would have control over versus the CFTC. That
Speaker 16: has proven a lot more difficult to do. On Capitol Hill,
Speaker 16: we have seen an effort get through the Financial Services
Speaker 16: and Agricultural committees in the House that would delineate that
Speaker 16: regulatory land, if you will, territory for those two different agencies,
Speaker 16: but that has not moved forward further. And that really
Speaker 16: is what would be required much more sweepingly to provide
Speaker 16: clarity for the industry. And in the meantime, of course,
Speaker 16: is you all probably know well based on your crypto
Speaker 16: conversations here on Bloomberg Technology, the industry really sees that
Speaker 16: at this point it's regulation buy horsemen, and it may
Speaker 16: stay that way. Intel Congress actually moves forward more substantially.
Speaker 3: Katie Lyon's just so thorough with the analysis and getting
Speaker 3: us up to speed. We thank you so much over
Speaker 3: there in Washington. Meanwhile, well, let's just talk about the
Speaker 3: SEC a little bit more. It's blocked third party messaging
Speaker 3: apps and texts from employees work mobile phones. Now it's
Speaker 3: bringing its own practices closer to the standards it's enforcing
Speaker 3: for the industry, and that includes what'sapp and I Message. Now,
Speaker 3: the SEC says it will quote lower risk that their systems.
Speaker 6: Could be compromised and enhance record keeping. Interesting one head.
Speaker 5: Yeah, let's get to another story out of Europe.
Speaker 4: The CEO of Atos, which has been struggling with tumbling
Speaker 4: shares and a wall of debt, is confident that the
Speaker 4: French IT company will be say CEO Paul Seller, spoke
Speaker 4: in an exclusive interview with Bloomberg's Caroline Connen in Paris.
Speaker 5: Have listened to this.
Speaker 13: We are actually working with our creditors, both our banks
Speaker 13: and our bondholders for a solution to our high level
Speaker 13: of debt, and the maturities are coming due in the
Speaker 13: next eighteen months and the dialogue is very very positive.
Speaker 13: We're operating under the consoliation, as you have mentioned, is
Speaker 13: like a mediator is helping through those discussions, and I
Speaker 13: do believe that everybody is aligned. In fact, we recently
Speaker 13: had secured some liquidity from those same bondholders and banks,
Speaker 13: again an indication.
Speaker 2: That everybody is really aligned to find a solution.
Speaker 14: So what else could be part of the proposal apart
Speaker 14: from this group of bondholders. Are we going to see,
Speaker 14: for example, some asset disposal announced before the end of
Speaker 14: next week. Is that a possibility or do you totally
Speaker 14: exclude this.
Speaker 13: I think what we have presented is a comprehensive plan
Speaker 13: that included all the assets of ATOS. Now we're going
Speaker 13: to have to see what proposals are going to come through.
Speaker 13: Some of them will just keep the whole the whole
Speaker 13: of the company together. One of those proposal is likely
Speaker 13: to come from one point, one of our largest shareholders,
Speaker 13: and others will come in from our bondholders who seem
Speaker 13: to also be interested in keeping the whole company. But
Speaker 13: we can't just really ago any potential proposal that may
Speaker 13: come in and may entail a different mix of ideas
Speaker 13: such as asset disposal or not.
Speaker 14: Will this whole pen be able to save Atos?
Speaker 13: Actually ATOS is a great company. As I mentioned to you,
Speaker 13: it's just really is going to be you know, I
Speaker 13: do believe that will come up with a plan and
Speaker 13: the company will succeed long term, So we'll be saved.
Speaker 8: It will be saved.
Speaker 6: Carolyn Conan speaking with the h CEO called Sally.
Speaker 3: Now coming up, we're going to be joined my Meno
Speaker 3: Ventures partner Matt Murphy on the firm's new playbook for
Speaker 3: AI applications.
Speaker 13: Or on that.
Speaker 6: Next, this is Blue Big Technology.
Speaker 3: Now it's today's VC Spotlight, and we're going to be
Speaker 3: taking a look at some of the winning strategies the
Speaker 3: formulas being used by early AI native enterprise companies, because
Speaker 3: that's the focus of Meno ventures latest AI paybook.
Speaker 6: Here to discuss. This is Meno Ventures partner Matt Murphy,
Speaker 6: and you've put out.
Speaker 3: Basically, there's seven Golden rules for generative AI apps. So
Speaker 3: this isn't the foundational models, but this is the applications
Speaker 3: which can be built upon these models that can be
Speaker 3: then used cross industry or across sales or marketing. What
Speaker 3: have you learned about the similarities some of these breakout
Speaker 3: successes we've already seen.
