WEBVTT - Bloomberg Businessweek Weekend - September 19th, 2025 0:00:00.280 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.640 --> 0:00:13.000 This is Bloomberg Business Week Daily reporting from the magazine 0:00:13.000 --> 0:00:17.599 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.640 --> 0:00:22.520 and trends shaping today's complex economy, plus global business, finance 0:00:22.560 --> 0:00:26.280 and tech news as it happens. The Bloomberg Business Weekdaily 0:00:26.400 --> 0:00:31.320 Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:32.159 --> 0:00:35.120 Hi, everyone, welcome to the Bloomberg Business Wee Weekend Podcast. 0:00:35.560 --> 0:00:38.400 We are coming off a FED meeting that played out 0:00:38.440 --> 0:00:42.200 as many investors expected, with FED officials lowering their benchmark 0:00:42.240 --> 0:00:45.159 interest rate by a quarter percentage point and penciling in 0:00:45.280 --> 0:00:49.320 two more rate reductions this year. Policymakers pointed to growing 0:00:49.360 --> 0:00:52.240 signs of weakness in the labor market, while also acknowledging 0:00:52.560 --> 0:00:56.320 that inflation has quote moved up and remained somewhat elevated. 0:00:56.560 --> 0:00:59.160 End quote. For the latest on that FED decision and 0:00:59.280 --> 0:01:01.720 all the analysis that we did here at Bloomberg and 0:01:02.000 --> 0:01:05.160 post market action, head to the Bloomberg or Bloomberg dot Com. 0:01:05.560 --> 0:01:08.720 Also happening this week, President Trump's second state visit as 0:01:08.760 --> 0:01:12.200 president to the UK, bringing along with him the CEOs 0:01:12.240 --> 0:01:15.600 of Apple, Nvidia, and Microsoft, among many others, to an 0:01:15.680 --> 0:01:18.280 ounce deals and spend tens of billions of dollars on 0:01:18.319 --> 0:01:19.839 tech infrastructure in the UK. 0:01:20.200 --> 0:01:23.160 We meantime, focused on the data center build out and 0:01:23.200 --> 0:01:25.560 spend in the United States. We did that with the 0:01:25.600 --> 0:01:29.680 CEO of the seventy seven billion dollar market cap reate Equinis. 0:01:29.600 --> 0:01:32.840 Plus the CMBs pioneer who's thrown his hat into the 0:01:32.840 --> 0:01:34.160 California governor's race. 0:01:34.440 --> 0:01:36.440 All that to come, we begin with a big story 0:01:36.480 --> 0:01:39.119 in the chip world, and Vidia agreed to invest five 0:01:39.160 --> 0:01:41.319 billion dollars in Intel and said the two will co 0:01:41.440 --> 0:01:44.720 develop chips for PCs and data centers, a surprise move 0:01:44.760 --> 0:01:47.120 to help prop up an ailing arch rival that sent 0:01:47.280 --> 0:01:49.480 Intel shares soaring on the news. 0:01:49.840 --> 0:01:51.919 For more on this, we were joined by Chris Miller, 0:01:52.040 --> 0:01:54.840 professor at the Fletcher School at Tufts University. He's also 0:01:55.040 --> 0:01:58.240 non resident Senior Fellow at the American Enterprise Institute and 0:01:58.360 --> 0:02:02.120 advises businesses and more at the consultancy Green Mantle. He 0:02:02.240 --> 0:02:04.840 of course, also is the author of the book Chipwar, 0:02:05.120 --> 0:02:07.400 The Fight for the World's Most Critical Technology. 0:02:08.080 --> 0:02:10.200 I think from the perspective of ten years ago, this 0:02:10.240 --> 0:02:13.120 would have been a pretty surprising pair up, but today 0:02:13.120 --> 0:02:15.480 there's a real logic for it. In Vidia is a 0:02:15.560 --> 0:02:19.720 leader in AI chips. Intel has been trying to catch 0:02:19.800 --> 0:02:22.480 up when it comes to AI. But also Intel's got 0:02:22.480 --> 0:02:24.800 a lot of unique know how when it comes to 0:02:24.880 --> 0:02:29.200 building processor chips, which AI servers still require. So certainly 0:02:29.280 --> 0:02:33.200 on the chip design side, there's differing areas of expertise 0:02:33.280 --> 0:02:35.800 that both of these companies can bring together, all. 0:02:35.760 --> 0:02:39.320 Right, but just all of it together. The US taking 0:02:39.840 --> 0:02:43.440 that ten percent, approximately ten percent stake in Intel over 0:02:43.480 --> 0:02:46.560 this summer, You've got SoftBank, there are two billion dollar 0:02:46.680 --> 0:02:49.359 investment now in Nvidia. What is this? I mean, is 0:02:49.400 --> 0:02:52.040 this what you thought would happened need to happen to 0:02:52.280 --> 0:02:56.520 ensure us remain a dominant player in the semi space. 0:02:57.160 --> 0:02:58.720 Well, I think we're going to need to wait and 0:02:58.840 --> 0:03:02.800 see what implication this announcement has, if any, for Intel's 0:03:02.840 --> 0:03:06.239 manufacturing business. I think there's no doubt that Intel's going 0:03:06.280 --> 0:03:09.080 to be an important chip designer in the future, perhaps 0:03:09.120 --> 0:03:11.519 smaller than it used to be, but they've got a 0:03:11.600 --> 0:03:13.840 unique position in the market on the chip design side. 0:03:13.840 --> 0:03:16.960 But from a national perspective, what really matters is Intel's 0:03:17.000 --> 0:03:20.040 manufacturing arm and that's where Intel has really struggled the 0:03:20.080 --> 0:03:22.679 last couple of years to stay at the cutting edge 0:03:22.720 --> 0:03:26.799 technologically and also to win customers away from TSMC, the 0:03:26.840 --> 0:03:30.280 Taiwanese market rival, and today in Vidia produces almost all 0:03:30.280 --> 0:03:33.880 of its most advanced ships with TSMC. There's been a 0:03:33.919 --> 0:03:36.840 big push from Washington to get companies like in Nvidia 0:03:37.000 --> 0:03:40.160 to diversify their supply and to try to help Intel 0:03:40.600 --> 0:03:44.720 become a more successful manufacturer of chips for other companies. 0:03:44.840 --> 0:03:47.240 The announcement doesn't really say anything about that, but I 0:03:47.280 --> 0:03:49.960 think a lot of people will ask whether this is 0:03:49.960 --> 0:03:53.600 a stepping stone for other US companies in video or 0:03:53.600 --> 0:03:56.560 some of its peers to bring more of their manufacturing 0:03:56.600 --> 0:03:58.400 business to Intel's manufacturing arm. 0:03:58.640 --> 0:04:01.640 So tip war it is on? Or where are we? 0:04:01.920 --> 0:04:03.720 Is it the beginning of the chip war? And I'm 0:04:03.720 --> 0:04:06.480 just curious, are you starting to think about I don't know, 0:04:06.520 --> 0:04:10.200 another book and where it goes from here? Give us 0:04:10.240 --> 0:04:10.920 your thought here? 0:04:11.920 --> 0:04:13.960 Why I think we're in the thick of the chip 0:04:13.960 --> 0:04:18.320 war right now? Next to this news about in Nvidia 0:04:18.360 --> 0:04:21.240 and Intel, there's a big debate going on in Beijing 0:04:21.279 --> 0:04:24.440 and in Washington about which company should be allowed to 0:04:24.480 --> 0:04:29.400 buy which type of the AI accelerators that Nvidia specializes 0:04:29.440 --> 0:04:33.279 in designing that are almost exclusively today produced in Taiwan. 0:04:33.360 --> 0:04:36.800 And so you've got these competitive commercial dynamics intersecting with 0:04:37.440 --> 0:04:40.159 high geopolitics, and today you can't really separate the chip 0:04:40.200 --> 0:04:43.279 industry from the decisions of President Trump or from Chairman 0:04:43.360 --> 0:04:44.720 she Well. 0:04:45.040 --> 0:04:46.520 That's a really good point and kind of brings me 0:04:46.560 --> 0:04:49.880 to my question about Intel specifically in the US taking 0:04:49.920 --> 0:04:53.800 this unprecedented stake in this chip maker earlier this year. 0:04:54.400 --> 0:04:56.480 What did you think of that, Chris. 0:04:58.000 --> 0:05:01.159 Well, I think the US has been pretty clear in 0:05:01.200 --> 0:05:02.880 its desire, going all the way back to the first 0:05:02.880 --> 0:05:06.120 Trump administration through the Bide administration, as well as both 0:05:06.160 --> 0:05:11.320 houses at Congress, both parties that it sees Intel's success 0:05:11.360 --> 0:05:15.119 in manufacturing as important for US national security. Right now, 0:05:15.200 --> 0:05:17.839 most of the world's advanced processor chips are produced by 0:05:18.400 --> 0:05:21.719 one company in one country, Taiwan, and the US wants 0:05:21.720 --> 0:05:25.880 a more diversified base of manufacturing these ultra critical chips 0:05:25.920 --> 0:05:29.080 that are key both for smartphones and computers, but especially 0:05:29.120 --> 0:05:32.640 for ai and Intel is one of the three companies 0:05:32.680 --> 0:05:35.200 in the world, alongside Samsung and TSMC, that can produce 0:05:35.240 --> 0:05:38.000 these cutting edge chips, and it's the only US company, 0:05:38.000 --> 0:05:41.120 the only company with a major US footprint, at least 0:05:41.560 --> 0:05:43.680 right now. And so that's why the US government has 0:05:43.720 --> 0:05:45.960 been trying to find ways to help Intel out. So 0:05:45.960 --> 0:05:47.600 what wouldations get going? 0:05:47.960 --> 0:05:50.240 Well, what would it take for Intel to be able 0:05:50.279 --> 0:05:53.000 to compete with TSMC? I mean it got money from 0:05:53.000 --> 0:05:55.560 the US government. It got money. It's getting money from 0:05:55.640 --> 0:05:58.440 Intel here. As Carol always says, the devil's in the details. 0:05:58.480 --> 0:06:00.520 And you said, we need to see exactly where this 0:06:00.600 --> 0:06:03.680 money goes. But what do we need to see to say, Okay, 0:06:03.760 --> 0:06:06.719 this company, this US company, is now competing with TSMC. 0:06:08.720 --> 0:06:11.440 So there's no doubt that Intel needs money, and it's 0:06:11.520 --> 0:06:13.560 raised some money from soft Bank and the US government, 0:06:13.600 --> 0:06:15.680 But the key thing that it needs is customers for 0:06:15.720 --> 0:06:19.120 its advanced manufacturing processes. You'd only prove whether or not 0:06:19.160 --> 0:06:22.120 they work if you've got at least medium sized, but 0:06:22.200 --> 0:06:24.440 ideally large scale customers that are going to let you 0:06:24.480 --> 0:06:28.640 produce thousands, tens of thousands, eventually millions of chips on 0:06:28.680 --> 0:06:31.600 your manufacturing process. You can't scale up without customers, and 0:06:31.680 --> 0:06:34.520 right now, Intel's got a couple of smaller customers for 0:06:34.640 --> 0:06:38.760 its manufacturing business, but it's thus far failed to win 0:06:39.200 --> 0:06:41.800 a very large scale customer, and Nvidia's one example of 0:06:41.839 --> 0:06:44.000 a company. There are others that could provide a really 0:06:44.080 --> 0:06:47.440 large contract that would let Intel test out its cutting 0:06:47.520 --> 0:06:50.200 edge manufacturing. And right now I think the entire ecosystem 0:06:50.240 --> 0:06:52.839 is waiting to see will it win some big customers 0:06:52.880 --> 0:06:56.039 that lets it complete that scale out and testing of 0:06:56.080 --> 0:06:57.760 its cutting edge manufacturing. 0:06:57.800 --> 0:06:59.560 All right, so we're talking abou Chris Miiler, professor of 0:06:59.600 --> 0:07:03.119 International History at the Fletcher School at Tufts University, author 0:07:03.120 --> 0:07:06.480 of Chip War, The Fight for the World's Most Critical Technology. Hey, Chris, 0:07:06.520 --> 0:07:07.800 one thing I want to ask you, and I want 0:07:07.800 --> 0:07:09.359 to go back to China. There was a story I 0:07:09.440 --> 0:07:13.000 was reading by our Javi R. Bloss an opinion police piece, 0:07:13.040 --> 0:07:15.480 and was asking why is China stockpiling so much surp 0:07:15.760 --> 0:07:18.160 plus oil? And one of there were like five or 0:07:18.200 --> 0:07:21.800 six different reasons, and one of it was does China 0:07:21.840 --> 0:07:24.720 fear an interruption and supply beyond US and European sanctions? 0:07:25.120 --> 0:07:27.800 Oil traders who traffic and intrigue at are only one 0:07:27.800 --> 0:07:32.800 word Taiwan. Do you believe that there is a strong 0:07:32.920 --> 0:07:37.040 possibility that there will be a conflict involving Taiwan? And 0:07:37.120 --> 0:07:43.000 what does that mean for TSMC, who is so crucial 0:07:43.520 --> 0:07:46.840 in terms of the global chip supply chain, what could 0:07:46.840 --> 0:07:50.440 that potentially mean for the United States the global economy? 0:07:50.480 --> 0:07:52.400 I mean, can you play that out and what the 0:07:52.520 --> 0:07:53.120 likelihood is? 0:07:55.040 --> 0:07:57.880 Well, there's no doubt it's a possibility. Nobody knows for 0:07:57.920 --> 0:08:00.720 certain what the likelihood is. But I think the magnitude 0:08:00.760 --> 0:08:03.240 of impact is so large that even if you think 0:08:03.280 --> 0:08:05.920 it's only five or ten percent likely, you've got to 0:08:05.920 --> 0:08:09.240 take steps to prepare. All of the biggest, most valuable 0:08:09.280 --> 0:08:12.520 companies in the United States require silicon that today can 0:08:12.560 --> 0:08:15.160 in some cases only be sourced from Taiwan. That's true 0:08:15.200 --> 0:08:18.760 for Nvidia, Troop, for Apple Group, for Google Trooper, Microsoft Proof, 0:08:18.800 --> 0:08:25.000 for Meta. The entire US tech ecosystem relies on Taiwan's expertise. 0:08:25.040 --> 0:08:27.160 And that's why there's been this push for the last 0:08:27.160 --> 0:08:30.559 couple of years to find ways to diversify the US 0:08:30.600 --> 0:08:34.480 from being so centrally exposed to China's decisions about war 0:08:34.520 --> 0:08:35.760 and peace and the Taiwan Straits. 0:08:35.840 --> 0:08:38.760 And the reality is that the US is still very, 0:08:38.880 --> 0:08:42.920 very exposed, correct because of how much TSMC still produces. 0:08:44.440 --> 0:08:45.880 That's right. I think the US has made a bit 0:08:45.920 --> 0:08:48.480 of progress, but there's still a long way to go. 0:08:48.559 --> 0:08:50.920 And it's a long way to go because TSMC is 0:08:50.920 --> 0:08:55.040 an extraordinarily capable company and the entire Taiwan's ecosystem is 0:08:55.080 --> 0:08:58.480 just so central to producing the semiconductor hardware that our 0:08:58.559 --> 0:09:00.400 tech firms and aifirms beend on. 0:09:00.840 --> 0:09:02.360 What do you think of the politics of this and 0:09:02.400 --> 0:09:06.840 the fact that TSMC, you know, has this facility in 0:09:06.880 --> 0:09:10.760 Arizona and is working to increase its presence here in 0:09:10.800 --> 0:09:12.960 the United States, does it put that at risk? 0:09:14.920 --> 0:09:17.120 No, I don't think so. I think TSMC has got 0:09:17.120 --> 0:09:20.440 a strong signal from its customers that they want US 0:09:20.480 --> 0:09:24.960 space production. Its uncertainty created by the tariffs that incentivizes 0:09:25.720 --> 0:09:29.800 more investment in the United States, and it's got a 0:09:29.840 --> 0:09:33.360 signal from the US government again across multiple administrations both parties, 0:09:33.360 --> 0:09:36.720 that they're going to keep pushing for a bigger US footprint. 0:09:36.720 --> 0:09:40.000 But I think the challenge that TSMC faces is twofold. First, 0:09:40.200 --> 0:09:42.240 all of its keyr and D remains in Taiwan and 0:09:42.320 --> 0:09:44.520 will be in Taiwan as far as we can see 0:09:45.000 --> 0:09:49.800 in the future. So Arizona is helpful and diversifying today's manufacturing, 0:09:49.840 --> 0:09:52.560 but it doesn't really get you diversification of the next generation. 