Speaker 1: From Mahart where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: Live from New York.
Speaker 4: This is Blomberg Technology coming up. Intel's secures an eight
Speaker 4: billion dollar grant for its US chip factory expansion of
Speaker 4: the months of trying to convince Washington and Wall Street
Speaker 4: that it can execute on its vision.
Speaker 3: Plus California, it proposes.
Speaker 4: State in centers for EV buyers, which could exclude Tesla's models,
Speaker 4: and social media companies push back against new legislation in
Speaker 4: Australia that's going through the courts that could limit team usage.
Speaker 3: But first that's checking on these markets.
Speaker 4: Because we're currently hired to the tune of four tenths
Speaker 4: of a percent, we're managing to shrug off some of
Speaker 4: that anxiety once again being built in around geopolitics and
Speaker 4: remid tariffs that we're going to break it down for
Speaker 4: you a little bit later.
Speaker 3: But still big tech managing to lead us higher.
Speaker 4: And in fact, the S and P five hundred on
Speaker 4: track for yet another set of records, and the NASUC
Speaker 4: is up for four straight days.
Speaker 3: Move on and look at some of the individual movers.
Speaker 4: Because we have still got some drip feed around earnings
Speaker 4: that have come after the bell. I want to look
Speaker 4: at what's of course been happening in the world of
Speaker 4: Zoom and another key chip maker. Zoom down some seven
Speaker 4: point nine percent, didn't live up to expectations in terms
Speaker 4: of its growth for its fiscal third quarter, and I
Speaker 4: think most notably is because this stock has run up
Speaker 4: hard since it's bottoming out in August some sixty percent higher.
Speaker 3: Many alis saying like it went.
Speaker 4: It showed solid numbers, but not as good as a
Speaker 4: market been pricing in analog devices down a percentage point,
Speaker 4: had been rallying earlier in the trade after they showed
Speaker 4: some strength in terms of auto sales and chips, but
Speaker 4: now just taking a turn into the red.
Speaker 3: But let's stick with chips now.
Speaker 4: Because Intel securing seven point nine billion dollars in federal
Speaker 4: grants from the Biden administration. The deal is actually marking
Speaker 4: the largest ever direct subsidy from a program, and this
Speaker 4: is a course to boost US chip production, sources telling
Speaker 4: Bloomberg Intel will get the money for projects in Arizona,
Speaker 4: in Oregon, in New Mexico. Bloomberg's Mackenzie Hawkins joins US
Speaker 4: now in Mackenzie, Ohio. Not on tap for this particular
Speaker 4: area of money because it's not far down the road
Speaker 4: enough in terms of well digging in and breaking ground.
Speaker 3: Where do we stand in terms of actually building.
Speaker 5: So Intel seven point nine billion dollar ward from the
Speaker 5: hips AP supports projects across four US states through between
Speaker 5: now and twenty thirty, by which time Intel plans to
Speaker 5: send ninety billion of a total one hundred billion CAPEX.
Speaker 2: On US projects.
Speaker 6: But projects have.
Speaker 5: To meet certain benchmarks and milestones to qualify for a
Speaker 5: funding dispersement, so it'll take a while for the money
Speaker 5: to actually go out the door and make it into
Speaker 5: Intel's hands. The first roughly one billion of that will
Speaker 5: happen this year because Intel has already made progress on
Speaker 5: projects in Arizona, New Mexico, and Oregon, Ohio. Construction was
Speaker 5: supposed to finish by late twenty twenty six. Now one
Speaker 5: of the facilities won't be online until the next decade.
Speaker 4: Paq Helsinger has joined Bloomberg Technology and sort of vented
Speaker 4: some frustration at how slow it's been to get the
Speaker 4: money from the US government.
Speaker 3: And also you note.
Speaker 4: That this is a little bit less than previously estimated.
Speaker 5: So it's been a very long process for Intel and
Speaker 5: for all of the other companies. Intel's award was announced
Speaker 5: at a preliminary stage in March for eight point five
Speaker 5: billion dollars, and since then the company has.
Speaker 2: Been going through due diligence.
Speaker 5: There have been disagreements about how much information Intel has
Speaker 5: to disclose to the government, and also about terms specifying
Speaker 5: what happens if Intel stands off at manufacturing business.
Speaker 6: Or is acquired in part or in whole.
Speaker 5: That's obviously a pretty tense discussion with Intel when they're
Speaker 5: going through some serious financial problems, and there have been
Speaker 5: conversations with other players in industry about potential m and a.
Speaker 5: The haircut that Intel took on its award is actually
Speaker 5: not because of those business problems. It's because the company
Speaker 5: is separately getting three billion dollars to make chips for
Speaker 5: the Pentagon. That program was originally supposed to be mostly
Speaker 5: funded by the Defense Department, but after a big funding
Speaker 5: stat involving various departments in the Biden administration and lawmakers
Speaker 5: on Capitol Hill, the Commerce Department had to use its
Speaker 5: own ship sacked money to support that program, and some
Speaker 5: of that came from the money already set aside for Intel.
Speaker 4: Breaking down the numbers and some of the M and
Speaker 4: A rumors. Mackenzie Hawkins really appreciate it, thank you. Look
Speaker 4: sticking with those M and A reports previously, Colcom's takeover
Speaker 4: interest in the company is actually cooling now, sources are
Speaker 4: telling Bloomberg the complexities associated with acquiring Intel have made
Speaker 4: it less attractive to Coalcom. A deal would likely have
Speaker 4: been one of the largest ever in technology. Meanwhile, more
Speaker 4: on chips and tech more broadly, as bringing in Nancy Curtain,
Speaker 4: chief investment Officer and ULTI team and global Nazi. It's
Speaker 4: always so important to have your voice on the show
Speaker 4: talking about the global context here, just dig in on
Speaker 4: for example, M and A hopes around this new administration
Speaker 4: coming in twenty twenty five and deals getting done, chips
Speaker 4: being supported or not supported as a sector.
Speaker 3: What do you make of it?
Speaker 7: Well, let's start with M and A first, and we
Speaker 7: do think that M and A will increase. You know,
Speaker 7: you have pretty rigorous merger guidelines passed by President Biden
Speaker 7: in twenty twenty three. We reckon those will be undone
Speaker 7: under President elect Trump. And remember they had lowered the
Speaker 7: guidance threshold at a company being seen as anti competitive.