Speaker 17: Sure, yeah, so I think basically this is the fastest
Speaker 17: innovation cycle we've seen across many like mobile, cloud, et cetera.
Speaker 17: And so what really has to happen to create the
Speaker 17: foundation for application innovators to move as quickly as they
Speaker 17: want to as you need the infrastructure side to be
Speaker 17: built out. So you've got kind of the brain, the
Speaker 17: heart and soul and something like anthropic and then a
Speaker 17: lot of surrounding tooling to get data into the model,
Speaker 17: such as an unstructured or a clean lab or pine
Speaker 17: cone which kind of help you curate and get data
Speaker 17: into the model. So that kind of is well underway,
Speaker 17: and we feel like we're at a kind of tipping
Speaker 17: point where the infrastructure stack is pretty well solidified and
Speaker 17: now we're really going to see a ten year innovation
Speaker 17: cycle around applications that's going to move faster and faster,
Speaker 17: and now that that tooling infrastructure is in place.
Speaker 1: So what we really took a look.
Speaker 17: At in this report is what are some of the
Speaker 17: early breakout applications, what have they done differently? And so
Speaker 17: we came up with the seven Golden rules. So for example,
Speaker 17: things like having an almost infinite content loop. If you
Speaker 17: think about a lot of applications, before you basically had
Speaker 17: to have a designer, design creative for each potential campaign.
Speaker 1: You would then test that, take it back, iterate.
Speaker 17: The way generative AI works is it can make end
Speaker 17: different campaigns and actually kind of close the loop and
Speaker 17: have this constant feedback system. So one of the companies
Speaker 17: that does that really well is a company called Typeface,
Speaker 17: which is the former CTO of Adobe and based recreating
Speaker 17: the Adobe Creative.
Speaker 1: Cloud with generative AI. So that's one very concrete example that's.
Speaker 3: Obviously one of your portfolio companies start to jump in there.
Speaker 3: But what's so interesting is what sets that particular business
Speaker 3: apart from others that you're pitched. I mean you also say, look,
Speaker 3: you want to see within these AI apps target work
Speaker 3: that is high value, high volume, or facing labor shortages.
Speaker 3: So basically, where is AI going to have the biggest impact.
Speaker 3: What are some of the winning formulas there?
Speaker 1: Yeah, sure, so what you want to do? Basically, there's
Speaker 1: two ways that an a generator model can work.
Speaker 17: It can work as a kind of an assistant, call
Speaker 17: that a copilot, where it makes a worker smarter, better,
Speaker 17: more efficient at their job. And then sometimes it'll actually
Speaker 17: be able to replace that job and allow a work
Speaker 17: to do something else, like a higher value, higher skilled activity.
Speaker 17: Things like customer service are a great example of that,
Speaker 17: and you kind of look for these pattern based, high
Speaker 17: volume workflows. On the other end of the spectrum, there
Speaker 17: are these high value, lower maybe amount of people workflows
Speaker 17: like let's say a paralegal who spends all this time
Speaker 17: digging through documents and matching terms and things like that,
Speaker 17: when they could really do the analytic work if a
Speaker 17: system built that for them. So that's kind of what's
Speaker 17: being reimagined here with general AI is how do you
Speaker 17: kind of take the bulk work and allow workers to
Speaker 17: do more higher value add activities.
Speaker 4: On top of that, Matt, I'd like to discuss how
Speaker 4: backward or forward looking your report is and how crowded
Speaker 4: the field of activity is in this space, I would
Speaker 4: say that. Caroline and I talk about companies and platforms
Speaker 4: targeting developers and apps quite regularly, an example being Salesforce.
Speaker 5: And the app Exchange.
Speaker 4: Right, they have brought in generative AI layer to their
Speaker 4: existing products.
Speaker 5: Just how busy is it right now in what you
Speaker 5: see happening?
Speaker 1: Yeah, I mean it's extremely busy, right.
Speaker 17: I mean so if you look even anecdotally at our
Speaker 17: portfolio over fifty companies early half of last year, maybe
Speaker 17: twenty percent of companies were doing something with the generative AI.
Speaker 17: Now it's pushing up against one hundred percent, and I
Speaker 17: think that's a good proxy for what's going on in
Speaker 17: the market. If you're an existing software company, it's not
Speaker 17: doing something with generative AI, you're falling behind.
Speaker 1: So that's one wave. But frankly, the.