0:09:53.200 --> 0:09:55.400 The second thing is that the ecosystem in Arizona is 0:09:55.440 --> 0:09:57.920 still less developed than it is in Taiwan, and so 0:09:57.920 --> 0:10:01.280 sourcing the gases and the materials and all the spare 0:10:01.320 --> 0:10:04.319 parts and specialized equipment you need for a cutting edge 0:10:04.360 --> 0:10:07.959 chip plant, it's still harder and more expensive in Arizona 0:10:08.000 --> 0:10:09.600 than in Taiwan. And that's going to be the case 0:10:09.640 --> 0:10:11.959 for some time until we keep building out the scale 0:10:12.520 --> 0:10:14.840 of Arizona. And all of that means that Taiwan's going 0:10:14.880 --> 0:10:18.240 to stay very, very important were our techie ecosystem for 0:10:18.280 --> 0:10:19.000 many years to come. 0:10:19.080 --> 0:10:21.640 Chris really quickly thirty seconds here, I mean, was President 0:10:21.679 --> 0:10:25.720 Trump wright in his increasing tensions on China. It started 0:10:25.720 --> 0:10:27.720 in his first term and wrapped up in the second. 0:10:27.760 --> 0:10:30.080 Was he right, especially when you think about semiconductors, and 0:10:30.360 --> 0:10:31.400 just quickly if you could. 0:10:32.600 --> 0:10:35.040 Well, I think the key driver of tensions in this 0:10:35.040 --> 0:10:38.600 sector is actually China's desire to become self sufficient. We 0:10:38.600 --> 0:10:41.760 were in a pretty stable gulibrium in twenty fifteen before 0:10:41.800 --> 0:10:44.520 the Made in China twenty twenty five plan was released. 0:10:44.640 --> 0:10:48.120 That happened before any of the US policies to support 0:10:48.120 --> 0:10:50.040 its own chip industry, and that was really the catalyst 0:10:50.120 --> 0:10:54.000 for introducing geopolitical tension as a central facet in the 0:10:54.040 --> 0:10:54.680 chip industry. 0:10:54.840 --> 0:10:56.840 All right, So glad we could get some time with you, 0:10:56.960 --> 0:10:59.680 So relevant as always, Chris Miller, author of Chip War 0:10:59.840 --> 0:11:02.840 and professor of international history at the Fletcher School at 0:11:02.880 --> 0:11:03.800 Tufts University. 0:11:13.000 --> 0:11:17.000 You're listening to the Bloomberg Business Weekdaily podcast. Catch us 0:11:17.040 --> 0:11:20.520 live weekday afternoons from two to five pm Eastern. Listen 0:11:20.559 --> 0:11:24.120 on Apple CarPlay and Android Auto with the Bloomberg Business app, 0:11:24.280 --> 0:11:27.000 or watch us live on YouTube. Hey. 0:11:27.120 --> 0:11:29.160 Over the summer, one of the things that caught our 0:11:29.400 --> 0:11:32.920 attention Bloomberg News reporting the world's largest technology companies that 0:11:32.960 --> 0:11:36.440 we're talking Microsoft, Amazon, Google, all of them planning to 0:11:36.480 --> 0:11:39.200 spend billions of dollars more than three hundred and forty 0:11:39.200 --> 0:11:42.320 four billion dollars on capital expenditures, with much of it 0:11:42.440 --> 0:11:44.800 tim going to data centers for AI models. 0:11:44.960 --> 0:11:48.520 According to Bloomberg intelligence analyst Amandy saying, companies have quote 0:11:48.559 --> 0:11:51.760 basically tripled capex investment in cloud due to AI, with 0:11:51.840 --> 0:11:55.520 executives emphasizing they need to invest quickly to get ahead. 0:11:55.520 --> 0:11:58.480 Our next guests is helping those hyper scalers scale up 0:11:58.480 --> 0:12:00.640 when it comes to AI with a in studio as 0:12:00.679 --> 0:12:04.000 a dere Fox Martin presidency of Equinix, the nearly seventy 0:12:04.040 --> 0:12:06.720 six billion dollar market cap data center readA trades under 0:12:06.720 --> 0:12:10.240 ticker EQIX down so far this year about eighteen percent. 0:12:10.559 --> 0:12:11.920 Dear, welcome, good to see. 0:12:11.720 --> 0:12:13.400 You, Thank you so much, Thank you for having me. 0:12:13.440 --> 0:12:14.040 Nice to have you. 0:12:14.280 --> 0:12:15.120 So, how's business? 0:12:15.440 --> 0:12:16.560 Business is very good? 0:12:16.720 --> 0:12:17.840 Like the best you've seen it. 0:12:18.679 --> 0:12:21.360 Like we're in the middle of a very strong cyclical 0:12:21.400 --> 0:12:24.240 demand cycle for you know, the products and services that 0:12:24.240 --> 0:12:24.640 we offer. 0:12:24.800 --> 0:12:27.720 When you say we're in the middle, help us understand 0:12:27.760 --> 0:12:30.120 how long that means of a runway there is to 0:12:30.160 --> 0:12:30.480 go here? 0:12:30.520 --> 0:12:33.800 Sure? You know, at Equinos we see a very significant 0:12:34.080 --> 0:12:39.160 trend from the training of models in the AI economy 0:12:39.160 --> 0:12:41.760 that you refer to in your opening there with the hyperscalters, 0:12:42.200 --> 0:12:45.920 to the deployment of those models in enterprise systems, and 0:12:46.320 --> 0:12:50.520 that deployment is called imprints. And we see that opportunity 0:12:50.600 --> 0:12:54.400 as potentially double the size of the training opportunity. And 0:12:54.800 --> 0:12:56.840 at our company, we feel we we're built for this moment. 0:12:56.920 --> 0:12:59.240 Has that happened faster than everybody anticipated? Because I do 0:12:59.280 --> 0:13:01.680 feel like the converse. Although we've been talking about AI 0:13:01.720 --> 0:13:03.719 of now almost two and a half years, well or 0:13:03.760 --> 0:13:05.640 well into two and a half years, but we are 0:13:05.679 --> 0:13:08.200 now increasingly talking about all this stuff starting to be 0:13:08.240 --> 0:13:08.920 put to work. 0:13:09.200 --> 0:13:13.040 Right, you can certainly seek organizations. We have ten thousand 0:13:13.120 --> 0:13:16.839 customers across the world moving from proof of concepts into 0:13:17.040 --> 0:13:19.760 production systems and applications of the technology. 0:13:19.840 --> 0:13:22.000 One of the things I think we're curious about is, 0:13:22.320 --> 0:13:24.800 as you know that the news flow is fast and 0:13:24.840 --> 0:13:28.120 furious from the White House and out of Washington, and 0:13:28.360 --> 0:13:30.679 there have been some announcements out of Trump administration about 0:13:30.720 --> 0:13:34.360 AI infrastructure initiatives specifically, So I'm curious, a dare have 0:13:34.480 --> 0:13:38.080 you seen any impact of that on your existing properties 0:13:38.160 --> 0:13:41.480 leasing effort? And I'm curious how you compete with how 0:13:41.520 --> 0:13:44.160 does that kind of compete their program with your own 0:13:44.160 --> 0:13:45.079 development program. 0:13:45.400 --> 0:13:48.080 Look, we very much welcome the focus that the current 0:13:48.120 --> 0:13:50.960 administration has on data centers and the importance and the 0:13:50.960 --> 0:13:54.200 recognition of data centers and their important role in the 0:13:54.240 --> 0:13:59.280 infrastructure of any economy. And we certainly are looking at, 0:13:59.320 --> 0:14:01.400 you know, some of the the properties that have been 0:14:02.240 --> 0:14:05.839 you know, identified as potential for RFPs, and we would 0:14:05.960 --> 0:14:09.280 choose based on locations that would be a creative to 0:14:09.360 --> 0:14:13.480 our business because we're very focused in cities, in metro 0:14:13.559 --> 0:14:16.600 areas close to where humans are who will use this technology. 0:14:16.840 --> 0:14:19.640 Are you getting pushed back from cities and humans who 0:14:19.640 --> 0:14:20.760 don't necessarily want. 0:14:20.640 --> 0:14:24.520 Those data is interesting, not hugely. I mean, we're very 0:14:24.560 --> 0:14:27.240 conscious of the role that we play and you know, 0:14:27.320 --> 0:14:29.600 the role that we play with communities where we have 0:14:29.760 --> 0:14:33.800 data centers, and we're very considered about our approach there. 0:14:33.960 --> 0:14:36.160 What makes a good location for a data center because 0:14:36.160 --> 0:14:38.800 it doesn't actually apart from the construction, it doesn't actually 0:14:38.800 --> 0:14:41.720 involve that many people to keep it up and running 0:14:41.760 --> 0:14:44.280 relative to the amount of money that's spent on it 0:14:44.400 --> 0:14:46.160 and what actually happens in there. 0:14:46.240 --> 0:14:49.000 Yeah, it's really interesting because I think you know, when 0:14:49.040 --> 0:14:51.360 you think about the operations of a data center, you 0:14:51.480 --> 0:14:55.520 tend in your mind to go immediately to technicians and technology, 0:14:55.880 --> 0:14:58.360 but actually there's a whole series of unsung heroes in 0:14:58.400 --> 0:15:01.239 the operation of a data center, which are the craftsmen 0:15:01.280 --> 0:15:04.520 and the tradesmen and women, you know, the plumbers, the electricians, 0:15:04.560 --> 0:15:07.600 the engineers who basically keep the Internet up and running, 0:15:07.640 --> 0:15:09.840 you know, through this data center infrastructure. 0:15:09.920 --> 0:15:12.640 So difficulties in finding those workers. We've done some reporting 0:15:12.680 --> 0:15:15.240 about that that there's you know, okay, yay, great the 0:15:15.280 --> 0:15:17.520 spend and the build, but there's not enough workers to diet. 0:15:17.680 --> 0:15:20.720 So I think, you know, the constraints that the industry 0:15:20.760 --> 0:15:23.680 are facing, or you know, are around energy and power, 0:15:24.680 --> 0:15:27.960 around skilled workforce, and then into the supply chain for 0:15:28.440 --> 0:15:31.200 the equipment. That's that's part and parcel of a data center. 0:15:31.280 --> 0:15:33.280 So that's structuring the build that you guys are trying 0:15:33.320 --> 0:15:34.360 to do and meet the demand. 0:15:34.600 --> 0:15:37.200 It is something that you have to actively manage as 0:15:37.240 --> 0:15:39.560 you are looking to build. You know, for example, in 0:15:39.640 --> 0:15:43.360 our case, around some of our supply chain portfolio, we've 0:15:43.360 --> 0:15:45.760 pre purchased in order to ensure that we can have 0:15:45.800 --> 0:15:48.640 the delivery dates that we need to bring capacity online. 0:15:49.120 --> 0:15:51.280 We talked about the three hundred and forty four billion 0:15:51.360 --> 0:15:53.680 dollars that some of the world's largest tech companies are 0:15:53.680 --> 0:15:55.880 planning to spend. When it comes to CAPEX, it's like 0:15:55.920 --> 0:15:58.880 the thing we look for now quarterly when a company 0:15:58.920 --> 0:16:04.840 reports results, how much of hyperscalers Capex budgets actually flow 0:16:04.880 --> 0:16:05.800 through your company. 0:16:06.760 --> 0:16:10.600 We have a very significant approach on a part of 0:16:10.640 --> 0:16:13.120 the data center industry that we call co location because 0:16:13.160 --> 0:16:16.239 not all data centers are the same, and so colocation 0:16:16.560 --> 0:16:20.040 is where enterprise customers businesses sixty percent of the Fortune 0:16:20.040 --> 0:16:24.400 five hundred for instance, would locate their workloads or their 0:16:24.440 --> 0:16:27.720 machinery with us and the inner shared facility. We have 0:16:27.760 --> 0:16:33.400 a JV structure that works with the hyperscalers to build 0:16:33.520 --> 0:16:36.200 to suit for the hyperscalers, and so that's how we 0:16:36.600 --> 0:16:40.200 service the Hyperscaler opportunity and maintain that very important partnership 0:16:40.240 --> 0:16:41.360 that we have with I mean, I guess we're. 0:16:41.240 --> 0:16:43.080 Trying to figure out your exposure. I think your top 0:16:43.120 --> 0:16:46.440 ten customers represent about sixteen percent of monthly recurring revenue, 0:16:46.640 --> 0:16:50.600 so your exposure to the hyperscalers is pretty big, right idea? 0:16:50.640 --> 0:16:51.440 Is it manageable? 0:16:51.600 --> 0:16:54.960 It's manageable. You know, the hyperscaltors, for example, when they 0:16:55.000 --> 0:16:58.560 operate in our retail facilities, they do so because of 0:16:58.600 --> 0:17:01.760 the connectivity of ex X. So that's going to be 0:17:01.800 --> 0:17:05.840 a requirement, you know, for inferencing and for the actual 0:17:05.920 --> 0:17:09.520 activation of these AI workloads. So it is for us 0:17:09.600 --> 0:17:13.560 about connectivity. Connectivity is the secret source of as a 0:17:13.640 --> 0:17:14.640 data center p I don. 0:17:14.680 --> 0:17:16.879 Means specifically by that because I think we can use 0:17:16.880 --> 0:17:19.200 the word connectivity to mean a lot of different things. 0:17:19.480 --> 0:17:21.840 Certainly in the business world, what does it mean specifically 0:17:22.080 --> 0:17:22.760 for us? 0:17:23.200 --> 0:17:26.520 So in our world, it essentially means we're located in 0:17:26.520 --> 0:17:29.480 two hundred and seventy three data centers right across the planet. 0:17:30.040 --> 0:17:33.760 Inside those data centers, we have ecosystems of customers, customers 0:17:33.760 --> 0:17:36.520 whose value chains are connected to each other, and we 0:17:36.640 --> 0:17:41.280 physically connect them, you know, literally internect interconnect those customers 0:17:41.320 --> 0:17:44.240 one to the other. That's the first part of interconnection. 0:17:44.600 --> 0:17:47.480 So that allows for low latency transactions to happen, say 0:17:47.480 --> 0:17:49.800 for example, on a trading floor. That allows for that 0:17:49.840 --> 0:17:51.080 to happen in real times. 0:17:51.320 --> 0:17:54.480 Yeah right, we're speaking right now with the dere Fox 0:17:54.520 --> 0:17:57.520 Martin presidency of Equinex joining us here. In the Bloomberg 0:17:57.560 --> 0:18:01.040 Business Week studio, you mentioned the difference between training and. 0:18:02.359 --> 0:18:03.520 In inference. Thank you. 0:18:03.920 --> 0:18:06.000 When you think about this, like a company like corwe 0:18:06.200 --> 0:18:09.360 for example, where does that fit into this, Well, a. 0:18:09.320 --> 0:18:13.560 Core Weave is a neo cloud. They're a company you know, 0:18:13.640 --> 0:18:17.320 that provides GPU capability to companies who want to train 0:18:17.480 --> 0:18:20.639 their models, so they fit into the ecosystem in the 0:18:20.680 --> 0:18:22.000 same way for us as. 0:18:22.080 --> 0:18:24.840 Other cloud like a GPU as a service correct, okay, 0:18:24.920 --> 0:18:27.120 So what are the average lease terms for an agreement 0:18:27.200 --> 0:18:29.960 with GPU as a service comorganization? 0:18:30.600 --> 0:18:34.439 It would depend, you know, they can be relatively short. 0:18:34.640 --> 0:18:37.480 For us are leasing in our wholesale side is ten 0:18:37.560 --> 0:18:38.159 years plus. 0:18:38.440 --> 0:18:39.120 Okay. 0:18:39.320 --> 0:18:41.119 Now, one of the things I think is interesting is 0:18:41.119 --> 0:18:42.440 I think we're all trying to figure out the boom 0:18:42.480 --> 0:18:47.040 and bust of this. And there was an investor, Jack Selby. 0:18:47.320 --> 0:18:51.480 He is a z VC founder managing partner. He's longtime 0:18:51.600 --> 0:18:55.639 managing director of billionaire entrepreneurs Peter Tiele's family office, and 0:18:55.720 --> 0:18:58.040 he said the euphoria around AI may have led to 0:18:58.040 --> 0:19:01.600 the biggest bubble yet in private technology, and so sounding 0:19:01.640 --> 0:19:04.880 warning bells that a correction startup valuations is in the cards. Now, 0:19:04.920 --> 0:19:07.600 we understand when you throw AI there's a lot of 0:19:07.640 --> 0:19:11.199 different players, but behind it all is the data center spend. 