Speaker 7: So we do think it's going to be a friendlier
Speaker 7: environment for regulation, a friendlier environment for M and A,
Speaker 7: and expect that animal spirits M and A and IPOs
Speaker 7: will pick up in twenty twenty five. So we think
Speaker 7: this is one of the positives coming from Trump. Just
Speaker 7: quickly on the Chips Act and Intel, are we back
Speaker 7: in their own horse there? I mean, this is supposed
Speaker 7: to create jobs. They just laid off fifteen percent of
Speaker 7: the workforce, and I kind of look at and think
Speaker 7: in Video didn't get any money from the CHIPSAC and
Speaker 7: it's actually doing a pretty dark good job of actually
Speaker 7: supplying the chips industry. So I think this is a program.
Speaker 7: It's hard to change and remove these legislative programs. It's
Speaker 7: not a program the president Electron favors very much. I
Speaker 7: think he called it a really bad program.
Speaker 3: Yeah, so stay tuned on in Video.
Speaker 4: Though they basically get TSMC and other chip makers to
Speaker 4: produce this is all about on shoring and making sure
Speaker 4: that chips can be made in the United States.
Speaker 3: When you're looking at in Video, and.
Speaker 4: Indeed, it's exposure, whether it be selling into China or
Speaker 4: indeed depending on a supply chain that is in many
Speaker 4: ways related to Taiwan.
Speaker 3: How does that factor into an investment thesis.
Speaker 7: Well, as you know, Trump has said Tara's the most
Speaker 7: beautiful word in the English language. So you know, maybe
Speaker 7: Trump just used some tariffs here on TSMC because that
Speaker 7: would incur coourage them to think about And by the way,
Speaker 7: they were part of the Chips Act as well, so
Speaker 7: they did receive some subsidies there. But you know that
Speaker 7: might encourage them to accelerate production in the United States. Now,
Speaker 7: how will in Vidia respond, I don't know. With seventy
Speaker 7: four percent gross margins and it seems like insane demand
Speaker 7: in Jensen Wayne's words, it seems like they're just going
Speaker 7: to raise prices. So you know, if we get some
Speaker 7: tariffs on TSMC, which I wouldn't be surprised, I just
Speaker 7: think in Video will end up passing that on to
Speaker 7: its demand hungry customers.
Speaker 4: It feels like you've got some nues about which horses
Speaker 4: you should back. But more broadly, the winners I likely
Speaker 4: to continue winning into the next administration is that we
Speaker 4: are articulating. Is it's still good to be longing tech here?
Speaker 7: I mean, let's just talk about a little bit of
Speaker 7: the winners and semiconductor. You know, at the end of
Speaker 7: the day, Nvidia is clearly in poll position monopoly position,
Speaker 7: I mean, more demand than supply. But competition is coming.
Speaker 7: Remember forty percent of their data center customers are also
Speaker 7: trying to compete with them. Amazon's coming pretty close here
Speaker 7: in developing a chip. Now I understand it's forty percent cheaper.
Speaker 7: Not really sure the performance benchmarks with respect to training
Speaker 7: an inference, they haven't been published and it's not clear
Speaker 7: it's in production.
Speaker 3: Mode, so to speak. So let's see what happens.
Speaker 7: And of course, to a certain extent, AMD and Intel
Speaker 7: are fast trying to be competitors as well. So competition
Speaker 7: is on the way and we should expect to see
Speaker 7: more of that. You know, people are looking at the
Speaker 7: price of Nvidia chips, the fact that they can't get
Speaker 7: access and are trying to diversify their supply sources, and
Speaker 7: that makes sense, right, So we do expect competition to
Speaker 7: come as we look forward. Now, I don't say this
Speaker 7: is a Q one. I think Nvidia should have another
Speaker 7: blockbuster quarter. Certainly they were pretty clear about it. They
Speaker 7: expect revenues to be up seventy percent in the next quarter,
Speaker 7: and they normally beat that number. So let's see where
Speaker 7: that comes out.
Speaker 4: Customers look at the price of the chips, Investors look
Speaker 4: at the price of the stock. With an Nvidia trading
Speaker 4: at forty six times future earnings, many have been perhaps
Speaker 4: taking a bit of profit. When you're looking at Tesla
Speaker 4: that's trading at one hundred and forty.
Speaker 3: One times future earnings.
Speaker 4: What do you make about the optimism beaked into that
Speaker 4: stock post election?
Speaker 1: WILLD Tesler is clearly a special child at the moment
Speaker 1: given the relationship between Eli Musk, you know, and Trump,
Speaker 1: and you know, in these stocks, these magnificent.
Speaker 7: Seven you know, on average there at about thirty five
Speaker 7: times forward earnings at the moment, and that means makes
Speaker 7: them very vulnerable to disappointment.
Speaker 8: Right.
Speaker 7: So one of the themes that we've had on this
Speaker 7: year is, you know, tech is fine. We believe in
Speaker 7: jen Ai, but you need to diversify beyond just those
Speaker 7: magnificent seven technology shares that have fueled the market's advanced
Speaker 7: and we think MidCap and particular trading at about thirteen
Speaker 7: fourteen times earnings up close to ten percent already this
Speaker 7: month is an excellent beneficiary OMAGA, potentially corporate tax rate cuts,
Speaker 7: manufacturer renaissance, and a better outlook for growth in the
Speaker 7: United States. So there are other things you can do
Speaker 7: and diversify away from tech. By the way, where earnings
Speaker 7: are expected to decelerate in the so called Magnificent seven
Speaker 7: as we head into twenty twenty five, where they're supposed
Speaker 7: to accelerate in the rest of the market, and so
Speaker 7: I think that's a really way nice way to still
Speaker 7: learn a return, participate, but protect some of that valuation potential,
Speaker 7: downside risk and tech.