Speaker 17: Wave that we're most excited about is people kind of
Speaker 17: rebuilding from the get go now with new capabilities of
Speaker 17: generative AI, like a couple that I mentioned, Because the
Speaker 17: most creative and innovative way to disrupt applications is to
Speaker 17: kind of start with a founding team that has the
Speaker 17: DNA around AI and thinks about how to build the
Speaker 17: application from the bottoms up.
Speaker 1: That way, whenever you bolt something on later.
Speaker 17: It's beneficial, it's additive, it's going to be great for
Speaker 17: Salesforce and other companies. But when a new company comes
Speaker 17: in and says, hey, you could just this application shouldn't
Speaker 17: even exist without generative AI.
Speaker 1: I can give you an example if you'd like.
Speaker 17: For example, take a company like Elios, which is doing
Speaker 17: kind of a generative AI for a therapist conversation, so
Speaker 17: you can listen to the conversation, use your own model
Speaker 17: to kind of parse that and give doctor notes as
Speaker 17: well as a potential diagnosis, and use generat AI to
Speaker 17: package that up and curate the content that comes.
Speaker 4: Out of that.
Speaker 17: These are kind of capabilities that a model was never
Speaker 17: able to process before, nor synthesize it down as something
Speaker 17: as precise and important as a diagnosis.
Speaker 4: Matt, one of your bullets is build where incumbents aren't, can't,
Speaker 4: or won't. But you know, in the history of Silicon
Speaker 4: Valley often something gets built because a founder realizes there's
Speaker 4: a problem because they were at another tech company where
Speaker 4: they were frustrated by something. Do you have any sense
Speaker 4: that the end markets actually know what their use cases
Speaker 4: are yet how they're supposed to be using generative AI
Speaker 4: in whatever it is the business does well.
Speaker 17: I think that's kind of my point is, like, I
Speaker 17: think everyone knows that generative AI is a great writer.
Speaker 17: It can take all the content you have, synthesize it
Speaker 17: down and help people get through it really quickly. If
Speaker 17: you've got a graph or a set of output, you
Speaker 17: can distill all that down and it makes it so
Speaker 17: much more effective for the user to consume the output.
Speaker 1: Of your application. But that's kind of table stakes.
Speaker 17: The things that again we're most interested in is how
Speaker 17: are you using that technology to the make the application
Speaker 17: completely different than what the incumbent has done and in
Speaker 17: the past.
Speaker 1: And that's really the opportunity lies here.
Speaker 17: Seeing a bunch of examples of that in the legal
Speaker 17: vertical that's a fast mower out of the gate and
Speaker 17: areas like that. I already mentioned customer service. So it's
Speaker 17: just different when you say let's change the entire workflow
Speaker 17: versus bolt on the capability after.
Speaker 4: The fact Menlovench has partner Matt Murphy. Thank you very much, Caroline.
Speaker 3: Yeah, let's have a quick check on talking to he
Speaker 3: first up to Shiba is seeking to cut five thousand jobs,
Speaker 3: or roughly ten percent of its head count in Japan.
Speaker 6: That's what the NIK is currently reporting now. The move could.
Speaker 3: Initiate one hu Jupan's biggest rounds of staff reductions this
Speaker 3: year in a country that has some of the world's
Speaker 3: strictest worker protection laws. Plus, Apple is wearing a possibility
Speaker 3: of making some of its gadgets in Indonesia now, the
Speaker 3: iPhone maker has been exploring production bases beyond its longtime
Speaker 3: stronghold of China. Of course, that to minimize geopolitical risks
Speaker 3: as tensions they rise between the world's two biggest superpowers.
Speaker 6: And business software start up Rippling.
Speaker 3: Well, it's a reporter that's in talks to raise new
Speaker 3: funding and evaluation between thirteen and fourteen billion dollars and
Speaker 3: the company we understand is planning to raise about five
Speaker 3: hundred million in a deal. According to sources, the talks
Speaker 3: with investors are ongoing, with plans to finalize terms within
Speaker 3: a few weeks. It might be said that Rippling so
Speaker 3: far has denied some of those reports. So the Bloomberg
Speaker 3: NEF Summit, it's in full swing here in New York,
Speaker 3: convenient leaders and energy, industry, transport, technology, finance, and government
Speaker 3: to discuss just how to shape a cleaner and more
Speaker 3: competitive future. I'm pleased to say we're speaking to a
Speaker 3: person who's doing just that. Cuna, your CEO, Spante Fresh
Speaker 3: Office panel from the summit and Claude. What's so interesting
Speaker 3: is you are providing the technology, the filters, the ability
Speaker 3: for companies such as say manufacturing makers to carbon capture.