0:19:11.560 --> 0:19:13.760 And we have had a lot of conversations about the 0:19:13.800 --> 0:19:19.160 hyperscalers making you know, multiple duplicate arrangements with power providers 0:19:19.400 --> 0:19:20.879 that they're not going to use all of them, but 0:19:20.920 --> 0:19:22.320 they just want to make sure they've got the power 0:19:22.359 --> 0:19:24.520 where they need it. Is there any signs to you 0:19:24.600 --> 0:19:31.160 that there's exuberance that the spend is slowing down, starting 0:19:31.160 --> 0:19:34.040 to will start to slow down. Maybe next year you're 0:19:34.080 --> 0:19:35.680 seeing it. You've got a front row seat. 0:19:35.800 --> 0:19:39.720 Yeah, I guess we believe in the enduring nature of 0:19:40.200 --> 0:19:44.160 the transformation that AI and the technology associated with it 0:19:44.200 --> 0:19:47.120 can bring and can bring to businesses. I mean, as 0:19:47.160 --> 0:19:52.359 I said, we support moneyfold workloads of our customers, you know, 0:19:52.440 --> 0:19:56.439 not just AI workloads, but you know, standard business process workloads, 0:19:56.680 --> 0:20:00.080 and we really are about that, being that connectivity and 0:20:00.080 --> 0:20:02.760 and so you know, I think in many ways our 0:20:02.800 --> 0:20:09.000 business model is you know, somewhat protected from any any potential. 0:20:08.720 --> 0:20:09.520 Before we let you go. 0:20:09.600 --> 0:20:11.800 As I mentioned some headlines on TikTok from the Wall 0:20:11.840 --> 0:20:14.240 Street Journal, the deal would create a new US entity 0:20:14.720 --> 0:20:17.360 Oracle and recent horror with silver Lake. 0:20:17.560 --> 0:20:18.600 Are you involved in this at all? 0:20:18.680 --> 0:20:21.400 Well, we partner very closely with Oracles, so it would 0:20:21.440 --> 0:20:23.480 be through that partnership that we would be supporting. 0:20:23.880 --> 0:20:26.480 So you think you will support an independent TikTok. 0:20:26.440 --> 0:20:30.639 Potentially with Oracle with Oracle, yes, I very key partner. 0:20:30.800 --> 0:20:34.159 One last question, your stocks down? Why if it's so, 0:20:35.160 --> 0:20:38.000 I mean, I know there's also an incredible spend in 0:20:38.040 --> 0:20:40.800 what you are doing. You've got to spend in order 0:20:40.800 --> 0:20:43.960 to meet the demand, you know, and so maybe that 0:20:44.080 --> 0:20:47.000 is why there isn't some reward from some of your investors. 0:20:47.600 --> 0:20:48.960 Is it kind of a conflict. 0:20:49.320 --> 0:20:52.280 Well, we're very focused on long term value creation for 0:20:52.480 --> 0:20:56.040 our shareholders, and you know, we announced that we are 0:20:56.080 --> 0:20:58.720 going to bring on as much capacity in the next 0:20:58.800 --> 0:21:01.880 five years we have done in the previous twenty seven 0:21:01.960 --> 0:21:05.119 years of our operations, and so we're very focused on 0:21:05.200 --> 0:21:08.159 executing against our strategy. We believe in the opportunity that 0:21:08.200 --> 0:21:10.640 we see in the market and hope to deliver proof 0:21:10.640 --> 0:21:12.600 points to that to our investor community very soon. 0:21:12.840 --> 0:21:15.960 That was a Deare Fox Martin, President and CEO of Aquinix. 0:21:16.040 --> 0:21:18.200 We should point out that we talked to a Dare 0:21:18.400 --> 0:21:21.240 that was ahead of President Trump's visit to the UK, 0:21:21.320 --> 0:21:24.159 where we know a lot was talked about when it 0:21:24.200 --> 0:21:26.840 came to the tech CEOs that was with him, that 0:21:26.920 --> 0:21:29.440 were with him, excuse me, and that also talked about 0:21:29.480 --> 0:21:32.439 investments over there in the UK. When it comes to 0:21:32.840 --> 0:21:35.320 the tech world, we should also point out that it 0:21:35.359 --> 0:21:38.880 was also before we got news of Nvidia's big investment 0:21:38.920 --> 0:21:41.359 in Intel. So have to say when it comes to 0:21:41.359 --> 0:21:43.359 the tech world, semi world. There's a lot going on, 0:21:43.440 --> 0:21:46.760 but nonetheless an interesting conversation because it really plays into 0:21:46.800 --> 0:21:49.760 the bigger sex, bigger story, if you will, of why 0:21:49.760 --> 0:21:52.199 all of this is going on, because of the AI 0:21:52.320 --> 0:21:54.679 spend and then the spend on data centers, it's all 0:21:54.760 --> 0:21:55.440 kind of connected. 0:21:55.640 --> 0:21:56.280 Yeah too. 0:21:56.320 --> 0:21:58.560 That and Carol. Something else that's connected is the news 0:21:58.560 --> 0:22:01.040 that we got on Thursday morning and that Huawei is 0:22:01.119 --> 0:22:05.600 unveiled new technology from memory chips to AI accelerators, outlining 0:22:05.640 --> 0:22:08.000 publicly for the first time, it's multi your plan to 0:22:08.080 --> 0:22:10.679 challenge in video's dominance in a growing market. 0:22:10.800 --> 0:22:13.880 Yeah, Huawei's approach seen as a significant milestone in China's 0:22:13.880 --> 0:22:20.120 AI chipset industry, reflecting breakthroughs in system design and interconnect technologies, 0:22:20.160 --> 0:22:22.800 and it really signals a stronger push toward self reliance 0:22:22.800 --> 0:22:26.000 and resilience in the face of export restrictions. This again 0:22:26.080 --> 0:22:29.840 reporting all done by our team on the ground at 0:22:29.840 --> 0:22:32.919 Bloomberg News, but it's just you know, this is what 0:22:32.960 --> 0:22:35.199 it's all about. It really we go back to I 0:22:35.240 --> 0:22:37.840 feel like when we talk so much about the war 0:22:37.880 --> 0:22:40.320 that's out there, it's not just geopolitical, it's really a 0:22:40.359 --> 0:22:42.960 tech war, right, and tech dominance, and you're seeing China 0:22:43.280 --> 0:22:45.200 making some moves. You and I talk about the EV 0:22:45.359 --> 0:22:50.840 space and how advanced China has really become in that 0:22:50.960 --> 0:22:53.920 world and dominating it feels like electric vehicles. 0:22:54.000 --> 0:22:55.840 I think one thing that's important to keep in mind 0:22:55.920 --> 0:22:59.960 is where Huawei sits in the tech sphere in China 0:23:00.080 --> 0:23:03.080 and globally. It's actually China's most advanced chip designer. It's 0:23:03.119 --> 0:23:07.000 the strongest contender to build alternatives too in Vidia's industry 0:23:07.080 --> 0:23:10.320 leading AI hardware, and as you mentioned, Carol, it also 0:23:10.600 --> 0:23:13.679 is part of a bargaining chip when it comes to 0:23:13.720 --> 0:23:17.080 trade negotiations between the US and China. And to that end, 0:23:17.119 --> 0:23:20.400 we did get news Thursday morning as well when we're 0:23:20.440 --> 0:23:23.800 recording this that the call between President Trump and Shijin 0:23:23.920 --> 0:23:27.280 Ping is set to happen at nine am on Friday. 0:23:27.400 --> 0:23:28.920 So before we put this to bed. 0:23:29.200 --> 0:23:30.880 Yeah, and what's interesting too, I want to just say 0:23:30.920 --> 0:23:34.119 from a market perspective, Chinese tech stocs have surged in 0:23:34.200 --> 0:23:37.560 past weeks, driven by a perception that the nation's industry 0:23:37.600 --> 0:23:41.760 leaders are making steady progress and developing homegrown AI and chips. 0:23:41.800 --> 0:23:44.280 So Ali, Baba by Do are among the companies that 0:23:44.320 --> 0:23:48.320 have secured important clients for their in house designs and others. 0:23:48.600 --> 0:23:50.960 But we've just seen kind of a big spend there. 0:23:51.119 --> 0:23:53.440 For the latest, head on over to Bloomberg dot com 0:23:53.480 --> 0:23:56.160 and check out everything on the Bloomberg terminal. Still ahead 0:23:56.200 --> 0:23:59.000 on Bloomberg BusinessWeek. He's a trader who helped transform the 0:23:59.000 --> 0:24:01.160 way commercial property our finance. 0:24:00.800 --> 0:24:04.320 And now he's launched a bid to become California's next governor. 0:24:04.840 --> 0:24:07.359 Ethan Penner is next. This is Bloomberg. 0:24:09.040 --> 0:24:12.880 This is the Bloomberg Business Week Daily Podcast. Listen live 0:24:13.000 --> 0:24:16.399 each weekday starting at two pm Eastern on Applecarplay and 0:24:16.480 --> 0:24:19.119 the Android Auto with the Bloomberg Business App. You can 0:24:19.160 --> 0:24:22.320 also listen live on Amazon Alexa from our flagship New 0:24:22.400 --> 0:24:25.840 York station, Just Say Alexa played Bloomberg eleven thirty. 0:24:26.720 --> 0:24:29.680 The gubernatorial race in California definitely picking up momentum just 0:24:29.680 --> 0:24:31.320 a little bit more than a year away. We featured 0:24:31.359 --> 0:24:33.640 a few possible candidates on air, and our next guest 0:24:34.000 --> 0:24:37.080 launched his own bid to become California's next governor, Targeting 0:24:37.119 --> 0:24:40.199 voters disillusioned with Democratic rule but tim not ready to 0:24:40.280 --> 0:24:41.240 vote Republican. 0:24:41.520 --> 0:24:44.639 Our next guest launch his bid to become California's next governor. 0:24:44.640 --> 0:24:46.520 He's here in the studio with us Ethan Penner. As 0:24:46.520 --> 0:24:49.440 we mentioned, he's twenty twenty six candidate for governor of California, 0:24:49.520 --> 0:24:53.160 also founder and managing partner of Mosaic Real Estate Investors. 0:24:53.200 --> 0:24:54.359 Ethan Welcome. How are you. 0:24:54.840 --> 0:24:56.280 I'm I'm very busy. 0:24:56.800 --> 0:25:00.320 Well you're you're going to run for governor of California. Yeah, 0:25:00.480 --> 0:25:02.040 but you're in New York. Why are you in New York? 0:25:02.200 --> 0:25:03.600 Hmmm, because you're. 0:25:03.480 --> 0:25:06.440 Here talking to us. Well, why do you want to run? 0:25:07.520 --> 0:25:07.760 Well? 0:25:08.400 --> 0:25:10.800 I really didn't see anyone who was qualified to do 0:25:10.920 --> 0:25:13.480 the job raising their hand, and so I decided I 0:25:13.520 --> 0:25:15.400 would do it. I feel that we're in a desperate place. 0:25:15.480 --> 0:25:18.879 I think that California has been so grossly mismanaged for 0:25:19.000 --> 0:25:21.919 so long. All the statistics bear that out. The quality 0:25:21.960 --> 0:25:25.919 of life has deteriorated so amazingly over the last decade 0:25:25.960 --> 0:25:30.280 and even two, and it's time for somebody with the 0:25:30.400 --> 0:25:33.080 real qualifications to do this job to step up. 0:25:33.200 --> 0:25:35.520 And that's what I decided I would do. 0:25:35.640 --> 0:25:37.639 What would you do differently? What don't you like? What 0:25:37.840 --> 0:25:39.560 needs to be changed that you think would change the 0:25:39.600 --> 0:25:42.000 course of California? In what you would perceive as a 0:25:42.040 --> 0:25:42.360 good way. 0:25:43.160 --> 0:25:46.120 There are a number of things, but the most obvious thing, 0:25:46.400 --> 0:25:50.800 the starter, is that we've repelled people. So we've been 0:25:50.920 --> 0:25:54.280 last in net migration for five consecutive years, which means 0:25:54.680 --> 0:25:57.680 people in the United States have preferred to live anywhere 0:25:57.760 --> 0:26:01.440 but California, which is shocking considering it's California, right gorgeous, 0:26:01.600 --> 0:26:06.680 And I think that we need to be more welcoming 0:26:06.760 --> 0:26:11.119 and inviting to businesses. We need to grow our economy. 0:26:11.400 --> 0:26:14.920 Our economy is important for everyone. It's important to create 0:26:15.000 --> 0:26:17.840 opportunities for our young people, but it's also important so 0:26:17.960 --> 0:26:20.560 that we have the funds to make good on the 0:26:20.880 --> 0:26:23.800 retirement benefit promises that people are counting on. 0:26:23.960 --> 0:26:25.119 So I would do. 0:26:25.480 --> 0:26:28.040 The first thing I would do is change our tax policy. 0:26:28.520 --> 0:26:30.399 Well, let's talk about this, because our understanding is you 0:26:30.440 --> 0:26:33.879 are releasing a tax plan that would turn California from 0:26:33.920 --> 0:26:36.200 one of the least friendly tax dates to one of 0:26:36.280 --> 0:26:40.160 the top five. So what details. That's a big broad statement. 0:26:40.520 --> 0:26:42.359 The devil's always in the details. So what's specific? 0:26:42.640 --> 0:26:48.560 So the Tax Foundation ranks all fifty states by their 0:26:48.680 --> 0:26:52.840 tax policy. We're currently ranked forty ninth, and pro form 0:26:52.920 --> 0:26:55.320 on my policy would move us to third according to 0:26:55.359 --> 0:26:56.119 the Tax Foundation. 0:26:56.480 --> 0:26:57.080 How do you do that? 0:26:57.320 --> 0:26:59.280 How do you do that well? And what do you 0:26:59.359 --> 0:27:03.280 do specific because you also talked about needing revenues for things, 0:27:03.320 --> 0:27:04.480 so I'm just curious. 0:27:04.160 --> 0:27:06.399 How you get Yeah, so it would be importantly, Carol. 0:27:06.840 --> 0:27:09.600 It will be a revenue neutral to revenue growth plan. 0:27:10.080 --> 0:27:13.320 So everyone else on everyone that talks about changing our 0:27:13.359 --> 0:27:17.479 tax plan talks about cutting taxes, and I understand kind 0:27:17.520 --> 0:27:20.080 of the intuitive appeal to some people, but of course 0:27:20.160 --> 0:27:22.919 that that really doesn't the math doesn't work. We need 0:27:23.000 --> 0:27:25.320 to actually pay for the things we need in California 0:27:25.600 --> 0:27:29.080 to support our society. So mine is a revenue neutral 0:27:29.119 --> 0:27:33.000 that will ultimately be a revenue growth idea. It's about 0:27:33.160 --> 0:27:36.240 replacing income tax with a consumption tax. 0:27:36.359 --> 0:27:39.440 Fun mentally, that's the plant, so explain the details there. 0:27:40.000 --> 0:27:46.520 We will eliminate all state income tax, both corporate and personal. Wow, amazing. 0:27:47.520 --> 0:27:51.600 We will replace all state sales tax, including our horrible 0:27:51.680 --> 0:27:54.639 gasoline tax, and all of that will be replaced by 0:27:54.680 --> 0:27:57.920 a single fifteen percent consumption tax on goods and search. 0:27:58.240 --> 0:28:01.040 But does California Okay, So you're coming at this from 0:28:01.040 --> 0:28:03.280 the angle where California has been a net loss when 0:28:03.320 --> 0:28:07.040 it comes to migration, Yes, do you want can California 0:28:07.080 --> 0:28:09.400 handle more people because the real estate price is there 0:28:09.920 --> 0:28:12.680 well in so many places and very desirable places to 0:28:12.760 --> 0:28:13.879 live are out of. 0:28:13.920 --> 0:28:15.440 Controls a phenomenal question. 0:28:15.720 --> 0:28:18.119 But the challenge is on a local level because you 0:28:18.160 --> 0:28:19.840 have all these people that say, yes, we want more 0:28:19.880 --> 0:28:22.400 affordable housing, but do not build that multi family house 0:28:22.480 --> 0:28:22.800 right here. 0:28:23.760 --> 0:28:26.760 Our problem has really nothing to do with having too 0:28:26.880 --> 0:28:31.119 many people. It has to do with too few housing units. 