Speaker 4: Massacatain always great to catch up. Thank you, Chief Investment
Speaker 4: Officer for an ltteam and Global I. Meanwhile, let's just
Speaker 4: talk about globally. China's shaw Me preparing a self design
Speaker 4: mobile processor for its upcoming smartphones. This comes as an
Speaker 4: effort to actually reduce its reliance on foreign suppliers Qualcom
Speaker 4: Media Tech. According to sources, massuction of the chip is
Speaker 4: expected to begin in twenty twenty five. Coming up, well,
Speaker 4: deja vu, President elect Donald Trump rattling markets across the
Speaker 4: world with more tariff threats. We discussed the potential impact
Speaker 4: on the tech sector next and we were just looking
Speaker 4: at Tesla with Nancy Nestwell on it a little bit
Speaker 4: more upper percentage point. We will recover from some of
Speaker 4: yesterday's sell off. Will going to dig in on what
Speaker 4: California is currently threatening, how they could be excluding them
Speaker 4: from any future support for EVS if indeed federal support
Speaker 4: is taken away.
Speaker 3: This is BlueBag technology.
Speaker 4: President's elect Donald Trump took to truth Social to vow
Speaker 4: additional tariffs on Mexico, Canada, and China, and the comment
Speaker 4: marks his first specific threat to the top trading partners
Speaker 4: of the United States since his election win just three
Speaker 4: weeks ago.
Speaker 3: Now, Bloomberg's Michael Shepherd joins us or for more.
Speaker 4: He promised it on campaign trail, and now he's once
Speaker 4: again reconfirming.
Speaker 9: He's taking a step closer. Caroline, this is what the
Speaker 9: president elect have been telling his voters all along, that
Speaker 9: he would try to bring manufacturing back to the US
Speaker 9: using tariffs as his primary weapon. Now he is threatening
Speaker 9: to use tariffs for something else, and this is to
Speaker 9: extract policy concessions from America's key trading partners. With Canada
Speaker 9: and Mexico. It's his concern about the border and with China.
Speaker 9: He is really trying to get Beijing to cooperate more
Speaker 9: in his view to stem the flow of fentanyl in
Speaker 9: the US, which has been blamed for a surge in
Speaker 9: overdose deaths in recent years. So we're seeing tariffs being
Speaker 9: applied in a different since, not purely economically, but to
Speaker 9: actually get a policy goal out of a key US counterpart.
Speaker 4: Yeah, and some of those policy goals the ones we
Speaker 4: heard in the previous administration too. The market more broadly
Speaker 4: is sort of it in its stride, and I'm wondering
Speaker 4: whether people feel that they'll be carve outs, whether or
Speaker 4: not this will specifically hit certain industries.
Speaker 9: Mike, Well, there's so many unanswered questions around this, Caroline
Speaker 9: right now, because he really just kind of dropped it
Speaker 9: on truth Social less than twenty four hours ago and
Speaker 9: walked away, and his transition team has not answered any
Speaker 9: further questions about just as you say, will there be carveouts?
Speaker 9: Is this in addition to the Tarasi had already been
Speaker 9: threatening a sixty percent level against goods coming in from China?
Speaker 9: And likewise, what does this mean for the USMCA agreement
Speaker 9: that he forged to replace NAFTA during his first term
Speaker 9: in office? In any case, this will have a major
Speaker 9: ripple effect on the economy and on supply chains. If enacted,
Speaker 9: it would affect autos, It would affect very significantly the
Speaker 9: tech trade with China. We do a huge amount of
Speaker 9: business with Chinese companies, sending them legacy semiconduct, getting finished
Speaker 9: computers back, and all of that would be royal by this,
Speaker 9: and we would have to watch for these trading partners
Speaker 9: to assess, as Mexico warned it might do today, whether
Speaker 9: they would retaliate in kind.
Speaker 4: Michael Sheppard always such a thorough setup. We really appreciate
Speaker 4: taking us through what is at the moment just a
Speaker 4: statement on truth social but let's try and extrapolate it out.
Speaker 4: With Mary Lovely, senior fellow at the Peterson Institute for
Speaker 4: International Economics and Mike there was discussing how this will
Speaker 4: affect auto's immediately In the tech industry, we think evs.
Speaker 4: But Mary, what are the ramifications on the auto sector
Speaker 4: do you think?
Speaker 3: Yeah?
Speaker 6: It's great to be with you.
Speaker 10: Well, first of all, when we're talking trade with Canada
Speaker 10: and Mexico, the first job has to be the auto sector.
Speaker 10: It's the most important export other than fuel from Canada
Speaker 10: that comes.
Speaker 6: From our two USMCA partners.
Speaker 10: Production is fully integrated between the United States, Canada, and Mexico.
Speaker 6: Cars go back and forth.
Speaker 10: By some accounts, certain vehicles can go back and forth
Speaker 10: across the border seven or more times before they're sent
Speaker 10: to an auto dealer. So this would be extremely disruptive.
Speaker 10: We would imagine that auto companies would be lining up
Speaker 10: to tell the new administration how harmful this would be
Speaker 10: not only to the two countries involved in this, Canada Mexico,
Speaker 10: but to the United States and to the plants that
Speaker 10: are in the United States waiting for those parts. So
Speaker 10: undoubtedly it would lead to disruptions of US production and.
Speaker 4: Increase costs, as many would anticipate from a consumer perspective.
Speaker 4: What about the supply chain when it affects China and
Speaker 4: US technology companies?
Speaker 3: Here how intertwined?
Speaker 4: How dependent does the US remain on Chinese pots and goods?
Speaker 10: Yeah, since the First Trade War, US has depended less
Speaker 10: strongly on China. But we have to remember that many
Speaker 10: of the electronic devices that we know and love were
Speaker 10: not actually tax under the First Trade War. So final
Speaker 10: items like laptops, nip notebooks, smart watches, cell phones, none
Speaker 10: of those were actually hit with the first trade war,
Speaker 10: tariffs peripherals were things that we may use with these devices.
Speaker 10: So that's you know, he has already proposed or promised
Speaker 10: a flat sixty on China. We don't know if this
Speaker 10: extra ten percent that he sent out last night is
Speaker 10: by a social media post, is on top of that
Speaker 10: or part of that. Either way, it's going to be
Speaker 10: extremely disruptive because our companies have not had time to
Speaker 10: move these vast supply chains out of China.
Speaker 3: Take Apple for a case study.