Speaker 8: How well.
Speaker 18: We kind of focus on a problem that we stated
Speaker 18: the one hundred and thirty five years ago by fellow
Speaker 18: called Venti Ernius, and we took the name Vante similar
Speaker 18: to Tesla Fuish on the EV. So we're unicorn and
Speaker 18: focusing on carbon management by providing solution to avoid SEE
Speaker 18: two going out in the atmosphere in the first place,
Speaker 18: industrial factory, cement pulp on paper plants, or even removing
Speaker 18: the SU two from the atmosphere that's sorry above the ground.
Speaker 18: So we are working in that case with the company
Speaker 18: called clim Works and we provide the filters inside the
Speaker 18: contactor that they have to collect the C two from
Speaker 18: the atmosphere.
Speaker 3: You built a lot of partnerships, You're working with a
Speaker 3: lot of companies and emitter is how long a timeframe
Speaker 3: is it to build such you know, to manufacture to
Speaker 3: actually get this going when you know that one of
Speaker 3: your clients wants indeed.
Speaker 18: Action this so for a legacy is that we're sixteen
Speaker 18: years in research, in developing the technology, the product, product,
Speaker 18: proving out in the market, and raising all these partnership
Speaker 18: to get there. We've raised five hundred million dollars to
Speaker 18: get to the point where we are, and we're currently
Speaker 18: building a factory to make the filters that we'll be
Speaker 18: able to equip the equivalent of ten project of a
Speaker 18: million ton. The world needs to get to ten thousand
Speaker 18: plant of a million ton in the next thirty years.
Speaker 2: Wow.
Speaker 18: So this is factory number one for us, and we're
Speaker 18: almost there in terms of building up the capacity to
Speaker 18: deliver projects. So now when you look at the specific
Speaker 18: project with one a meter, normally it takes about almost
Speaker 18: two years of discussions studies to evaluate how we're going
Speaker 18: to integrate the capture project into let's say a cement
Speaker 18: factory or a pulp and paper plant, and then it
Speaker 18: takes two years to construct. So these projects are to
Speaker 18: take a certain amount of time to deploy, and imagine,
Speaker 18: you know, we need to deploy at the rate of
Speaker 18: two capture plant every week for the next thirty.
Speaker 4: Years clause your twenty twenty two Series E three hundred
Speaker 4: and eighty million dollars led by Chevron's venture arm I
Speaker 4: remember twenty twenty one, twenty twenty two, there was a
Speaker 4: lot of energy, pardon the expression behind your industry and
Speaker 4: financial backing. Had things slowed down in terms of corporate
Speaker 4: interest and public commitment to what you're trying to do, well,
Speaker 4: you have?
Speaker 18: Your question is two fold one. The corporate commitment has
Speaker 18: been there and it's growing as well. I think the
Speaker 18: support we got from the audio gas industry and primarily
Speaker 18: led by Chevron, is instrumental in us being here today
Speaker 18: be able to talk about about management. But you know
Speaker 18: what's missing now to grow the business at the scale
Speaker 18: that needs to be done is we need the private
Speaker 18: equity infrastructure funds to come to play, and so far
Speaker 18: they never come to the value of debt of early
Speaker 18: start startup companies and help them to deploy. So this
Speaker 18: is something that we're working on these days to bring
Speaker 18: the two together because it's the sum of the financial
Speaker 18: sector plus the corporate that will make this thing work. Now,
Speaker 18: from a consumer point of view or the public acceptance,
Speaker 18: I think that it's a slow process. And the analogy
Speaker 18: I can give you is we've been throwing see you
Speaker 18: two in the atmosphere freely for the last one hundred
Speaker 18: years with no consequences. In the minds of people, the
Speaker 18: analogy is the waste management. At the same time you
Speaker 18: know you're rubbish at home. The waste management somebody collects
Speaker 18: and transport and recycle and store your rubbish. That's because
Speaker 18: it smells and you can see it. You cannot see
Speaker 18: and smell Coe two. So it's very difficult for people
Speaker 18: to associate that the common management industry needs to exist.
Speaker 18: And the price of collecting your rubbish is about one
Speaker 18: hundred and fifty dollars per per ton of SE two equivalent.
Speaker 6: So Claude, we will share more time. Claude Latuna, your CEO.
Speaker 6: A savante that does it for this edition of BLOEMG
Speaker 6: Technology