0:28:31.600 --> 0:28:36.080 So the RAND Corporation published a paper last year that 0:28:36.720 --> 0:28:39.520 showed that it costs one hundred and ten thousand dollars 0:28:39.680 --> 0:28:42.880 more to build an apartment unit in the state of 0:28:42.920 --> 0:28:45.760 California than in the neighboring state of Arizona or most 0:28:45.800 --> 0:28:46.600 other states. 0:28:46.440 --> 0:28:47.520 For regulatory reasons. 0:28:47.520 --> 0:28:50.880 That's all driven by regulatory red tape. That's the second 0:28:50.920 --> 0:28:53.720 thing I would have to do is really streamline our 0:28:53.800 --> 0:28:57.840 regulatory approval processes. So the tax plan is stage one. 0:28:58.200 --> 0:29:01.640 Stage two is the mining of regulatory processes. 0:29:02.240 --> 0:29:04.120 How do you think about it against a backdrop or 0:29:04.160 --> 0:29:07.280 climate change is certainly impacting California neighborhoods in a big way, 0:29:07.320 --> 0:29:09.600 and so the build back has also got to think 0:29:09.600 --> 0:29:10.720 about how do you make it safer. 0:29:10.960 --> 0:29:16.440 So environmental greatness is really at the foundation of California. 0:29:16.880 --> 0:29:19.080 I mean, you're from California and you know this. I 0:29:19.240 --> 0:29:22.960 I take all of my vacations hiking in the nature 0:29:23.000 --> 0:29:26.240 of California. It's amazing, right, And so first trip to 0:29:27.040 --> 0:29:30.080 I'm a few months ago for Carol, it's incredible. 0:29:29.640 --> 0:29:35.160 Gorgeous, everything exactly right, I really, and passing a massive 0:29:35.200 --> 0:29:37.480 wind farm to get there. So it's certainly embracing. 0:29:37.680 --> 0:29:40.880 So I think that we we have to be as 0:29:41.040 --> 0:29:44.760 vigilant as we've ever been about protecting our natural beauty 0:29:44.800 --> 0:29:48.560 and our resources. But but we don't need nineteen different 0:29:49.160 --> 0:29:53.120 organizations that a developer of an apartment has to go 0:29:53.320 --> 0:29:56.680 through an approval process for. We need one, one very 0:29:56.760 --> 0:30:01.400 good one powered by AI with great responsiveness. Rather than 0:30:01.720 --> 0:30:04.680 five years, how about five days to get your feedback, 0:30:04.720 --> 0:30:07.600 how about fifteen minutes to get your feedback. There's no 0:30:07.760 --> 0:30:11.400 reason that we can't use technology intelligently, and there's no 0:30:11.520 --> 0:30:14.280 reason we can't have both both the things. We can 0:30:14.360 --> 0:30:19.400 have environmental beauty and environmental soundness and make it easy 0:30:19.480 --> 0:30:21.600 for people to build the units that we actually need 0:30:21.720 --> 0:30:24.240 to drop costs and make living more affordable. 0:30:24.360 --> 0:30:25.640 One of the thing you're talking about too, when it 0:30:25.680 --> 0:30:27.360 comes to housing, and tim see it. You know, we 0:30:27.440 --> 0:30:28.960 see it when we've been to Seattle. We live in 0:30:29.000 --> 0:30:31.680 New York City. Go any place where it's warm, the. 0:30:31.720 --> 0:30:33.800 Heart its warm, and there's a high cost of living, high. 0:30:33.680 --> 0:30:38.280 Cost, but the homeless populations and it's you know, I 0:30:38.360 --> 0:30:40.560 went to college here in New York many many years 0:30:40.560 --> 0:30:42.320 ago and it was a homeless problem. And here we 0:30:42.360 --> 0:30:45.200 are again in twenty twenty five and we haven't figured 0:30:45.240 --> 0:30:48.400 this out. What you are looking to build some communities 0:30:48.440 --> 0:30:51.280 from my understanding in rural areas for homeless people to 0:30:51.400 --> 0:30:54.280 live in, how would you fund that? How long do 0:30:54.320 --> 0:30:57.040 you would you expect it to take to get that done? 0:30:57.240 --> 0:30:58.880 How do you roll that all up? 0:30:58.960 --> 0:31:02.360 So it gets back to the original question of bringing 0:31:02.680 --> 0:31:06.400 true competence, the required competence to lead the state at 0:31:06.440 --> 0:31:09.040 this moment. We need the skills that I bring to 0:31:09.160 --> 0:31:12.080 the table. We need an understanding of how to build things. 0:31:12.240 --> 0:31:16.280 We need an understanding and appreciation for how to have transparency. 0:31:16.480 --> 0:31:18.480 It's not that we don't have the money. We've spent 0:31:18.600 --> 0:31:21.160 twenty five billion dollars in the last state money in 0:31:21.160 --> 0:31:24.000 the last four years and all that's gotten us is 0:31:24.120 --> 0:31:28.080 nothing but twenty five percent more homeless. So nothing's been solved. 0:31:28.120 --> 0:31:31.160 We have systems that don't work. We have a management 0:31:31.240 --> 0:31:34.680 system that's failing us. We don't know where the money is, 0:31:34.680 --> 0:31:36.560 there's no accountability, So how do you do this? 0:31:36.680 --> 0:31:38.920 Then you're saying that with this consumption to actually have 0:31:38.960 --> 0:31:40.680 the money to do this, and how do you get 0:31:40.720 --> 0:31:41.920 how quickly can you get it built? 0:31:42.040 --> 0:31:43.600 Well, so it's a combination of things. 0:31:43.720 --> 0:31:46.600 One is, yes, the money is there, although we've squandered 0:31:46.720 --> 0:31:48.880 so much money ready, the money is there for this. 0:31:49.560 --> 0:31:52.520 Second of all, we have to use smart building. We 0:31:53.000 --> 0:31:56.960 don't have government. We need public private partnerships and my 0:31:57.160 --> 0:32:00.840 government will lean very heavily on private excells to work 0:32:00.880 --> 0:32:05.360 in tandem with public oversight to get things done fast. 0:32:05.440 --> 0:32:05.920 And I think that. 0:32:07.560 --> 0:32:11.680 Modular housing is definitely one of the answers. Yeah, but 0:32:11.840 --> 0:32:16.600 we have to combine competence, a commitment to safety, and 0:32:16.720 --> 0:32:20.320 a love for our fellow people. Right especially I'm proud 0:32:20.360 --> 0:32:23.760 to be in California. We care for our most vulnerable neighbors. 0:32:24.000 --> 0:32:26.480 That will never change, but we need to do it 0:32:26.600 --> 0:32:28.960 the right way. These people, unfortunately, with all the money 0:32:29.040 --> 0:32:31.000 we've spent still sleep on the pavement. 0:32:31.600 --> 0:32:34.240 We're speaking with Ethan Penner, twenty twenty six, candidate for 0:32:34.320 --> 0:32:37.000 Governor of California and also the founder and managing partner 0:32:37.120 --> 0:32:41.320 of Mosaic Real Estate Investors, on the homelessness question. It 0:32:41.600 --> 0:32:43.080 obviously has to do with housing, it has to do. 0:32:43.120 --> 0:32:43.720 With mental health. 0:32:43.800 --> 0:32:48.880 There's no easy solution, as we've learned on the regulatory 0:32:48.960 --> 0:32:51.600 side of things. You said, for building housing, you want 0:32:51.640 --> 0:32:54.280 to streamline regulations, get rid of red tape. But how 0:32:54.360 --> 0:32:56.440 specifically do you do that? Because it's an easy thing 0:32:56.480 --> 0:32:58.400 to say. But as we're learning in the wake of 0:32:58.440 --> 0:33:02.720 the fires in Pacific palac aids and the waste removal 0:33:03.440 --> 0:33:06.920 going to New Calabasas and the landfill there, people are 0:33:06.960 --> 0:33:08.960 not happy about that, Like, how do you do this 0:33:09.040 --> 0:33:11.600 in a way that satisfies these constituents. 0:33:12.600 --> 0:33:15.480 Well, I think it's top down, actually, So I think 0:33:15.560 --> 0:33:17.480 we have to set a standard from the from the 0:33:17.600 --> 0:33:22.160 Governor's office and Sacramento, and that standard has to be Look, 0:33:22.240 --> 0:33:25.240 if I get elected, it will be with a mandate 0:33:25.320 --> 0:33:25.800 for change. 0:33:25.880 --> 0:33:26.000 Right. 0:33:26.040 --> 0:33:28.880 I'm the consummate outsider. I don't belong to either of 0:33:28.920 --> 0:33:32.160 the main parties. I've never had a day in political office. 0:33:32.480 --> 0:33:35.880 So I'm running for a mandate for change with specific 0:33:35.960 --> 0:33:39.080 policies in mind, and I believe the people's will will 0:33:39.120 --> 0:33:42.680 be heard through me, and that will that will empower 0:33:42.760 --> 0:33:43.760 me to actually make change. 0:33:43.800 --> 0:33:45.400 But you understand, I mean. 0:33:45.720 --> 0:33:46.560 I do understand me. 0:33:46.680 --> 0:33:49.320 I understand bureaucracy very well, have worked in big companies. 0:33:49.760 --> 0:33:53.240 But I'm just thinking about Elon musk Doze even in 0:33:53.320 --> 0:33:58.240 the federal government, and yes, USA dismantled other offices or 0:33:58.360 --> 0:34:02.800 other built departments. But it's not easy to kind of 0:34:03.120 --> 0:34:05.479 you know, all of these regulatory checkpoints. I mean, how 0:34:05.520 --> 0:34:08.319 do you really do it when it gets down to it, how. 0:34:08.280 --> 0:34:08.800 Do you do it? 0:34:08.960 --> 0:34:13.800 In you know, I'll tell you two things. One, I 0:34:13.960 --> 0:34:17.239 am not willing to accept that it's hard or impossible 0:34:17.320 --> 0:34:19.680 to do. And I'm going to commit myself fully to 0:34:19.800 --> 0:34:22.560 doing that. And I know for sure, if people like 0:34:22.719 --> 0:34:25.239 you and I don't commit ourselves to positve change, the 0:34:25.320 --> 0:34:28.800 answer is one hundred percent bad. So I'm going to 0:34:28.840 --> 0:34:30.719 commit myself and I'm going to do as as good 0:34:30.719 --> 0:34:34.000 a job as I can. Second, I really do believe 0:34:34.040 --> 0:34:37.239 that most people in government, in state government in California 0:34:37.600 --> 0:34:40.520 go into their jobs wanting to do the right thing 0:34:40.600 --> 0:34:43.120 for their people. I really do believe that, and I 0:34:43.239 --> 0:34:46.120 think that as a non partisan and a non career 0:34:46.200 --> 0:34:48.759 politician who's not trying to advance my career at all, 0:34:49.680 --> 0:34:52.320 I think I'm going to be very uniquely well received 0:34:52.719 --> 0:34:56.440 by the legislature because I won't be viewed as oppositional 0:34:56.520 --> 0:34:57.000 in any way. 0:34:57.960 --> 0:35:00.759 We got to talk property taxes. Do you think something 0:35:00.840 --> 0:35:03.000 has to change with property taxes in California? And the 0:35:03.040 --> 0:35:05.400 context is that somebody like my parents, who've lived in 0:35:05.440 --> 0:35:08.319 the same house since the nineteen nineties, pay basically nothing 0:35:08.360 --> 0:35:11.000 in property taxes thanks to the passing of a certain 0:35:11.040 --> 0:35:13.799 proposition many years ago. But if somebody were to buy 0:35:13.840 --> 0:35:16.040 that house, like you know, the next family to own 0:35:16.080 --> 0:35:20.880 that house, the property taxes would be debilitating. And it 0:35:20.920 --> 0:35:22.440 makes it so people stay in homes for a very 0:35:22.480 --> 0:35:27.319 long time and contributes to the housing crisis. Some critics say, you. 0:35:27.400 --> 0:35:29.919 Know what, I don't believe that's true. Well, I don't 0:35:29.960 --> 0:35:30.440 accept that. 0:35:30.680 --> 0:35:34.480 I think that I think that we our society, our 0:35:34.560 --> 0:35:39.040 community is served well by continuity, and I think that 0:35:39.880 --> 0:35:43.000 having people be forced out of their homes because of 0:35:43.080 --> 0:35:47.719 appreciation it detegrates our community. It denigrates the continuity of 0:35:47.800 --> 0:35:50.759 our community. So I would I would not try to 0:35:50.880 --> 0:35:53.600 change that policy. I think that's a wonderful policy. 0:35:53.840 --> 0:35:55.920 Got to ask you, Aback, Governor Newsom, his feed with 0:35:55.960 --> 0:35:59.600 the President, the President's attention on California on many states, 0:35:59.680 --> 0:36:02.919 how we would you posture yourself toward President Trump? 0:36:03.239 --> 0:36:03.880 Well, I think that. 0:36:05.760 --> 0:36:10.800 Both parties are busy fighting with each other about the 0:36:10.920 --> 0:36:14.440 president pro or against the President, and I feel that 0:36:14.600 --> 0:36:19.000 it's a gigantic distraction from the incompetence that they've brought 0:36:19.040 --> 0:36:21.239 to the table in actually doing their job for the 0:36:21.360 --> 0:36:25.160 citizens of California. I will not be engaged in that distraction. 0:36:25.360 --> 0:36:28.120 For me, I'm laser focused on serving the needs of 0:36:28.160 --> 0:36:31.160 the people in California who would be electing. 0:36:30.880 --> 0:36:31.800 Me, who I care for. 0:36:32.200 --> 0:36:35.160 But what do you do, though, Ethan? If President Trump 0:36:35.760 --> 0:36:39.640 you do a policy and you are a social media 0:36:39.680 --> 0:36:42.000 post at seven am in the morning of something he 0:36:42.120 --> 0:36:44.279 doesn't like, and he says, maybe we're going to go 0:36:44.320 --> 0:36:49.040 down to California and talk to Governor Penner, Well, what 0:36:49.160 --> 0:36:49.440 do you do? 0:36:49.800 --> 0:36:53.880 I think that every leader Carol has to approach their 0:36:54.040 --> 0:36:56.960 job with humility, and I don't see that as often 0:36:57.040 --> 0:37:00.960 as I would like, so Governor Penner would remember that 0:37:01.120 --> 0:37:04.320 Governor Penner is a servant for the people, and Governor 0:37:04.360 --> 0:37:08.239 Penner would understand that whatever he says or does he 0:37:08.320 --> 0:37:10.560 has to take in mind. Is this in the best 0:37:10.680 --> 0:37:13.719 interests of the people who he's serving and fighting with 0:37:13.800 --> 0:37:16.719 the President of the United States, It's not in the 0:37:16.760 --> 0:37:19.600 best interests of the people. Okay, this is definitely not. 0:37:20.080 --> 0:37:23.480 So I would try to have a workable relationship with 0:37:24.239 --> 0:37:26.880 both the legislatives, the legislature that I would need to 0:37:26.960 --> 0:37:29.840 work with, but also the federal government, because, as you 0:37:29.880 --> 0:37:32.080 point out, that's a very important relationship. Whether it's this 0:37:32.280 --> 0:37:37.800 president or another president. It's not about my personality and 0:37:37.880 --> 0:37:41.080 the personality of another, which I think, unfortunately we see 0:37:41.160 --> 0:37:44.960 today becoming the story. I don't need to be the story. 0:37:45.120 --> 0:37:48.200 My personality is not that important to me. My job 0:37:48.360 --> 0:37:50.520 as serving the needs of the people who elected me 0:37:50.840 --> 0:37:52.239 is the only thing I care about. 0:37:53.040 --> 0:37:55.640 Well, stay in touch as this year progresses. I love 0:37:55.719 --> 0:37:57.560 to see how things are going. Ethan, thank you so much. 0:37:57.680 --> 0:37:58.320 Thanks for having me. 0:37:58.480 --> 0:38:01.200 Yeah, I really appreciate Ethan Penner twenty twenty six, candidate 0:38:01.280 --> 0:38:04.640 for Governor of California, Founder and managing director of mosaic 0:38:04.719 --> 0:38:06.759 real estate investors. We did not get to talk about 0:38:06.760 --> 0:38:10.200 the CMBs markets. May be next time around. Next time Ethan. 0:38:10.280 --> 0:38:10.520 Thank you. 0:38:15.600 --> 0:38:19.600 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 0:38:19.680 --> 0:38:23.120 live weekday afternoons from two to five pm Eastern Listen 0:38:23.160 --> 0:38:26.640 on Applecarplay and Android Auto with the Bloomberg Business app, 0:38:26.880 --> 0:38:28.640 or watch us live on YouTube. 