Speaker 4: They have been trying to depend more on India, for example,
Speaker 4: of the Southeast Asian countries, and we've seen him just
Speaker 4: in China over the weekend, trying to ensure the relationships
Speaker 4: remain strong with the government there. But also many understand
Speaker 4: that Tim Cook has a decent relationship with the incoming administration.
Speaker 4: Do you think CEOs are anticipating CoV outs? Do you
Speaker 4: think CEOs are able to manage this without passing it
Speaker 4: on to a consumer.
Speaker 10: I think they understand how disruptive this would be, and
Speaker 10: that if we know that there are constitutional limits on
Speaker 10: what the president can do, he's shown a pension for
Speaker 10: trying to blow past a lot of the limits that
Speaker 10: people have tried to place on him, but he can't
Speaker 10: revoke the law of economics, and there's economics limits to
Speaker 10: what he can do, or at least economic constraints. They're
Speaker 10: going to cause him a lot of trouble, not only
Speaker 10: in individual sectors, but on the macro front. Inflation will
Speaker 10: kick up again, for example, something which voters have shown
Speaker 10: that they dislike intensely. So I think it would be
Speaker 10: wise that C suites are anticipating.
Speaker 6: That this will be either set up with carve outs.
Speaker 10: Or it will be rolled back in terms of the
Speaker 10: absolute tex amount.
Speaker 6: That he is going to levy.
Speaker 10: So I think we have a long way to go
Speaker 10: before this social media quote becomes new taxes on US trade?
Speaker 4: How effective in the first iteration were tariffs on changing
Speaker 4: the flow of goods out of China in the US,
Speaker 4: reducing perhaps dependence or indeed the overall trade excess or
Speaker 4: lack thereof.
Speaker 10: I think we saw the value of trade dropped by
Speaker 10: about thirty percent between well US and China. Remember, China
Speaker 10: also retaliated against the US. We would certainly expect to
Speaker 10: see some retaliation again, not just from China but also
Speaker 10: from our other partners. So it had a significant effect
Speaker 10: on trade flows.
Speaker 6: That said, a lot of that trade was diverted to countries.
Speaker 10: There's very little evidence that any of that activity came
Speaker 10: back to the United States. Some of it flowed to Vietnam,
Speaker 10: some of it flowed to other parts of East and
Speaker 10: Southeast Asia, and of course some of it went into Mexico,
Speaker 10: which is why we've seen our trade, particularly in electronics
Speaker 10: and electrical devices increase with Mexico.
Speaker 4: Very lovely and the vets and Institute breaking it all down.
Speaker 4: Thank you, Meta TikTok Google. They're taking aim in Australia's
Speaker 4: legislation to ban children under sixteen from accessing such social
Speaker 4: media platforms. The government in Australia is pushing to pass
Speaker 4: the bill through parliament this week.
Speaker 3: Under the proposed bill, the.
Speaker 4: Social Media Chance would be responsible for policing that ban
Speaker 4: under threats of fines of up to thirty two point
Speaker 4: five million dollars. Let's bring in bring those, Kurt Wagner
Speaker 4: and look, thirty two and a half million dollars is
Speaker 4: but a drop in the ocean for any of these companies.
Speaker 3: But what is to fear here for them?
Speaker 8: Yeah?
Speaker 11: I think the bigger concern here is that this serves
Speaker 11: as some kind of a blueprint or template that other
Speaker 11: countries are going to adopt. Right, I mean, the last
Speaker 11: thing these companies want, these services want is for teenagers
Speaker 11: young people to not be able to use their services
Speaker 11: because that's how they get that next.
Speaker 6: Generation and users.
Speaker 11: And so if this ends up working in Australia, or
Speaker 11: it ends up getting passed and sort of effectively ending
Speaker 11: that connection, there would be real concern that other countries,
Speaker 11: especially those in Europe where regulation around these big tech
Speaker 11: companies has been much tighter, that other countries would try
Speaker 11: to maybe follow in their footsteps.
Speaker 4: It's interesting that we've had a spate of activity around
Speaker 4: protecting young people, whether it's in gaming with roadblocks, but
Speaker 4: also Instagram for example, they have their teen accounts rolled out.
Speaker 4: What is it then when instagram parent company Metro is
Speaker 4: coming out and saying that this is going to be
Speaker 4: really hard to enforce. We had a statement from Meta
Speaker 4: saying that the approach will require each app provider to
Speaker 4: collect personal identification or biometric data from all Australians. Are
Speaker 4: they trying to make out that this is you know,
Speaker 4: this is an issue of free speech and identity here?
Speaker 11: Yeah, I mean this is kind of an old playbook
Speaker 11: from them, right, which is to really push back and say, hey,
Speaker 11: this is impossible technologically, we can't do this, right and
Speaker 11: Meta is not the only company to say those kinds
Speaker 11: of things. At the same time, those team accounts you mentioned,
Speaker 11: Caroline are exactly the type of thing that you would
Speaker 11: think they could roll out in Australia, right, which is
Speaker 11: they automatically put teens into two more strict settings. They
Speaker 11: require you know, ID or some other type of verification
Speaker 11: before those teens can age up into an account for
Speaker 11: eighteen plus. And so while I do agree that it
Speaker 11: probably is a very tough technical challenge, I don't think
Speaker 11: it's necessarily impossible, and I think it's in Meta's best
Speaker 11: interests and all these companies' best interest to get across
Speaker 11: the fact that this is a tough chain Andre that's
Speaker 11: their argument is that hey, we can't do this.
Speaker 4: All eyes on how it goes through the Parliament this week.
Speaker 4: Wagner being asked to work hard up until holidays.
Speaker 3: We thank you.
Speaker 4: Welcome back to lum Meg Technology. I'm Caroline Hide in
Speaker 4: New York. A quick check in on these markets and
Speaker 4: more specifically crypto, because look, the ecosystem added about a
Speaker 4: trillion dollars. Since the election of Donald Trump for the
Speaker 4: administration in twenty twenty five, we had seen a bit
Speaker 4: of a pullback from close to one hundred thousand dollars.