0:38:29.719 --> 0:38:31.680 Plenty ahead on our second hour of the weekend edition 0:38:31.719 --> 0:38:35.439 of Bloomberg Business Week, including how artificial intelligence is making 0:38:35.480 --> 0:38:37.360 the grade big time with the Dean of the ko 0:38:37.480 --> 0:38:39.000 Good School of Business. 0:38:39.200 --> 0:38:42.680 Plus speaking of AI is AI helping or herding the 0:38:42.760 --> 0:38:46.160 language learning business at Babbel. The CEO joins us later 0:38:46.239 --> 0:38:47.480 on First Up this hour. 0:38:47.640 --> 0:38:49.920 You might recall a story earlier this month from our 0:38:49.960 --> 0:38:53.359 Bloomberg News team. It was about Apollo Global Management being 0:38:53.440 --> 0:38:56.720 poised to launch a five billion dollar strategy to invest 0:38:56.800 --> 0:39:00.320 in sports deals, marking another major asset manager target the 0:39:00.400 --> 0:39:01.240 booming sector. 0:39:01.880 --> 0:39:04.920 It's about long term lending of strategic capital with sports 0:39:05.000 --> 0:39:08.800 leagues and clubs. Apollo's strategy is set to specialize in 0:39:08.880 --> 0:39:12.040 lending long term strategic capital to sports leagues and clubs. 0:39:12.600 --> 0:39:15.360 It will also consider owning stakes and teams, though this 0:39:15.400 --> 0:39:18.000 wouldn't be a priority and may hire new staff. Our 0:39:18.080 --> 0:39:21.320 next guest, too, is investing in sports teams for his investors. 0:39:21.400 --> 0:39:24.839 He is, indeed, Jeff Luno is CEO Blue Crow Sports Group. 0:39:25.080 --> 0:39:28.920 He's also former Houston Astros President of baseball Operations. He 0:39:29.080 --> 0:39:32.120 joined us from our Dallas News bureau alongside Bloomberg News 0:39:32.200 --> 0:39:34.600 Texas Bureau chief Julie fine Well. 0:39:34.640 --> 0:39:38.200 You rightly pointed out there's a lot of interest in sports. 0:39:38.239 --> 0:39:41.600 A lot of American investors are investing in European football, etc. 0:39:42.880 --> 0:39:45.640 We started as a startup four years ago. We wanted 0:39:45.680 --> 0:39:49.120 to pick our niche. Our niche is to find own 0:39:49.400 --> 0:39:54.839 and operate clubs in desirable locations that have big growth opportunities. 0:39:55.560 --> 0:40:00.600 So we invested in KANKUNFC and Mexico Glub Deportivo GOSS 0:40:01.080 --> 0:40:04.520 in the suburbs of Madrid and luav in the Normandy 0:40:04.680 --> 0:40:06.719 area of France. And those are the three teams, one 0:40:06.800 --> 0:40:09.920 in first division and two in second division. And the 0:40:10.040 --> 0:40:12.080 key for us is to operate those clubs well and 0:40:12.640 --> 0:40:14.520 allow them to make money and to win games. 0:40:15.640 --> 0:40:17.799 Jeff, you talk about the key is to operate them 0:40:17.880 --> 0:40:20.040 well and to win money in games but really, what's 0:40:20.040 --> 0:40:22.400 the long term plan? Are you looking at other sports? 0:40:22.520 --> 0:40:25.839 Do you want to stay in the in the soccer world, 0:40:25.920 --> 0:40:26.399 what's next? 0:40:27.120 --> 0:40:29.080 Well, we've got a lot of work to do in football. 0:40:29.200 --> 0:40:31.640 We want Leganes to get back to first Division. We 0:40:31.760 --> 0:40:35.040 want LUOV to establish itself in second Division, and now 0:40:35.120 --> 0:40:37.560 that promotion relegation is coming back to Mexico, we'd like 0:40:37.640 --> 0:40:41.480 KANCUNFC to get into LEGAMX. So I think our to 0:40:41.600 --> 0:40:44.040 do list for the next five years is pretty busy 0:40:44.160 --> 0:40:47.120 and pretty filled, but I think over time we will 0:40:47.160 --> 0:40:49.200 certainly look at other sports, where right now our focus 0:40:49.320 --> 0:40:49.760 is football. 0:40:49.920 --> 0:40:52.080 I want to talk a little bit. You were with 0:40:52.239 --> 0:40:55.480 the Houston Astros. You were fired after a baseball scandal. 0:40:55.560 --> 0:40:58.359 You have denied any wrongdoing, but you are going now 0:40:58.440 --> 0:41:01.480 and asking people for money. Has there been any issue 0:41:01.600 --> 0:41:02.279 when it comes to. 0:41:02.360 --> 0:41:04.040 Trust now, Not at all. 0:41:04.080 --> 0:41:06.200 In fact, many of the investors in Blue Crow are 0:41:06.320 --> 0:41:08.640 people that were either investors in the Astros or knew 0:41:08.680 --> 0:41:11.240 me from that time. If anything, it's been an advantage 0:41:11.360 --> 0:41:15.200 because people knew of what happened with the Astros after 0:41:15.280 --> 0:41:17.879 we got involved in getting the World Series in twenty 0:41:17.920 --> 0:41:20.560 seventeen and reaching it in twenty nineteen, and you know, 0:41:21.160 --> 0:41:24.239 making money for the club and its investors. So we 0:41:24.400 --> 0:41:29.919 have a very diverse group of investors, people from private equity, entrepreneurs, technologists, 0:41:29.960 --> 0:41:32.880 et cetera, and they're all very bullish on what we're building. 0:41:33.160 --> 0:41:35.560 Does it ever come up though? I am curious, Jeff, 0:41:35.680 --> 0:41:38.200 Like I know, we all have our past and histories, 0:41:39.280 --> 0:41:41.200 and I just think, you know, sometimes when it comes 0:41:41.239 --> 0:41:43.000 to money, people do at least be like, well, just 0:41:43.320 --> 0:41:45.000 let me just talk to you a little bit about 0:41:45.000 --> 0:41:46.920 this before maybe I think about investing. 0:41:48.400 --> 0:41:49.640 Well, I think a lot of people want to know 0:41:49.880 --> 0:41:53.440 about my time in baseball and what we did and 0:41:53.960 --> 0:41:55.200 how it relates to football. 0:41:55.400 --> 0:41:56.720 It's never come up as a negative. 0:41:56.719 --> 0:42:00.160 I was telling Julie earlier that in Europe, base is 0:42:00.200 --> 0:42:02.520 not a very big sport, so people don't even know 0:42:02.600 --> 0:42:05.600 who the astros are or who josel To is, so 0:42:06.200 --> 0:42:07.920 they really just care about whether we're going to win 0:42:08.000 --> 0:42:10.359 on Sunday and whether we're going to get three points 0:42:10.480 --> 0:42:10.680 or one. 0:42:11.040 --> 0:42:13.160 Hey. One thing I want to ask you too, though, Jeff, 0:42:13.200 --> 0:42:14.719 when it comes to owning a team, is it a 0:42:14.800 --> 0:42:18.000 buy and hold strategy or because you have investors, is 0:42:18.040 --> 0:42:20.400 it buy hold, build up and then sell for a 0:42:20.520 --> 0:42:23.200 premium so that there are returns to your investors. I'm 0:42:23.239 --> 0:42:23.720 just curious. 0:42:25.000 --> 0:42:25.799 That's a great question. 0:42:26.040 --> 0:42:28.840 And the way to make money and football, as you noticed, 0:42:28.920 --> 0:42:31.440 is you can either hold and sell for more than 0:42:31.480 --> 0:42:33.360 you bought, but you usually have to cover losses in 0:42:33.400 --> 0:42:37.080 the meantime. But we're trying to run these clubs to 0:42:37.280 --> 0:42:41.520 win and grow revenue and eventually be profitable so that 0:42:41.640 --> 0:42:44.440 we can potentially return some money to our investors as 0:42:44.520 --> 0:42:46.560 we go along. We're not looking to buy and flip. 0:42:47.120 --> 0:42:48.640 A lot of the things that we do in our 0:42:48.719 --> 0:42:51.799 clubs require three or four years, five years for them 0:42:51.840 --> 0:42:54.839 to start working, and that's why for us, we're talking 0:42:54.880 --> 0:42:56.400 about more long term holds. 0:42:56.840 --> 0:42:58.920 Talking about long term and working. 0:42:59.040 --> 0:43:02.080 We talked earlier about technology and analytics. 0:43:02.120 --> 0:43:03.560 What role is AI playing in. 0:43:03.600 --> 0:43:04.000 All of that. 0:43:05.239 --> 0:43:08.920 Well, the world of football has lagged baseball and basketball 0:43:08.960 --> 0:43:11.279 and other major sports in terms of the use of 0:43:11.320 --> 0:43:14.440 analytics and technology, but that's changing. And part of the 0:43:14.520 --> 0:43:17.800 reason it's changing is in football, you have eleven v eleven, 0:43:18.040 --> 0:43:20.200 so there's a ton of data, and there's a ton 0:43:20.280 --> 0:43:22.560 of games all over the world, and it's hard to 0:43:22.600 --> 0:43:26.680 analyze that with just a few data scientists, So AI 0:43:26.800 --> 0:43:29.960 allows you to analyze a much much larger volume of 0:43:30.040 --> 0:43:32.600 data and to generate insights from it. So I think 0:43:32.640 --> 0:43:35.120 it's going to be increasingly important in our world. 0:43:36.120 --> 0:43:39.440 Jeff, we talk a lot here in the US about 0:43:39.520 --> 0:43:42.880 ballooning sports team valuations. I mean, you're certainly familiar with this. 0:43:43.440 --> 0:43:47.160 We just had the deal news about the New York Giants, 0:43:47.200 --> 0:43:50.080 for example, with American football, and I'm curious if you 0:43:50.200 --> 0:43:52.880 think the growth here in the US will start to 0:43:52.920 --> 0:43:56.120 slow down and the real opportunity for valuations to grow 0:43:56.200 --> 0:43:58.160 as they did here in the US in the last 0:43:58.239 --> 0:44:01.400 two decades. That opportunity is outside of the US now. 0:44:03.640 --> 0:44:05.520 I think that, well, first of all, I've always been 0:44:05.560 --> 0:44:08.840 skeptical about valuations of major US sports, but I've always 0:44:08.880 --> 0:44:11.440 been wrong. I've been saying that things are overvalued for 0:44:11.480 --> 0:44:14.400 the last thirty years, and they keep selling for more 0:44:14.440 --> 0:44:16.759 and more down the road. So I'm not good at 0:44:16.800 --> 0:44:21.360 predicting that. I do think that buyer beware on European 0:44:21.440 --> 0:44:24.520 football because there is relegation and promotion and you have 0:44:24.680 --> 0:44:27.080 to do things well in order to increase value, and 0:44:27.200 --> 0:44:29.200 there's a lot of investors that are losing money in 0:44:29.239 --> 0:44:32.600 this sector as well. So we're hoping to be one 0:44:32.640 --> 0:44:36.080 of the winners, but we're being very cautious about what 0:44:36.239 --> 0:44:37.359 we invest in and how. 0:44:37.320 --> 0:44:37.640 We do it. 0:44:37.800 --> 0:44:41.360 What makes you skeptical about US team valuations? It's a 0:44:41.360 --> 0:44:44.080 supply and demand question, right Is it more complicated than that? 0:44:45.600 --> 0:44:48.480 Well, I think that generally the revenue is driven from 0:44:48.800 --> 0:44:52.320 TV contracts for most of the sports, and I just 0:44:52.600 --> 0:44:55.279 can't see those continuing to grow at the rate that 0:44:55.360 --> 0:44:58.759 they've grown. But I know it's happened, so, like I said, 0:44:58.800 --> 0:45:01.600 I'm not a good predict sure of that, but I 0:45:01.680 --> 0:45:04.440 think ultimately everybody's going to want to consume sports on 0:45:04.520 --> 0:45:08.239 their mobile or on their you know, their handheld, and 0:45:08.400 --> 0:45:10.480 that that changes the dynamic a little bit, and some 0:45:10.600 --> 0:45:13.600 of these bigger contracts, you know, may not get renewed 0:45:13.600 --> 0:45:15.360 at the increases that have happened in the past. 0:45:16.440 --> 0:45:18.120 This is going to be a very big time for 0:45:18.239 --> 0:45:21.399 football coming up with the World Cup. We have here 0:45:21.480 --> 0:45:24.800 in Dallas, we have the most matches. Houston, your hometown 0:45:24.920 --> 0:45:27.200 has a lot of matches as well. What do you 0:45:27.320 --> 0:45:30.440 think this attention on the sport in the United States 0:45:30.760 --> 0:45:32.080 will do for it overall? 0:45:32.719 --> 0:45:34.160 I think it's going to be great for all of 0:45:34.280 --> 0:45:38.560 North America, Mexico, United States, and Canada. I'm very bullish 0:45:38.640 --> 0:45:41.200 on North American football. I have been since the beginning 0:45:41.200 --> 0:45:44.600 when we invested in Cancun. And you know, I lived 0:45:44.640 --> 0:45:47.880 through the ninety four World Cup and everybody who's expecting 0:45:48.080 --> 0:45:51.560 football to suddenly become one of the big four sports. 0:45:51.560 --> 0:45:53.840 I think it has grown, but I think it's poised 0:45:53.840 --> 0:45:56.440 to continue to grow. It's never going to beat NFL, 0:45:56.480 --> 0:45:59.120 it's never going to beat MLB or NBA, but I 0:45:59.200 --> 0:46:01.279 think it can continue to grow its fan base and 0:46:01.440 --> 0:46:03.920 I think it can continue to produce good results. 0:46:04.280 --> 0:46:07.960 You know you are now in soccer, you came from baseball. 0:46:08.000 --> 0:46:11.200 I want to know what your future is. Well, like 0:46:11.280 --> 0:46:13.160 I said, we're just at the beginning. We've been doing 0:46:13.200 --> 0:46:15.680 this for four years. We've got a lot on our 0:46:15.760 --> 0:46:17.720 to do list. I'm going to be focused on building 0:46:17.760 --> 0:46:20.400 Blue Crow for the foreseeable future. 0:46:21.120 --> 0:46:23.560 Is there an investor that you would love to have 0:46:24.280 --> 0:46:26.719 with you for the ride? Is there a team that 0:46:26.840 --> 0:46:28.520 you would love to go after? And I know who's 0:46:28.560 --> 0:46:30.040 going to talk, right because you don't want to kick 0:46:30.080 --> 0:46:32.759 up the valuation, But I am just curious because and 0:46:32.800 --> 0:46:34.920 anything you can share on your investors or who else 0:46:34.960 --> 0:46:36.120 you'd like to have with you. 0:46:37.520 --> 0:46:39.239 Well, we have a great cap table. We've got some 0:46:39.360 --> 0:46:43.439 people that have in the NBA, in the NFL and MLB, etc. 0:46:44.520 --> 0:46:47.080 I don't like to disclose who they are because that's 0:46:47.160 --> 0:46:52.120 their business. But we're well funded. All of our investors 0:46:52.200 --> 0:46:54.600 have offered to put more money in if they need to. 0:46:55.360 --> 0:46:57.759 So really, at this point, I think we have an 0:46:57.840 --> 0:47:00.759 all star cap table. We've got a plan and now 0:47:00.800 --> 0:47:02.840 it's just a matter of going out and continue execute. 0:47:03.080 --> 0:47:06.120 Jeff twenty seconds. Women's sports. How does that play into it? 0:47:06.640 --> 0:47:08.319 It's kind of popular. I don't know if you've heard 0:47:08.360 --> 0:47:09.440 that really quickly. 0:47:09.800 --> 0:47:11.439 It is, and there's a lot of money going into 0:47:11.480 --> 0:47:17.200 women's sports. We have a female team in Spain. We're 0:47:17.239 --> 0:47:20.120 looking at the sector very closely and trying to figure 0:47:20.120 --> 0:47:22.400 out what our strategy is. But it's growing in the 0:47:22.520 --> 0:47:25.000 US a lot, and it's growing in Europe quite a lot, 0:47:25.040 --> 0:47:26.359 and I think it's going to continue to grow. 0:47:26.480 --> 0:47:28.160 All right, Well, you're always welcome to come back and 0:47:28.200 --> 0:47:30.319 share some more, Jeff, thank you so much. Jeff Leno, 0:47:30.640 --> 0:47:33.160 CEO Blue Crow Sports Group, along with our Bloomberg News 0:47:33.200 --> 0:47:36.960 Texas Bureau Chief Julie Fine. This is Bloomberg Business Weekdaily. 0:47:38.480 --> 0:47:42.279 This is the Bloomberg Business Week Daily Podcast. Listen live 0:47:42.400 --> 0:47:45.279 each weekday starting at two pm Eastern on Apple car 0:47:45.400 --> 0:47:48.160 Play and the Android Auto with the Bloomberg Business App. 0:47:48.280 --> 0:47:51.040 You can also listen live on Amazon Alexa from our 0:47:51.080 --> 0:47:55.200 flagship New York station, Just Say Alexa played Bloomberg eleven thirty. 0:47:55.719 --> 0:47:57.760 All right, So we've talked a bit about the resistance 0:47:57.800 --> 0:48:01.640 to artificial intelligence and classrooms here on Business Week, with 0:48:01.880 --> 0:48:05.799 some educators raising concerns on how to effectively integrate AI 0:48:05.840 --> 0:48:10.080 into their teaching practices, students overly relying on AI for homework, 0:48:10.120 --> 0:48:11.560 and of course the effect that AI is going to 0:48:11.600 --> 0:48:13.879 have on the labor market. There's a lot of play here. Tim, 0:48:14.120 --> 0:48:14.600 our next. 0:48:14.520 --> 0:48:17.680 Guest, is looking to infuse more AI across the classroom 0:48:17.719 --> 0:48:21.279 by helping students collaborate with the technology. David Marchik is 0:48:21.480 --> 0:48:24.320 dean of the co God School of Business at American University. 0:48:24.640 --> 0:48:26.920 He also served in different capacities in the Biden and 0:48:27.000 --> 0:48:30.359 Clinton administrations, as well as spending a dozen years at 0:48:30.360 --> 0:48:32.399 the private equity giant Carlisle Group. 0:48:32.800 --> 0:48:35.560 So I'm not a techie person, but we had the 0:48:35.640 --> 0:48:38.840 president of Google, Kent Walker, who basically said that AI 0:48:39.080 --> 0:48:41.600 was going to be as profound as fire or electricity. 0:48:41.640 --> 0:48:44.600 And I said, well, that seems like a strong statement, 0:48:44.680 --> 0:48:48.520 but even if it's zero point one percent true, it's big. 0:48:49.080 --> 0:48:51.120 Then we had a fellow named Brett Wilson, who's a 0:48:51.160 --> 0:48:54.520 CEO of an AI venture capital firm, and a student 0:48:54.719 --> 0:48:56.440 raised his hand and said, am I going to be 0:48:56.520 --> 0:48:59.600 replaced by AI? And Brett said, you likely won't be 0:48:59.680 --> 0:49:02.479 replaced by AI, but you could be replaced by someone 0:49:02.520 --> 0:49:05.600 who knows AI if you don't. So at that moment, 0:49:05.680 --> 0:49:08.680 I said, we need to infuse AI into everything we 0:49:08.800 --> 0:49:12.560 do to prepare our students for an AI workforce. And 0:49:12.680 --> 0:49:14.200 we've done that over the last three years. 0:49:14.600 --> 0:49:16.640 So what does that actually look like in the classroom. 0:49:17.400 --> 0:49:20.600 So when you start at co God School of Business, 0:49:20.800 --> 0:49:23.239 if you're an eighteen year old, the first day is 0:49:23.320 --> 0:49:26.399 you do you undergrad, undergrad and grad. The first day 0:49:26.400 --> 0:49:29.040 of orientation, we tell you you're going to use AI 0:49:29.320 --> 0:49:32.600 every day. Most students were prohibited from using AI in 0:49:32.760 --> 0:49:36.520 high school, but they did it anyway. So we want 0:49:36.560 --> 0:49:39.200 to teach students how to use it properly. We actually 0:49:39.360 --> 0:49:42.200 start by teaching what's wrong with AI before we teach 0:49:42.280 --> 0:49:45.040 them what's right with AI, and then over the four 0:49:45.120 --> 0:49:47.160 years or if you're getting an MBA, we want them 0:49:47.200 --> 0:49:49.840 to learn how to underwrite an investment, how to do 0:49:50.000 --> 0:49:53.719 fundamental research, how to develop a marketing plan, how to 0:49:53.840 --> 0:49:57.680 learn to negotiate, all using AI because they'll be expected 0:49:57.760 --> 0:49:59.400 to use AI in the workforce. 0:50:00.080 --> 0:50:04.120 That's what we keep hearing increasingly is the people who 0:50:04.239 --> 0:50:06.560 know and understand how to use it as a tool 0:50:07.160 --> 0:50:12.080 will really do well going forward. Okay, so talk to 0:50:12.160 --> 0:50:14.719 us little bit more though about because I think one 0:50:14.719 --> 0:50:16.520 of the things that we're playing around with David is 0:50:16.560 --> 0:50:19.399 that we use it too and then it's like okay, 0:50:19.480 --> 0:50:20.960 but then we kind of check it out because we 0:50:21.160 --> 0:50:24.360 just don't totally trust all of it. So tell us 0:50:24.400 --> 0:50:28.560 how you guys teach that aspect of it, like what 0:50:28.719 --> 0:50:30.960 to trust, what not to how do you fact check 0:50:31.000 --> 0:50:33.360 some of this information that comes across Still, so we. 0:50:33.440 --> 0:50:37.000 Have a professor Ed Walsall who teaches advanced Data Management 0:50:37.120 --> 0:50:40.880 data analytics. His whole class is used to show how 0:50:41.000 --> 0:50:44.680 AI comes up with wrong answers in correct information. So 0:50:44.840 --> 0:50:48.320 he has students analyze data sets come up with predictive analytics, 0:50:48.760 --> 0:50:51.359 and he shows that AI makes mistakes all the time. 0:50:52.120 --> 0:50:55.719 That's as valuable as learning what's right with AI. So 0:50:55.840 --> 0:50:58.360 AI can be a powerful tool, but you need to 0:50:58.400 --> 0:51:01.880 be skeptical. You need to test it, you need to probe, 0:51:02.080 --> 0:51:03.560 and you need to be able to shape it to 0:51:03.640 --> 0:51:04.800 produce the right answers. 0:51:05.520 --> 0:51:07.360 You know, I want to talk about your background a 0:51:07.400 --> 0:51:09.720 little bit and then talk more about AI and perhaps 0:51:09.800 --> 0:51:11.680 why you approach it this way. You have a really 0:51:11.719 --> 0:51:14.239 interesting background a lawyer. You served in the Clinton and 0:51:14.280 --> 0:51:17.440 Biden administrations in very different capacities. You did more than 0:51:17.480 --> 0:51:19.840 a dozen years as a managing director and member of 0:51:19.880 --> 0:51:23.640 the management committee at Carlisle. You've written a book, a 0:51:23.760 --> 0:51:27.239 co author to book on presidential transition transitions. You don't 0:51:27.239 --> 0:51:30.360 have the traditional background of a dean, like traditional academic 0:51:30.440 --> 0:51:31.799 background of a dean. 0:51:32.400 --> 0:51:35.520 I also had poor grades and was not the best student. 0:51:35.680 --> 0:51:38.399 That wasn't in the bio that I read. But I'm 0:51:38.400 --> 0:51:41.120 glad you're bringing us that color. How does that perhaps 0:51:41.200 --> 0:51:45.600 make you think differently about the workforce and what they 0:51:45.640 --> 0:51:48.279 need to be prepared to do once they leave the 0:51:48.320 --> 0:51:49.160 academic world. 0:51:49.640 --> 0:51:52.720 So I had the best boss ever who actually hosts 0:51:52.719 --> 0:51:56.960 a show at Bloomberg David Rubinstein. David also was probably 0:51:57.440 --> 0:52:00.719 the least likely person to run an equity firm, he 0:52:00.760 --> 0:52:03.560 had no private equity background. What I learned from David 0:52:03.640 --> 0:52:06.280 is surround yourself with people that are better and smarter 0:52:06.400 --> 0:52:09.600 than you in each of their areas and empower them 0:52:09.800 --> 0:52:13.920 and you can do anything. So what we're basically focused 0:52:13.960 --> 0:52:16.560 on is ensuring that our students are prepared for the 0:52:16.680 --> 0:52:20.920 AI workforce, the AI economy, which is changing rapidly. Stanford 0:52:21.520 --> 0:52:24.000 just put out a study that shows that AI exposed 0:52:24.160 --> 0:52:27.440 jobs for twenty two to twenty five year olds are 0:52:27.560 --> 0:52:29.960 shrinking between thirteen and twenty percent. 0:52:30.160 --> 0:52:30.960 It's terrifying. 0:52:31.120 --> 0:52:35.160 It's a very hard time. My daughter graduated last year. 0:52:35.280 --> 0:52:36.879 It was very hard for her to get a job. 0:52:36.960 --> 0:52:39.839 We see it every day, and so what we're trying 0:52:39.880 --> 0:52:41.880 to do is make sure that our students have a 0:52:42.040 --> 0:52:44.920 leg up when they apply for jobs, which means you 0:52:45.040 --> 0:52:51.320 need to have the fundamentals of a business education marketing, accounting, management, finance, 0:52:51.360 --> 0:52:55.000 et cetera, plus know how to use AI and everything 0:52:55.080 --> 0:52:58.359 you do. And we're also doubling down on what used 0:52:58.400 --> 0:53:03.759 to be considered soft skilled communication teamwork, the ability to 0:53:03.800 --> 0:53:07.360 think on your feet. Those skills are more important today 0:53:07.680 --> 0:53:10.719 than in an AI economy. Look at your jobs. You 0:53:10.840 --> 0:53:13.480 have to think on your feet every day, react to. 0:53:13.600 --> 0:53:14.319 News from times. 0:53:14.400 --> 0:53:16.600 It works, sometimes it doesn't, But. 0:53:17.000 --> 0:53:19.759 Having an entrepreneur mindset and being able to think and 0:53:19.920 --> 0:53:22.280 create is essential for today's economy. 0:53:22.360 --> 0:53:25.719 How do you, as an educator but also somebody from 0:53:25.800 --> 0:53:28.799 the business world think about how important it is? Though? 0:53:29.000 --> 0:53:31.600 When somebody their first couple of jobs or their first 0:53:31.680 --> 0:53:34.279 job at they're learning so much. The learning curve is 0:53:34.360 --> 0:53:37.960 so much, but it teaches their brain to think in 0:53:38.040 --> 0:53:41.200 maybe different ways that they maybe didn't get when they 0:53:41.239 --> 0:53:44.480 were at university or at college. And so I'm just wondering, like, 0:53:45.320 --> 0:53:49.360 are we cutting that out of younger generations, that ability 0:53:49.440 --> 0:53:52.840 to mess up learn I learned so much from mistakes 0:53:52.880 --> 0:53:55.280 I made in kind of my first couple of jobs, 0:53:55.440 --> 0:53:57.239 and I'm just wondering, are we getting rid of that? 0:53:57.800 --> 0:53:59.800 So I think we are getting rid of at and 0:54:00.239 --> 0:54:04.160 ways because AI will replace some jobs. In my view, 0:54:04.280 --> 0:54:08.279 is incumbent on universities and educational institutions to be able 0:54:08.320 --> 0:54:12.080 to foresee that and to give students the skills that 0:54:12.239 --> 0:54:14.879 you may have learned in your first job. We're trying 0:54:14.880 --> 0:54:18.080 to give them those skills at the university through in 0:54:18.239 --> 0:54:21.520 classroom and out of classroom experiences. So we have a 0:54:21.560 --> 0:54:24.360 lot of competitions for students to learn how to pitch, 0:54:25.200 --> 0:54:27.960 where they have to answer questions on their feet. We 0:54:28.080 --> 0:54:32.080 have investment clubs where students are investing actual money and 0:54:32.120 --> 0:54:35.400 they need to present and defend and investment ideas. The 0:54:35.480 --> 0:54:39.000 ability to give a pitch, to communicate orally, to work 0:54:39.080 --> 0:54:41.200 in teams is as important as ever. 0:54:41.880 --> 0:54:45.000 How do you have to think about the admissions process 0:54:45.120 --> 0:54:47.920 differently as a result of what happens now or what 0:54:48.120 --> 0:54:50.160 you want to have happen in a school right now. 0:54:50.719 --> 0:54:54.000 Traditionally, and maybe this is why I wasn't a great student, 0:54:54.600 --> 0:54:58.239 a teacher stands in front of a classroom and communicates, 0:54:58.280 --> 0:55:02.160 disseminates information, which is student absorbs, and then the student 0:55:02.360 --> 0:55:05.120 is assessed on how good they are by how much 0:55:05.200 --> 0:55:09.480 they can retain and regurgitate AI replaces all that. You 0:55:09.560 --> 0:55:12.520 can get any piece of information on your fingertips. So 0:55:12.680 --> 0:55:14.600 now the best students are going to be ones that 0:55:14.640 --> 0:55:18.239 are most curious, that have an entrepreneurial mindset. They're going 0:55:18.280 --> 0:55:20.160 to be able to take risk they're going to be 0:55:20.160 --> 0:55:22.560 able to figure out stuff on their own, and so 0:55:22.719 --> 0:55:24.960 we're looking for that in the admissions process. 0:55:25.239 --> 0:55:26.960 You know, it's funny, Karl and I talked about this 0:55:27.000 --> 0:55:29.439 a lot because one of the things that we found 0:55:29.480 --> 0:55:31.960 these lllms are so good at is if you prompt 0:55:32.000 --> 0:55:35.360 it properly, it can essentially write you a paper to 0:55:35.400 --> 0:55:37.800 answer question and that a teacher. I mean, I'm not 0:55:37.840 --> 0:55:39.920 giving anyone any news here that they don't already know who. 0:55:40.160 --> 0:55:41.560 Students starre way ahead of us. 0:55:41.600 --> 0:55:42.719 You are ahead of us here. 0:55:42.760 --> 0:55:44.759 I mean for me, as somebody who graduated from what 0:55:44.920 --> 0:55:48.640 like twenty ish years ago, this is like kind of crazy. 0:55:49.239 --> 0:55:50.920 But I think back to my own experience in college. 0:55:50.960 --> 0:55:52.400 I went to a liberal arts school, and some of 0:55:52.480 --> 0:55:56.160 those aha moments that occurred for me were like late 0:55:56.200 --> 0:55:57.759 at night when I was trying to write a term 0:55:57.840 --> 0:56:00.279 paper or trying to write some sort of analysis of 0:56:00.400 --> 0:56:02.719 a book I read, And those are the moments that 0:56:02.800 --> 0:56:04.520 stuck with me. Those are the moments where I learned 0:56:04.520 --> 0:56:07.120 how to make those connections. Do we lose the ability 0:56:07.200 --> 0:56:09.839 to make those connections because of this technology. 0:56:10.480 --> 0:56:12.719 I don't think so. I think it actually aids you. 0:56:12.880 --> 0:56:14.680 So you were probably a better student than I was. 0:56:15.000 --> 0:56:16.800 But when I was writing an essay, I had a 0:56:16.880 --> 0:56:20.680 hard time figuring out topic sentences, structuring an essay, structuring 0:56:20.719 --> 0:56:24.880 an argument. AI can help you do that. It's a collaborator, 0:56:25.320 --> 0:56:29.480 and so those aha moments are still there, they're just different. Also, 0:56:29.560 --> 0:56:31.680 the ability to work in teams is going to be 0:56:31.880 --> 0:56:34.680 much more important today than it was when we were 0:56:34.680 --> 0:56:36.640 growing up. And I have students come to me all 0:56:36.640 --> 0:56:38.759 the time and say, boy, this team work is hard. 0:56:39.280 --> 0:56:42.000 This one student is a show off, this one doesn't 0:56:42.040 --> 0:56:46.360 do their work, this one has views that I can't understand, 0:56:46.400 --> 0:56:49.200 and they don't change. And I'm like, welcome to the 0:56:49.320 --> 0:56:51.960 real world. I have that every day in my job, 0:56:52.040 --> 0:56:53.360 and I've had it every day in my job for 0:56:53.400 --> 0:56:56.400 the last forty years. So teaching students not only the 0:56:56.600 --> 0:57:00.680 fundamental basic skills that you learn reading right now, reasoning, 0:57:01.840 --> 0:57:05.799 plus AI skills and these soft skills which I call 0:57:05.960 --> 0:57:09.640 power skills, that's the future of education in my view. 0:57:10.960 --> 0:57:13.640 But are we also losing though, the ability of people 0:57:13.719 --> 0:57:16.560 kind of struggling David through something and like maybe having 0:57:16.600 --> 0:57:18.800 to work a little bit hard and understanding the idea 0:57:18.840 --> 0:57:20.840 that Okay, maybe spend a little bit more time with it, 0:57:21.360 --> 0:57:23.600 dig a little bit deeper, I don't know, look at 0:57:23.640 --> 0:57:27.479 some different sources and like figure something out versus going 0:57:27.640 --> 0:57:29.800 like I'm blown away by some of the stuff that 0:57:29.880 --> 0:57:35.120 you get off of chat, GPT and other chatbots, if 0:57:35.160 --> 0:57:37.680 you will, And I'm just kind of wondering, are we 0:57:37.800 --> 0:57:38.520 losing something? 