Speaker 4: We've called down slightly maybe sort of about a four
Speaker 4: day sell off. Eight percent wiped off. We're now recovering
Speaker 4: a little bit up sixt tens percent. Ninety four two
Speaker 4: undred and sixty three is where we trade as people
Speaker 4: lock in profits, maybe question some of the geopolitical risks
Speaker 4: once again, and some risk aversion. But more broadly, let's
Speaker 4: talk about politics post the election of Trump, and in
Speaker 4: particular California Governor Gavin Newsom proposing a state incentive for
Speaker 4: EV buyers if federal support is taken away, but it
Speaker 4: would exclude Tesla's models from a market share limitation perspective
Speaker 4: that this move is aiming to create market editions for
Speaker 4: more car makers to enter the EV market, but confurther
Speaker 4: escalate tensions between these two characters, Elon Musk and Gavin Newsom.
Speaker 4: Let's talk about it all webnomgs Ilia, Yahoo, Keemische who
Speaker 4: joins us for more? And look, this is Gavin Newsom
Speaker 4: trying to front run any change from the new administration.
Speaker 4: If they take away that seven and a half thousand
Speaker 4: dollars tax credit for EV purchases, California will be there
Speaker 4: to step in and support.
Speaker 3: But why limit Tesla's.
Speaker 12: Yeah, that's exactly right. This is part of Newsom coming
Speaker 12: out from and saying Trump does take this away, we're
Speaker 12: going to Californians are still going to be eligible for
Speaker 12: electric vehicle tax credits. But the proposal that he gave
Speaker 12: yesterday says that there's a market share limitation which would
Speaker 12: prevent Tesla from qualifying from these credit. It's their reasoning
Speaker 12: for that is that they want to spur competition of
Speaker 12: smaller electric vehicle manufacturers in the state, and they said
Speaker 12: they want them to take root in the state. So
Speaker 12: essentially they're saying, you know, Tesla already has a huge
Speaker 12: market share in the state, and they want some of
Speaker 12: the smaller guys to be able to compete. A lot
Speaker 12: of these other electric vehicle manufacturers are losing money, some
Speaker 12: of the traditional OEM manufacturers are losing money when they
Speaker 12: sell an electric vehicle, so this is kind of an
Speaker 12: incentive for those smaller guys, while Tesla is making money
Speaker 12: every time they sell a car.
Speaker 4: I can imagine that Ilia who that this is going
Speaker 4: to be seen as therefore punishment for success, for punishment
Speaker 4: for being profitable. Already, I mean, what do we anticipate
Speaker 4: in terms of the reaction coming from Elon Musk because
Speaker 4: he's not been afraid to have pretty tough words for
Speaker 4: Gavin Newsom in the past.
Speaker 12: Yeah, I mean Elon Musk has already come out swinging
Speaker 12: and he called this proposal insane, and he cited that
Speaker 12: Tesla is the only car manufacturer that is actually producing
Speaker 12: cars in California, and they have a lot of employees
Speaker 12: based in California, even though they did move their headquarters
Speaker 12: to Texas. So I think it really does raise the
Speaker 12: tensions between these two characters. California is becoming this oil
Speaker 12: to the Trump administration, and Elon Musk has taken a
Speaker 12: newfound prominence in Republican politics. So you're seeing kind of
Speaker 12: Elon Musk and Newsome becoming these emerging characters that are
Speaker 12: representing kind of the new state of politics in the
Speaker 12: country right.
Speaker 4: Now, California and some massive economy. Elijah who commissa thank
Speaker 4: you for breaking it down. Let's just keep this discussion
Speaker 4: going with Jessica Caldwell, head of Insights at Edmonds, and
Speaker 4: your focus that you can bring us is the underlying
Speaker 4: data of EV sales, the actual success story that Tesla
Speaker 4: has compared to other competitors. Jessica, what will this mean
Speaker 4: for competition? Could it spur competition?
Speaker 2: I mean it's definitely going to spur competition.
Speaker 13: I mean, if you're out there at your shopping for
Speaker 13: a vehicle one adiligible for seventy five hundred dollars rebate,
Speaker 13: when is not I mean you're going to shop both vehicles.
Speaker 13: Of course, everyone knows what Tesla is. They have a
Speaker 13: lot of brand recognition, but something like this is going
Speaker 13: to get shoppers to look and consider other things, and
Speaker 13: a lot of times that does ultimately end in a purchase. So,
Speaker 13: without a doubt, Tesla will be at a disadvantage if
Speaker 13: this goes through.
Speaker 4: Jessica, just set the context here though, seven and a
Speaker 4: half thousand, what does that mean for the ultimate price
Speaker 4: point of an easy right now? Because well, they're not
Speaker 4: cheap and seven and a half thousand doesn't seem that
Speaker 4: much in comparison.
Speaker 3: To the cost of a Rivian for example.
Speaker 13: Yeah, I mean that is true, but I think as
Speaker 13: we go towards the mass market consumer, they're looking for
Speaker 13: cheaper evs, and in that case, seventy five hundred dollars
Speaker 13: does become probably more attractive because someone that's buying one
Speaker 13: hundred thousand dollars EV they're probably not bothered by these
Speaker 13: rebeates anyhow. And at the end of the day, people
Speaker 13: are buying a lot of times even though they shouldn't
Speaker 13: be on monthly payment, and so when it's calculated out,
Speaker 13: you're looking at the monthly payment, the seventy five hundred
Speaker 13: dollars apply, especially for lease customers.
Speaker 2: That can make a really.
Speaker 13: Big difference and make that a lot more attractive and
Speaker 13: get consumers to buy.
Speaker 4: California, though I'm assuming has been a first adopt early
Speaker 4: adopter of evs. More broadly, when you compare state to state,
Speaker 4: so who is how much of the mass market is
Speaker 4: still left to penetrate in California?
Speaker 13: Well, I think that's the whole thing, is that in
Speaker 13: California the EV market share over twenty percent, So you
Speaker 13: have a lot of masks or a lot of early
Speaker 13: adopters have already purchased. So getting the mass market is
Speaker 13: probably the bigger challenge here because these people need convincing.
Speaker 13: They probably don't have highs income. They're kind of questioning
Speaker 13: whether they even want an EV So now.
Speaker 2: It's a time. If there was ever a time.
Speaker 13: To have an incentive on EV's, it is for the
Speaker 13: mass market, not for the people that were early adopters
Speaker 13: that were excited about EV's to start with and probably
Speaker 13: didn't need much incentive to even purchase.
Speaker 3: Just compare States to state.
Speaker 4: We know that Newsom has not been afraid to push
Speaker 4: back at a LA musk and indeed perhaps be a
Speaker 4: key supporter of the EC sector. Wouldn't this be replicated elsewhere?
Speaker 4: Do you think if federal support did come away?
Speaker 2: I mean, it's likely we have things like CARB states.
Speaker 13: Other people are following some of the California a Resource Board,
Speaker 13: some of the edicts that they have put out, So
Speaker 13: there is a president here of other states kind of
Speaker 13: following California's lead.
Speaker 2: But at the end of the day, this program does
Speaker 2: sound quite costly, especially if you're to sell a lot
Speaker 2: of vehicles.
Speaker 13: So state's going to have to find funding for this program,
Speaker 13: which may be complicated. I mean, California has a clear
Speaker 13: order zero missions vehicle by twenty thirty five.
Speaker 2: And you know, if that's the case, then programs like.
Speaker 13: This will have to exist to spur that mass market
Speaker 13: to start to buy.
Speaker 3: They really want to spur the mass market.
Speaker 4: You'd anticipate that you let Chinese EV's in, which are
Speaker 4: much cheaper than US competitors. Who therefore, given that that
Speaker 4: won't be the case, where are the cheaper vehicles, who
Speaker 4: will this end up supporting?
Speaker 6: Well, I mean, I.
Speaker 2: Think any automakers. I mean they're all kind of scrambling.
Speaker 13: I mean, in this era of affordability, it costs all
Speaker 13: living increase of inflation, people just feeling a lot less
Speaker 13: wealthy than they have in.
Speaker 2: The past has been a big issue for car buyers.
Speaker 13: So I think a lot of automakers are trying to
Speaker 13: focus on the lower end. To anyone that is delivering
Speaker 13: good value that kind of has maybe like you know,
Speaker 13: a forty thousand dollars price tag, they're probably going to
Speaker 13: get a lot more eyeballs than some of these other
Speaker 13: things that we have seen, you know, like the Jaguar
Speaker 13: coming out in a few years or any of these
Speaker 13: you know, six figure EV type of vehicles.
Speaker 4: All eyes on the neis sounds of this world, Jessica
Speaker 4: Cool well, we thank you. Kind of insights over at Edmund's.
Speaker 4: I meanwhile coming up Klana getting ready for that IPO.
Speaker 3: We'll discuss with.
Speaker 4: Headlines Cameron and Sorry, and what it means for other
Speaker 4: fintech companies that may also be mone and going public.
Speaker 3: This is what we make Technology.
Speaker 4: A group of former Google and Stripe executives who helped
Speaker 4: build the Android platform and raising fifty six million dollars
Speaker 4: for a new company. This one focused on developing an
Speaker 4: operating system for AI agents. Showing KAfari joins us now
Speaker 4: showing every other moment I seem to reading about the
Speaker 4: latest AI agent company, and this one's actually to foster
Speaker 4: an operating system for its adoption.
Speaker 3: That's right.
Speaker 14: So the idea is they're not actually building the agents themselves,
Speaker 14: but because they believe that the future of computing will
Speaker 14: not be necessarily about apps, that the next evolution of
Speaker 14: these AI agents, that they want to build something that
Speaker 14: will connect all these agents to be able to talk
Speaker 14: to each other and for developers to all build on
Speaker 14: one platform, kind of like how we have Android for OS.
Speaker 4: It's called well, I don't know how it would say
Speaker 4: it slash dev, slash agents or just dev agents as
Speaker 4: they're coming out of stealth.
Speaker 3: This is the new name.
Speaker 4: They've got some really interesting characters on their cap table now,
Speaker 4: so Alexander Wang of SCALEAI. They've also got Nikesh Aurora,
Speaker 4: who we've been speaking to on the show recently of
Speaker 4: Palo Alto Networks. But who are the vcs behind this
Speaker 4: and how do they find them?
Speaker 14: That's right, so Index is leading the round and Alphabet's
Speaker 14: independent growth arm Capital G is co leading it.
Speaker 3: And what's interesting is that you know, these.
Speaker 14: Guys have been known for a long time in Silicon
Speaker 14: Valley helping build the Android platform, and the CEO is
Speaker 14: also a former Stripe executive. You a CTO there, so
Speaker 14: you know these people. These investors have known these these
Speaker 14: leaders for a while. And actually the lead partner at
Speaker 14: Index knew the founder back at Google. They both worked
Speaker 14: together briefly at Google. So yeah, it's a really interesting,
Speaker 14: I think case study of where you see this sort
Speaker 14: of founder market fit. The lead investor told me right
Speaker 14: where people have a lot of confidence in this group
Speaker 14: to be able to execute on this kind of ambitious
Speaker 14: plan to build a new network that can connect this
Speaker 14: future wave of technology we're seeing with AI agents.
Speaker 4: David Singleton, who is over Stripe as CTO quoting it
Speaker 4: we need an Android like moment for Ai Shoreen KAfari,
Speaker 4: thank you so much for bring us the latest funding round. Meanwhile,
Speaker 4: let's dig into funding rounds to future IPOs and exits. Karana,
Speaker 4: for example, another key fintech that we're all getting on
Speaker 4: our mind for its IPO. We understand it almost broke
Speaker 4: even in the first nine months of the year, companies
Speaker 4: stating that as at eyes the markets in today's VC Spotlight,
Speaker 4: let's dig in with Cameron and Sary his partner at Headline,
Speaker 4: who understands by now pay later deeply and I'm.
Speaker 3: Interested in Kharana.
Speaker 4: How important, how integral to the market opening?
Speaker 3: Will it's IPO be?
Speaker 15: Well, it's going to be huge because we really haven't
Speaker 15: had a major tech IPO in months. We had read
Speaker 15: it and I bought it came out back in the spring,
Speaker 15: but it's been quite since then. I think been waiting
Speaker 15: for the election outcome and also to see what's happening
Speaker 15: with interest rates. But now that we're past that, I
Speaker 15: think Clara is going to be the first real test
Speaker 15: of the market.
Speaker 4: And in terms of valuation, like they've been on a
Speaker 4: volatile ride.