0:57:38.640 --> 0:57:41.760 Maybe they're still struggling. But let's say I were a 0:57:41.840 --> 0:57:43.480 twenty two year old and I wanted to be your 0:57:43.600 --> 0:57:47.200 research assistant. You would expect me to be able to 0:57:47.320 --> 0:57:51.000 find any piece of information at my fingertips any day 0:57:51.120 --> 0:57:53.400 and deliver it to you. You'd expect me to have 0:57:53.800 --> 0:57:57.160 much more advanced skills today than if I were applying 0:57:57.680 --> 0:58:00.520 twenty years ago or in my case, forty years ago. 0:58:01.040 --> 0:58:04.320 So it's just a different type of struggle, and the 0:58:04.400 --> 0:58:07.320 students today need to learn how to do the stuff 0:58:07.360 --> 0:58:09.000 that's required in an AI economy. 0:58:09.120 --> 0:58:11.240 Can I ask you about teachers how they've had to 0:58:11.320 --> 0:58:13.400 rethink how they teach, because that's something you guys have 0:58:13.480 --> 0:58:14.400 had to deal with as well. 0:58:14.720 --> 0:58:17.920 That is a great question. Faculty traditionally are very resistant 0:58:17.960 --> 0:58:20.280 to change. We have faculty that have taught the same 0:58:20.360 --> 0:58:22.960 thing over and over again for we've actually created a 0:58:23.160 --> 0:58:26.120 very arentrepreneural culture among our faculty, where we started with 0:58:26.280 --> 0:58:30.160 a few early adopters, then we had some others that 0:58:30.280 --> 0:58:33.840 we dragged along. Today, ninety percent of our faculty are 0:58:33.920 --> 0:58:36.880 infusing AI and in their classroom. At the end of 0:58:36.920 --> 0:58:39.680 the spring semester it was fifty. So over the summer 0:58:39.720 --> 0:58:42.720 there was just a cultural change where everybody said, the 0:58:42.880 --> 0:58:46.040 parades leaving, either need to get in front of it 0:58:46.560 --> 0:58:47.640 or I'm going to be left behind. 0:58:48.120 --> 0:58:50.640 So what do you think David is constructive for we 0:58:51.120 --> 0:58:53.640 as communicators and having guests and we're talking about A 0:58:53.800 --> 0:58:56.200 I feel like every conversation somehow, you know, all roads 0:58:56.240 --> 0:58:56.960 lead back to AI. 0:58:57.280 --> 0:58:58.880 Are you trying to get him to give us advice 0:58:58.920 --> 0:59:01.400 about how we AI prove our no no, because I 0:59:01.400 --> 0:59:02.360 would be open to that too. 0:59:02.640 --> 0:59:04.360 Just thinking about the smart way to deal with it, 0:59:04.400 --> 0:59:06.280 because I think it's really easy to get caught up 0:59:06.400 --> 0:59:10.240 in the exuberance around it. There's so much spending that's 0:59:10.280 --> 0:59:11.919 going on and we're trying to Like we even today 0:59:12.000 --> 0:59:13.760 did kind of a reality check about where we are 0:59:13.840 --> 0:59:14.520 in AI. 0:59:14.520 --> 0:59:16.240 Like it's kind of a wild world where we're talking 0:59:16.240 --> 0:59:19.120 about two hundred million dollar salaries for people who are 0:59:19.200 --> 0:59:23.240 poached and brought to metaplatforms for specific technology, just trying. 0:59:23.080 --> 0:59:25.400 To understand what do you think is constructive based on 0:59:25.560 --> 0:59:30.240 kind of the experience you have had reorienting your approaches there. 0:59:30.880 --> 0:59:34.360 So I think what we're seeing is a technology revolution 0:59:34.600 --> 0:59:37.520 in a much more abbreviated version than we've seen it before. 0:59:37.920 --> 0:59:42.000 It's the fastest technology ever to be adopted. So chat 0:59:42.080 --> 0:59:45.880 GPT has acquired the same number of users. They you know, 0:59:46.360 --> 0:59:49.960 five times as fast as Netflix or Amazon, twenty times 0:59:50.000 --> 0:59:55.080 as fast as Facebook. So when the mobile revolution took place, 0:59:55.160 --> 0:59:57.920 which we all live through, it took thirty years for 0:59:58.080 --> 1:00:02.040 us to really use the phone for everything. AI is 1:00:02.160 --> 1:00:04.400 changing that in a matter of months. So I do 1:00:04.600 --> 1:00:07.280 think this is a transformational change that we're seeing. It's 1:00:07.360 --> 1:00:10.760 going to change everything in the economy faster than any 1:00:10.800 --> 1:00:12.440 technology change that ever has happened to. 1:00:12.480 --> 1:00:13.960 Do you think we know if yet it's good for 1:00:14.040 --> 1:00:14.640 the economy. 1:00:15.120 --> 1:00:18.040 I don't think we know. I think there's big pluses 1:00:18.360 --> 1:00:20.800 and I think there's big minuses. My view is that 1:00:21.160 --> 1:00:24.920 there will be winners and losers, and my focus is 1:00:25.040 --> 1:00:27.080 taking care of the students that are at my school 1:00:27.200 --> 1:00:28.400 to help them prepare well. 1:00:28.480 --> 1:00:30.360 Let's talk a little bit about the outcomes that you've 1:00:30.360 --> 1:00:33.160 seen thus far. You're really still early into this experiment. 1:00:33.320 --> 1:00:36.640 Three years ago, as Carol mentioned, was when you set 1:00:36.680 --> 1:00:38.800 out to become the first AI first business school in 1:00:38.840 --> 1:00:41.880 the country. What can you tell us about graduates who 1:00:41.920 --> 1:00:44.400 are finding full time employment on the undergrad side, then 1:00:44.440 --> 1:00:46.360 also on the MBA side. 1:00:46.320 --> 1:00:49.200 It's helping them. It's helping them have a leg up 1:00:49.400 --> 1:00:51.840 in me or be more competitive. One of the things 1:00:51.880 --> 1:00:54.320 I'm most excited about this year is we're offering an 1:00:54.360 --> 1:00:57.440 AI minor to non business schools. So let's say you're 1:00:57.440 --> 1:00:59.560 a student that wants to go to med school. You've 1:00:59.600 --> 1:01:02.520 done what traditionally as student does, taking a biodegree, you 1:01:02.600 --> 1:01:04.640 have some labs, you're applying to med school. If you 1:01:04.720 --> 1:01:07.280 have an AI minor, you're going to be much more 1:01:07.320 --> 1:01:10.440 attractive because AI is going to transform healthcare more than 1:01:10.520 --> 1:01:14.240 perhaps any other field. If you want to be a 1:01:14.360 --> 1:01:16.960 policy major and go work for a United States senator, 1:01:17.320 --> 1:01:19.760 and that senator the chief of staff says, Okay, you're 1:01:19.760 --> 1:01:21.280 a policy major from a good school and you have 1:01:21.320 --> 1:01:23.880 an AI minor, I know you're going to be able 1:01:23.920 --> 1:01:27.520 to do research for me for any hearing for any 1:01:27.640 --> 1:01:31.320 questions for anything, I need to know much faster, and 1:01:31.400 --> 1:01:34.280 you're going to be able to analyze data much better 1:01:34.400 --> 1:01:37.240 than others. So I think it's a huge leg up 1:01:37.680 --> 1:01:40.280 for both business students and non business students. 1:01:40.400 --> 1:01:42.720 Do you ever envision a class where it's just someone 1:01:42.840 --> 1:01:46.280 talking to you like chat, GPT or whatever version might 1:01:46.360 --> 1:01:49.040 ultimately come out, like you just think about the We 1:01:49.120 --> 1:01:51.200 always talk about a great conversation, how much we can 1:01:51.280 --> 1:01:53.440 learn if you need to ask the right questions. But 1:01:53.520 --> 1:01:55.240 I think about that back and forth. 1:01:55.440 --> 1:01:58.920 I think duelingo CEO has said that AI could replace teachers. 1:02:00.160 --> 1:02:06.480 AI could disintermediate the whole education system. Okay, and we're experimenting. 1:02:06.480 --> 1:02:08.600 I'll give you an example. We have a professor named 1:02:08.640 --> 1:02:11.920 Tommy White. He runs our entrepreneurship program. He's incredible, one 1:02:11.960 --> 1:02:14.800 of those popular professors. He created a class this year 1:02:15.400 --> 1:02:18.960 using all AI to create the class. It has no books, 1:02:19.560 --> 1:02:25.560 no reading. The only assignments are prompts prompts plus teamwork. 1:02:26.160 --> 1:02:27.040 We'll see how it goes. 1:02:27.440 --> 1:02:27.920 Will it work? 1:02:28.040 --> 1:02:31.760 I don't know, but we're trying so maybe so maybe. 1:02:31.840 --> 1:02:33.520 I mean, we're experimenting, and that's one of the things 1:02:33.520 --> 1:02:36.080 that we've done to create this AI first culture is 1:02:36.120 --> 1:02:39.080 We've told our faculty it's okay to fail because nobody 1:02:39.240 --> 1:02:42.400 really knows what's going on or what we're doing because 1:02:42.440 --> 1:02:46.120 it's so new. So try something. It doesn't work, try 1:02:46.200 --> 1:02:48.560 something else, really interesting stuff. 1:02:49.040 --> 1:02:50.760 Hopefully you'll find some time to come back to us 1:02:50.800 --> 1:02:54.080 in case with lot of conversation. Love love. Maybe we 1:02:54.160 --> 1:02:55.439 talked to some students at some point. 1:02:55.560 --> 1:02:57.280 That'd be great. We have some incredible students. 1:02:57.360 --> 1:02:58.640 Yeah, I think that would be a lot of fun. 1:02:59.160 --> 1:02:59.680 Get on the road. 1:03:00.920 --> 1:03:01.640 I'm happy to do that. 1:03:02.920 --> 1:03:03.840 Come to teach a class. 1:03:04.880 --> 1:03:08.840 Try that good stuff. Thank you, David. Thanks really appreciate 1:03:08.920 --> 1:03:11.480 David Marcheck. He is the dean of the co God 1:03:11.520 --> 1:03:15.560 School of Business at American University. Really fascinating conversation. If 1:03:15.560 --> 1:03:17.040 you've missed any of it, but please be sure to 1:03:17.120 --> 1:03:19.400 check out our podcast. You can download it whether they are. 1:03:23.880 --> 1:03:27.840 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 1:03:27.960 --> 1:03:31.360 live weekday afternoons from two to five pm Eastern. Listen 1:03:31.440 --> 1:03:34.880 on Apple CarPlay and Android Auto with the Bloomberg Business app, 1:03:35.160 --> 1:03:36.920 or watch us live on YouTube. 1:03:38.280 --> 1:03:40.720 All Right, so, earlier we talked about AI's role as 1:03:40.760 --> 1:03:43.280 a tool in academia and how it can help students 1:03:43.360 --> 1:03:45.960 better prepare for the future of work. On the other hand, 1:03:46.040 --> 1:03:48.360 certain AI tools can be seen as a real competitive 1:03:48.400 --> 1:03:50.800 threat to companies in the language learning space. 1:03:51.360 --> 1:03:54.880 Apple unveiled its new AirPods three with a live translation feature, 1:03:55.040 --> 1:03:58.240 giving us a glimpse into a future where global communication 1:03:58.480 --> 1:04:01.040 might be seamless. What does that mean though, for the 1:04:01.080 --> 1:04:03.520 way we actually learn languages and how does AI fit 1:04:03.600 --> 1:04:04.280 into that picture. 1:04:04.640 --> 1:04:06.840 So to help us answer some of those questions, we 1:04:06.920 --> 1:04:09.280 were joined by the CEO of Babbel, Tim Allen. 1:04:09.760 --> 1:04:12.520 You know, language learning is the oldest software known demand, 1:04:12.680 --> 1:04:15.280 so it's not going anywhere. What I love about what 1:04:15.400 --> 1:04:18.200 Apple and Google have done is it actually generates more 1:04:18.240 --> 1:04:21.520 interest in the space. So what we find interesting, especially 1:04:21.560 --> 1:04:25.160 on our product Babble, is when users or learners go 1:04:25.640 --> 1:04:28.120 to take a trip or go into a foreign country, 1:04:28.520 --> 1:04:30.919 they actually come back and they're more interested in learning 1:04:30.960 --> 1:04:33.240 the language. So we see all of this as a 1:04:33.320 --> 1:04:36.320 tailwind because we think that ultimately, you know, I think 1:04:36.360 --> 1:04:38.320 the technology is really cool as well, Right, it's so 1:04:38.440 --> 1:04:40.440 interesting put in AirPods you can go from one to 1:04:40.520 --> 1:04:42.800 the other. But what people will then do is adopt 1:04:42.880 --> 1:04:45.600 and go Oh, I really want to get into the language. 1:04:45.640 --> 1:04:47.480 I really want to belong to the language. 1:04:47.200 --> 1:04:50.280 That's happening right now because it's volume. Well, so Tim, 1:04:50.320 --> 1:04:52.560 I get that that's happening right now because that technology 1:04:52.600 --> 1:04:54.960 isn't widespread. But I can just imagine in a few years, 1:04:55.600 --> 1:04:58.080 you know, we won't even need maybe we won't even 1:04:58.120 --> 1:04:58.920 need another device. 1:04:59.040 --> 1:04:59.400 We'll have it. 1:05:00.440 --> 1:05:03.120 It'll be a wearable and then it'll be even more seamless. 1:05:03.160 --> 1:05:06.840 Do you see that continuing to drive demandin. 1:05:06.800 --> 1:05:09.920 What's interesting about that is, like I think, short of 1:05:10.000 --> 1:05:12.880 a neural implant, people are going to always be learning languages, right, 1:05:13.040 --> 1:05:15.200 so that in a universal language, those are the two 1:05:15.240 --> 1:05:17.600 things that could disrupt the market. So what will end 1:05:17.680 --> 1:05:19.360 up happening is that the iPhone when it came out, 1:05:19.440 --> 1:05:22.120 everyone declared the death of language learning, right because you 1:05:22.160 --> 1:05:23.480 could hold up your phone you could do the same 1:05:23.560 --> 1:05:27.160 translation that the AirPods are offered today. Even a wearable 1:05:27.200 --> 1:05:29.720 can do it. The difference is that people actually want 1:05:29.800 --> 1:05:33.000 to live and breathe inside of the language. In fact, 1:05:33.320 --> 1:05:36.120 we just launched a part of our new technology that 1:05:36.600 --> 1:05:39.720 explores AI that brings both the pedagogy and the human 1:05:39.840 --> 1:05:42.600 learning aspect of it together with AI called babble Speak, 1:05:43.160 --> 1:05:45.360 and what that does. It allows people to actually practice 1:05:45.400 --> 1:05:47.680 the language of learning with with an AI coach, an 1:05:47.680 --> 1:05:50.600 AI tuner, So there's pre defined conversations you can practice with. 1:05:51.120 --> 1:05:54.280 It does small corrections, but we see this as a compliment. 1:05:54.400 --> 1:05:56.400 We see this as a way for people to actually 1:05:56.560 --> 1:05:59.480 learn and accelerate the transmission of the language. I think 1:05:59.480 --> 1:06:01.960 the new technies are really going to allow for dabbling 1:06:02.000 --> 1:06:04.560 inside of the language. It's going to be great on 1:06:04.720 --> 1:06:06.320 the go, it's going to be great for those one 1:06:06.360 --> 1:06:09.680 time use cases, but people will always want to learn 1:06:09.800 --> 1:06:11.560 and live inside of a language themselves. 1:06:11.720 --> 1:06:14.400 How do you do them? More generally? Tim kind of 1:06:14.440 --> 1:06:18.000 the landscape of learning apps With the introduction of GPT five, 1:06:18.360 --> 1:06:22.200 we saw the team create a custom language learning app 1:06:22.400 --> 1:06:26.360 in minutes during the demos. I mean, it's kind of 1:06:26.600 --> 1:06:28.920 amazing how quickly all this is happening and how quickly 1:06:28.960 --> 1:06:31.800 you can do things. Do you view AI products like 1:06:31.880 --> 1:06:34.200 this is a real competitive threat and what can you 1:06:34.240 --> 1:06:36.160 do to keep your user base and sustain growth? 