Speaker 3: Ro's so too a stripe.
Speaker 4: Look, both of these companies will call up and the
Speaker 4: twenty twenty one year Fouria or around fintech I both
Speaker 4: had a sharp realization of what valuations really are. Klan
Speaker 4: has been bringing its way back as that's strong.
Speaker 8: Absolutely. Look, I think Clarna did a very smart thing.
Speaker 15: They got over what I call valuation nostalgia, where you
Speaker 15: feel like I was worth X before I should be
Speaker 15: worth X now it's not true.
Speaker 8: Right, the markets adjusted.
Speaker 15: Everyone's kind of worth a different price than they were
Speaker 15: in twenty twenty in a zero interest rate environment. So
Speaker 15: Clarnet was valued at forty six billion and they came
Speaker 15: down and did around the next year at seven billion.
Speaker 15: That's a tough pill to swallow, but they did it.
Speaker 15: They did the reset. It was a sober, great decision.
Speaker 15: And now they've built their way back up, and this IPO,
Speaker 15: by all indicasions, will price probably somewhere in fifteen twenty
Speaker 15: billion dollars sort of range, maybe a little higher.
Speaker 8: Their main comp affirm in the US.
Speaker 15: The stock US up like five hundred percent in the
Speaker 15: last couple of years, So I think they're coming out
Speaker 15: at a great time and they're going to get the
Speaker 15: you know, hopefully approach back.
Speaker 8: To where they were. But they did that reset and
Speaker 8: that was very smart them.
Speaker 4: What's interesting is that the secondary market has been so
Speaker 4: active and so many companies have a decent chunk of
Speaker 4: change they don't.
Speaker 3: Need to exit.
Speaker 4: So, for example, Stripe has been buying back its own
Speaker 4: stock from previous employees. They so little need to go
Speaker 4: and tap the markets. Why then should a Klan or
Speaker 4: a Stripe eventually come an IPO.
Speaker 15: Look and ipl Really, there's three things. It's a marketing event.
Speaker 15: It's an opportunity to come out and say here's what
Speaker 15: we do, here's what we are. You know, my parents
Speaker 15: may have not heard of Clara before, but now they will.
Speaker 15: You know, Klarana is telling a big AI story that
Speaker 15: I call themselves the AI powered Global Payments Network.
Speaker 8: So that's the first thing. The second is it is liquidity, right.
Speaker 15: Dot's provide liquidity in a deeper way than any private
Speaker 15: funding round can.
Speaker 8: To employees to investors.
Speaker 15: And the third thing that's really important is it sets
Speaker 15: a really clear public equity price for your stock, so
Speaker 15: you can use that to then compensate employees to hire
Speaker 15: and to do m and A to buy companies because
Speaker 15: before that it's always this parlor game of well, what's
Speaker 15: the stock really worth? We don't really know, and now
Speaker 15: you'll know every second of every day how much it's worth.
Speaker 4: What are you thinking about MNA, because I believe that
Speaker 4: you backed sort of a Klana similar so got bought
Speaker 4: by a bigger tech company.
Speaker 3: Aren't we going to see more I'm and A in
Speaker 3: the space.
Speaker 8: I really think so.
Speaker 15: I beck to company called Bread Finances, which is bought
Speaker 15: by aline Stata Systems.
Speaker 8: The whole companies now called Bread.
Speaker 15: It's a very similar company to our firmand Clarna, And
Speaker 15: in fact, you know, in the fintech space and tech.
Speaker 8: Overall, we've seen very little M and A.
Speaker 15: Part of it's been the regime and the regulatory process
Speaker 15: where people are afraid that deals will get blocked. I
Speaker 15: think by all indications, in twenty twenty five, with the
Speaker 15: new Trump era, we'll see a more friendly environment for
Speaker 15: M and A and I think folks are kind of
Speaker 15: leaning into that now. And you saw some rumored stuff.
Speaker 15: There was like a Qualcom deal that was going to happen.
Speaker 15: We've heard about HubSpot, Google, Whiz Google. Those didn't turn
Speaker 15: out to actually happen. But I think in the new
Speaker 15: year you will see M and A pickup as well. Absolutely,
Speaker 15: How do.
Speaker 4: You prep your own portfolio companies then for that new
Speaker 4: era of twenty twenty five, I.
Speaker 15: Think, you know, the thing has always been, you know,
Speaker 15: cash is oxygen and auxygen is life, So you have
Speaker 15: to have enough cash on hand to make it through
Speaker 15: whatever period of time. And these last couple of years
Speaker 15: have been tricking in that regard. So companies have been
Speaker 15: raising you know, debt rounds, bank equity, you know, loans
Speaker 15: from banks, convertible notes, things like that to bridge and
Speaker 15: get through to a period where hopefully there's going to
Speaker 15: be more liquidity and better environment for exits.
Speaker 4: What about you and your thoughts on building up holdings
Speaker 4: in companies via the secondary market or going direct to
Speaker 4: when they're doing fresh sales.
Speaker 3: What's the environment been like? How how pure is it.
Speaker 4: At the moment or is it kind of it's who
Speaker 4: you know in the back door and therefore you.
Speaker 15: Will access It used to be that way, you know,
Speaker 15: ten tho ten years ago, secondaries was always kind of
Speaker 15: whispered and so forth. And there's famously a massive secondary
Speaker 15: market for Facebook soccer.
Speaker 8: You know before it was public.
Speaker 15: For many years, but a lot of companies put limits
Speaker 15: on secondary sales and you can only sell a certain portion,
Speaker 15: or some companies don't allow sales at all. They have
Speaker 15: rights of first refusal to stop sales or purchases stocks themselves.
Speaker 8: But now you have all these.
Speaker 15: Other markets like Forge and Hive, and while Carter was
Speaker 15: trying to do this where you have a kind of
Speaker 15: more liquid quote unquote secondary market where you can see
Speaker 15: the most up to date pricing, but it's still very episodic,
Speaker 15: where you know, some deal happens and then maybe six
Speaker 15: months goes by, so you're not really sure exactly how
Speaker 15: what the pricing is of these shares in any given
Speaker 15: moment in.
Speaker 4: Time, and how difficult is it to understand some of
Speaker 4: the nuances in the deals. The contracts are very individual,
Speaker 4: and some of these very hot companies are able to
Speaker 4: have pretty tough rules on how you speak about.
Speaker 3: Them and how you invest in rivals. What's that looking like?
Speaker 15: Well, you know, the biggest thing is information right, and
Speaker 15: information rights are very limited for investors who come into
Speaker 15: say a secondary in a company like a Klarna or
Speaker 15: whatever before their public you don't get all the rights
Speaker 15: you don't get all the financials, you don't get all
Speaker 15: the documents. You're just told, okay, look this is the
Speaker 15: information you get. There's the price of the stock and
Speaker 15: that's Sydney. You have to kind of live with that.
Speaker 15: Once a company is public, then obviously you get all
Speaker 15: the full information and it's a level playing field for
Speaker 15: everybody and it's a much adding more rich environment.
Speaker 8: For folks people to invest with full info.
Speaker 4: We'll see how that full info comes to beir next
Speaker 4: day at camera And I'm sorry, it's so great to
Speaker 4: have you partner at headline Eon.
Speaker 3: It's a cloud backup startup and in fact it was
Speaker 3: founded in just.
Speaker 4: January of this year by a group of Amazon Web
Speaker 4: Services alumni and it's just closed a new funding round,
Speaker 4: value in the company at one point four billion dollars.
Speaker 4: That's less than a year after founding. So I'm going
Speaker 4: to talk about it with a fair like he's the
Speaker 4: CEO joining us. Now, you've done three funding rounds in
Speaker 4: one year of your first existence. How are we doing
Speaker 4: this and talk to us about what problem you're solving.
Speaker 16: Well, it actually four rounds of funding. A first round
Speaker 16: was led by Secoya, second round a light Speed, then
Speaker 16: Green Oaks and lastly Bond And what we're doing we're
Speaker 16: making cloud backup useful because now they're not. And to
Speaker 16: think why should we care about cloud backups? Mean, my
Speaker 16: grandmother have backup on her iPhone for all of her
Speaker 16: kids over only grab kids, So it's not that easy
Speaker 16: in the cloud. You see on premise everyone have everything.
Speaker 16: And in the cloud companies just moved in the last
Speaker 16: few years. They're spending hundreds of billions of dollars annually
Speaker 16: on the cloud, out of which twenty percent is cloud spent,
Speaker 16: is backup spent. And this is a huge spent and
Speaker 16: today it doesn't work. It's very cumbersome, it's a mess,
Speaker 16: and it's not useful. You can't even use it when
Speaker 16: you need it. So it's a very big problem and
Speaker 16: we're happy to solve that.
Speaker 3: I mean aws Or it is a problem. And they
Speaker 3: bought your.
Speaker 4: Previous company, cloud Endure.
Speaker 3: So how long have you been fixing this problem?
Speaker 4: How are the ways that the technology is changing to
Speaker 4: ensure that it is less cumbersome going forward?
Speaker 16: So we've seen it. We had a front row seat
Speaker 16: when we're in a previous company in cloud on Door
Speaker 16: and then after being acquired by AWS. In AWS, we
Speaker 16: built the disaster recovery service for enterprises, so we had
Speaker 16: a front row seat seeing very large companies either moving
Speaker 16: to the cloud and starting using that for resilience, and
Speaker 16: apparently they encountered many problems related to how you manage
Speaker 16: your data, how you govern that, and then how you
Speaker 16: make sure that it's it's safe and that you can access.
Speaker 8: It when you need it.
Speaker 16: So we've seen it for the last I'm doing it
Speaker 16: for the last eleven years and my partner's doing it
Speaker 16: for even more time than that. And when we left AWS,
Speaker 16: it was very vivid that the time is now because
Speaker 16: when enterperse move to the cloud, they form these new
Speaker 16: organizations cloud cloud infrastructure, cloud operations. These are organizations responsible
Speaker 16: for all cloud resilience across the organization, twenty percent of
Speaker 16: cloud spend, which is tens of billions of dollars annually.
Speaker 16: But simply it doesn't work. The same technology and the
Speaker 16: same architecture which worked on premise, it simply doesn't work
Speaker 16: in the cloud. It's like trying to take a square
Speaker 16: peg and fit it into a round hole. And we
Speaker 16: are here to fix it in two ways. One, we
Speaker 16: want to make sure we are able to manage all
Speaker 16: the data for the entire organization, help classify everything, understand
Speaker 16: what's important to back up, what's not to witch retention policy,
Speaker 16: and then we're making it very easy to actually access
Speaker 16: it when you need it. For example, compliance audits, both
Speaker 16: internal and external compliance audits.
Speaker 8: Let's say that you're.
Speaker 16: An insurance company and you want to access your data
Speaker 16: from three years back. Who knows if you have backup?
Speaker 16: And if you do, how long will it take you
Speaker 16: to get the data today? It could take days or
Speaker 16: even weeks. Companies are missing compliance audits really bad.
Speaker 3: So you're the fix for the It sounds like you've
Speaker 3: built the offering.
Speaker 4: So when you're going through your fourth round of funding,
Speaker 4: why do you need the funds?
Speaker 3: What is it you're going to be spending it on.
Speaker 16: So we found out that as this category category emerges
Speaker 16: and there are very big problems that customers are having,
Speaker 16: we want to make sure that we have everything we
Speaker 16: need in order to support it and solve that quickly,
Speaker 16: and in the enterprise level, because the budget that huge,
Speaker 16: The pain is enormous, and frankly, today what's going on
Speaker 16: is a mess, and we need enough funding to make
Speaker 16: sure that We're building a comprehensive solution fit for the enterprise,
Speaker 16: so that we are well positioned to solve that for
Speaker 16: every company, big or small.
Speaker 3: Engineers marketing sales.
Speaker 4: I'm sure you'll be bringing on a fair few e
Speaker 4: on CEO, A fair Alex. Thank you for your time
Speaker 4: over in Israel today. Meanwhile, that does it the sedition
Speaker 4: of Bloomberg Technology.
Speaker 3: Don't forget to check out the podcast.
Speaker 4: You'll find it on the terminal as well as online
Speaker 4: on Apple and Spotify.
Speaker 3: On iHeart from New
Speaker 4: York, this is Bloomberg Technology.