1:06:37.360 --> 1:06:37.560 Yeah? 1:06:37.600 --> 1:06:39.760 I watched the same demonstration. It was a cool friendship 1:06:39.840 --> 1:06:41.760 that they had created. It has limitation. 1:06:41.920 --> 1:06:42.440 Is it cool? 1:06:42.720 --> 1:06:45.760 Are you like, oh, my god, this is going to 1:06:45.800 --> 1:06:48.360 be what was difficult for us? 1:06:49.000 --> 1:06:51.160 It was cool. No, definitely not in Oh my god. 1:06:51.360 --> 1:06:53.680 It was a cool because it was created so quickly. 1:06:53.800 --> 1:06:55.280 And what I think is so cool about it is 1:06:55.360 --> 1:06:58.200 people are starting to learn on demand. What the difference 1:06:58.320 --> 1:07:01.040 is though, is I think that people will want want pedagogy, 1:07:01.080 --> 1:07:03.320 they'll want lessons, they'll want content. They'll want to be 1:07:03.360 --> 1:07:05.600 able to actually know that they're getting a trusted guide 1:07:05.720 --> 1:07:09.040 through the language learning process. Large language models, as you know, 1:07:09.520 --> 1:07:12.240 are good at many things. They're good everywhere. They've been 1:07:12.320 --> 1:07:15.160 declaring for now almost two years that they're going to 1:07:15.200 --> 1:07:17.840 take away all of the jobs and just really disrupt 1:07:17.840 --> 1:07:20.120 all the markets. But I think what ends up happening 1:07:20.240 --> 1:07:22.400 is when you start to get into really narrow spaces 1:07:22.440 --> 1:07:24.760 such as language learning, people want to know that they 1:07:24.840 --> 1:07:26.680 have a real lesson plan, that they have really the 1:07:26.720 --> 1:07:28.880 transmission of the language in a way that's going to 1:07:28.920 --> 1:07:31.200 adapt to them. And that's what we think AI is 1:07:31.240 --> 1:07:33.200 going to empower. Inside of babble, we think it's really 1:07:33.280 --> 1:07:37.160 going to allow for the personalization of your individual learning plan, 1:07:37.880 --> 1:07:41.640 but with the content, the pedagogy, the transmission, so you 1:07:41.800 --> 1:07:44.760 retain you're able to speak it, you feel fluent and 1:07:44.840 --> 1:07:47.400 you actually feel comfortable with it. So I think from 1:07:47.440 --> 1:07:50.000 a build perspective, it's really interesting. We look at it 1:07:50.040 --> 1:07:52.080 as a tool to really help facilitate and go to 1:07:52.160 --> 1:07:54.680 market a lot faster. I think for a transmission and 1:07:54.760 --> 1:07:57.640 a trusted content, it'll actually end up being niche markets 1:07:57.680 --> 1:07:59.160 with real players such as ourselves. 1:07:59.160 --> 1:08:01.360 All Right, So the truth I'll probably be in usage 1:08:01.480 --> 1:08:04.520 or the stickiness. And I'm assuming then you're signing up 1:08:04.520 --> 1:08:07.280 more and more people. You're very enthusiastic amid all of 1:08:07.360 --> 1:08:12.760 this potential competition. So give us an idea of customers, usership, 1:08:12.840 --> 1:08:16.000 people sticking to the platform. Give us some metrics. 1:08:16.360 --> 1:08:20.280 We're growing, we're going on, we have large demand. In fact, 1:08:20.320 --> 1:08:22.519 September is one of our larger months. Just give it 1:08:22.680 --> 1:08:25.320 back to school and back to office after the summertime 1:08:25.880 --> 1:08:27.320 that in New Year's as you can tell, the New 1:08:27.360 --> 1:08:30.040 Year's resolutions tend to be really heavy periods for us. 1:08:30.720 --> 1:08:33.120 What I can say is we have millions of subscribing customers. 1:08:33.240 --> 1:08:36.720 We're signing up thousands every single day. Demand has not 1:08:36.880 --> 1:08:39.360 waned on this side of the equation. We're really excited 1:08:39.400 --> 1:08:42.280 about the future. I actually get more excited about more 1:08:42.320 --> 1:08:45.200 of the players showing interest and actually saying, hey, look, 1:08:45.400 --> 1:08:48.040 this is cool. Understand a language. Play with a language. 1:08:48.240 --> 1:08:49.880 But when you want to go really learn a language, 1:08:50.160 --> 1:08:51.320 go to the providers you trust to. 1:08:51.920 --> 1:08:54.080 TAMU say millions, it'd be great if you get one millions, 1:08:54.080 --> 1:08:56.040 a lot different than ten million or twenty million. So 1:08:56.240 --> 1:08:58.439 just give us an idea if you could. And how 1:08:58.520 --> 1:09:01.240 much is corporate versus kind of individual and what are 1:09:01.280 --> 1:09:03.600 folks paying for a subscription and how long do they 1:09:03.640 --> 1:09:04.120 stay with you? 1:09:05.360 --> 1:09:05.559 Yeah? 1:09:05.600 --> 1:09:07.680 No, probably have over two thousand business clients B to 1:09:07.760 --> 1:09:09.240 B clients. So I can tell you that we just 1:09:09.320 --> 1:09:12.800 signed Inner Miami Football Club. They're using it for their players, 1:09:12.800 --> 1:09:15.479 their coaches, their teams in order to teach them the 1:09:15.600 --> 1:09:17.559 languages and what they need to be. We've created custom 1:09:17.600 --> 1:09:20.120 content for them as well, which gets really exciting. But 1:09:20.160 --> 1:09:22.600 I can tell you it's millions of consumer customers. And 1:09:22.600 --> 1:09:23.880 I can tell you it's more than one million, and 1:09:23.920 --> 1:09:25.760 it's more than two million, and it's more than three million, 1:09:25.840 --> 1:09:27.479 So it goes on up from there. 1:09:27.560 --> 1:09:32.120 Yeah. So, and what do people pay corporate versus individuals? 1:09:32.200 --> 1:09:32.400 Yeah? 1:09:33.640 --> 1:09:36.320 Yeah, So on individuals, there's a variety of packages. As 1:09:36.360 --> 1:09:38.320 you can imagine, there's a variety of price points. We 1:09:38.400 --> 1:09:40.679 have a lifetime price point that we can that users 1:09:40.720 --> 1:09:42.360 can subscribe for a life and they get all of 1:09:42.439 --> 1:09:44.519 the features and all of the things that we actually 1:09:45.320 --> 1:09:48.840 upsell to and then you know, there's monthly plans. It 1:09:48.960 --> 1:09:51.519 is the normal subscription model for what users want from 1:09:51.520 --> 1:09:52.240 any moment of time. 1:09:53.520 --> 1:09:55.519 All right, but give me an idea. So Tim wants 1:09:55.600 --> 1:09:58.719 to learn what language, Spanish? Spanish? 1:09:58.880 --> 1:10:00.200 Practice my Spanish better. 1:10:00.280 --> 1:10:02.080 He just wants to kind of learn Spanish, So give 1:10:02.120 --> 1:10:03.760 us an idea. So he signs up, and what would 1:10:03.800 --> 1:10:05.760 he be paying, like on a monthly basis or if 1:10:05.800 --> 1:10:07.679 you wanted the lifetime yes, yeah. 1:10:08.280 --> 1:10:10.880 Yeah, So if Tim you came to the site and 1:10:11.040 --> 1:10:13.720 signed up and downloaded the app, you could pay one 1:10:13.800 --> 1:10:16.160 hundred and ninety nine for the lifetime and then there's 1:10:16.160 --> 1:10:19.439 also disicates available, as all good subscription sites have. But 1:10:19.520 --> 1:10:21.559 then there's the monthly fee of twenty nine ninety nine 1:10:21.600 --> 1:10:22.479 that you could be paying as well. 1:10:22.880 --> 1:10:24.800 So okay, so why could do one n nine for life? 1:10:26.160 --> 1:10:28.320 Yeah, that's a lot less expensive than competitors such as 1:10:28.360 --> 1:10:30.600 du Lingo, which is you know that plus sum I 1:10:30.640 --> 1:10:33.040 think per year so no catch. 1:10:32.920 --> 1:10:35.920 Come on, no catch, So Tim signs up. I mean, 1:10:36.400 --> 1:10:38.800 and that's provided you stick around. No, I'm not trying 1:10:38.840 --> 1:10:40.920 to say, but right like you got to be around, right. 1:10:42.320 --> 1:10:42.519 Yeah. 1:10:42.600 --> 1:10:44.880 Look, with any language learning, there has to be a 1:10:45.200 --> 1:10:47.439 real commitment to it and you have to actually practice 1:10:47.479 --> 1:10:48.040 and utilize it. 1:10:48.160 --> 1:10:48.280 Right. 1:10:48.360 --> 1:10:51.960 But we see the life happens right the families. 1:10:52.040 --> 1:10:53.040 You know, I have kids. 1:10:53.400 --> 1:10:55.439 I'm learning German right now, right, I've moved to Berlin 1:10:55.520 --> 1:10:58.320 for the job. I knew very little German altogether. But 1:10:58.400 --> 1:11:00.200 what I could tell you is I have life about 1:11:00.200 --> 1:11:02.439 the kids of school. The kids have activities. I will 1:11:02.479 --> 1:11:04.479 pick up, I will put down. I will pick up 1:11:04.520 --> 1:11:05.000 and put down. 1:11:05.200 --> 1:11:10.040 But the one nine nights at life, okay, interesting. We 1:11:10.640 --> 1:11:13.080 I'm curious about do a lingo in the competition that 1:11:13.160 --> 1:11:16.400 you see there. I'm wondering if you've considered moving outside 1:11:16.439 --> 1:11:19.360 of languages. We use dual linguo at home, but more 1:11:19.439 --> 1:11:22.559 so for chess and reading with our kids. 1:11:23.200 --> 1:11:25.439 I don't know if it works, but it's great. 1:11:25.520 --> 1:11:28.360 The six year old has fun than we do for 1:11:28.680 --> 1:11:29.439 Spanish right now. 1:11:30.880 --> 1:11:33.720 Yeah, you hit the core market there, which is the 1:11:33.800 --> 1:11:36.600 games are great and the great learning transmission, especially for 1:11:36.680 --> 1:11:40.439 the younger audiences right now. Our specialty is language learning, 1:11:40.680 --> 1:11:43.720 where we're we really focus on that. We focus on 1:11:43.760 --> 1:11:46.439 the transmission of language learning. We want to make sure 1:11:46.520 --> 1:11:48.360 that you have the most effective means in order to 1:11:48.439 --> 1:11:50.960 go from a zero to one conversation. And the way 1:11:51.000 --> 1:11:53.599 we look at that is you feel confident walking into 1:11:53.680 --> 1:11:56.040 a room and being able to know that you're speaking 1:11:56.080 --> 1:11:58.160 the language in which you're looking to speak. So we 1:11:58.400 --> 1:12:02.000 focus all of our our linguistics, all of our teachers, 1:12:02.400 --> 1:12:04.920 all of the human centric pieces, and then we actually 1:12:05.000 --> 1:12:08.280 use AI as the tool to facilitate that in order 1:12:08.360 --> 1:12:10.800 to help make that happen faster. So that Will Speak 1:12:10.920 --> 1:12:12.720 is a good example of that, where we continue to 1:12:12.760 --> 1:12:16.080 allow you to practice speaking, continue to allow you the conversations. 1:12:16.320 --> 1:12:18.360 But we're hyper focused there. We really think that the 1:12:18.360 --> 1:12:20.360 games are going to lead to other people. We're focused 1:12:20.400 --> 1:12:21.559 on the languages you are. 1:12:21.720 --> 1:12:24.959 Okay, So that's a note like moving outside of languages. 1:12:25.120 --> 1:12:27.400 Okay, Yeah, languages are sweet spot. 1:12:28.080 --> 1:12:29.680 When it comes to the AI spend and something we 1:12:29.760 --> 1:12:32.400 talk about a lot, right, I'm curious about what you 1:12:32.479 --> 1:12:34.720 guys are spending. What are you spending it on? Is 1:12:34.720 --> 1:12:37.639 it on engineering? Talent? Is a data centers, is it content, 1:12:37.800 --> 1:12:38.559 is it something else? 1:12:39.960 --> 1:12:42.560 Yeah, we've been cashful positives since twenty eleven. It's a 1:12:42.600 --> 1:12:45.760 private company, so we're not out there raising capital. We 1:12:45.840 --> 1:12:48.480 are well funded. We're doing very well. Where we reinvest 1:12:48.560 --> 1:12:50.920 on our capex is. We look for engineers, we're looking 1:12:50.960 --> 1:12:54.240 on AI talent, We're looking at the infrastructure. We're investing 1:12:54.280 --> 1:12:56.759 in what's going to actually transmit and actually forward the future. 1:12:56.800 --> 1:12:59.160 We actually think that this is an exciting time to 1:12:59.280 --> 1:13:02.000 be really looking looking at product features with our proprietary 1:13:02.120 --> 1:13:04.559 data set and our proprietary motes that we have inside 1:13:04.560 --> 1:13:07.599 of our ecosystem. You know, we have hundreds of millions 1:13:07.640 --> 1:13:11.280 of lessons completed a year. That's very rich data to 1:13:11.400 --> 1:13:14.800 be taking into proprietary llms and data models and really 1:13:14.880 --> 1:13:17.360 working inside of the AI to work towards the most 1:13:17.360 --> 1:13:19.360 effective products in terms of transmitting the language. 1:13:19.560 --> 1:13:24.160 Are you at this point able to use AI to 1:13:24.280 --> 1:13:27.720 create language courses? Are you able to use AI to 1:13:28.000 --> 1:13:30.479 do what humans used to do in recent years? 1:13:31.880 --> 1:13:33.960 We actually married the two. You know, where the real 1:13:34.080 --> 1:13:37.719 sweet spot was is not in removing people from creating 1:13:37.760 --> 1:13:40.479 the languages. It's a facilitating the people to create the languages. 1:13:40.560 --> 1:13:40.840 So we do. 1:13:41.040 --> 1:13:43.560 Just answer your question directly, we do use AI, but 1:13:43.680 --> 1:13:46.080 we use it with the human centric piece. We've always 1:13:46.160 --> 1:13:48.439 found that our linguists and are also our teachers are 1:13:48.479 --> 1:13:51.360 the best to formulate all of the content so it 1:13:51.439 --> 1:13:54.720 can transmit better than anyone else and more effective. And 1:13:54.880 --> 1:13:57.200 so what we find is we marry the human with 1:13:57.400 --> 1:13:59.840 the AI tools, so we're using the blend of both roles. 1:14:00.080 --> 1:14:02.880 We haven't replaced jobs in order just to replace jobs. 1:14:03.479 --> 1:14:06.400 All right, I got one really really important last question 1:14:06.520 --> 1:14:08.600 for you, Tim, how's the German going? Sure, how's the 1:14:08.680 --> 1:14:09.280 German going? 1:14:09.439 --> 1:14:14.439 You know, I'm beschinspec and de Deutsch so babel every 1:14:14.520 --> 1:14:17.639 day very little, but I'm learning very slowly. 1:14:17.760 --> 1:14:19.640 So okay, maybe next time he's on we do the 1:14:19.680 --> 1:14:21.360 interview in German, we get Matt Miller in here. 1:14:21.600 --> 1:14:23.360 Oh I'm on, I'm game. 1:14:23.560 --> 1:14:26.240 Matt would definitely do that really really well. All right, Tim, 1:14:26.280 --> 1:14:29.639 thanks so much. Fun to talk with you and get 1:14:29.640 --> 1:14:31.439 some time and hear what you guys are doing, especially 1:14:31.479 --> 1:14:33.600 when it comes to AI to incorporated and get in 1:14:33.880 --> 1:14:37.679 Tim allan, chief executive officer of Babbel, joining us from Berlin, Germany. 1:14:38.560 --> 1:14:43.840 This is the Bloomberg Business Week daily podcast available on Apple, Spotify, 1:14:44.040 --> 1:14:47.759 and anywhere else you get your podcasts. Listen live weekday 1:14:47.760 --> 1:14:51.479 afternoons from two to five pm Eastern on Bloomberg dot Com, 1:14:51.840 --> 1:14:55.679 the iHeartRadio app tune In, and the Bloomberg Business app. 1:14:56.000 --> 1:14:58.759 You can also watch us live every weekday on YouTube 1:14:58.960 --> 1:15:01.080 and always on a bloombergy terminal. 1:15:08.040 --> 1:15:08.519 Mm hmm