Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's go to one of our favorite tech investors. Kathy Would, founder,
Speaker 2: CEO and CIO of ARC invest joins us around the
Speaker 2: table to talk about this world. Kathy, we want to
Speaker 2: get into your tech investments, we want to get into
Speaker 2: your views, but we got to put this question to
Speaker 2: you around H one B visas and this new application fee.
Speaker 3: What do you make of it? What's the impact?
Speaker 1: Well, again, this is part of President Trump's negotiating process,
Speaker 1: and I think he's negotiating quite intensively right now with India.
Speaker 1: I think India would be have the biggest impact here
Speaker 1: in terms of, you know, workers in the United States.
Speaker 1: So I think this is a little bit like tariffs,
Speaker 1: and it's going to capture all the headlines and it's
Speaker 1: going to really take the oxygen out of the room.
Speaker 1: Because there's a lot of really good fundamental activity happening
Speaker 1: in the United statesating relating to policy.
Speaker 2: Well, a lot of that, a lot of the innovation,
Speaker 2: a lot of that Silicon Valley kind of goodness really
Speaker 2: comes from the talent and the labor pool.
Speaker 3: We've been talking about this for quite some.
Speaker 2: Time in terms of how do you train your engineers.
Speaker 2: You train Americans to do a lot of what Silicon
Speaker 2: Valley depends on foreign workers to do. Does this impact
Speaker 2: innovation in Silicon Valley and doesn't impact megacap tech stocks tech.
Speaker 3: Companies that are dependent on this.
Speaker 1: Well, from what we know of this administration, they ultimately
Speaker 1: want to keep students who have been educated in the US,
Speaker 1: foreign students that have been educated in the US in
Speaker 1: the US. So really, I just think this is part
Speaker 1: of the negotiation with India and that when all is
Speaker 1: said and done, we're probably going to loosen up the
Speaker 1: H one visa visa program.
Speaker 2: But in the short term, is that going to have
Speaker 2: an impact on tech companies.
Speaker 1: I think what it's going to do is force tech
Speaker 1: companies to do what they're already doing and that has
Speaker 1: become more efficient. And the other thing to note is, uh,
Speaker 1: you know, coding is changing dramatically. The number of coding
Speaker 1: jobs and openings has dropped dramatically. Because of AI, all
Speaker 1: of us can become coders. You've heard a vibe good.
Speaker 2: That's a lot of faith gout.
Speaker 1: You know, this is natural language programming generative AI is
Speaker 1: prompting chat GBT to get your programs going.
Speaker 3: We can all do that.
Speaker 1: That's simplifying it, but I do think it gives you
Speaker 1: a sense of the kind of productivity, that possibilities that
Speaker 1: are possible, that that will impact these tech companies longer term.
Speaker 4: Come takes me on to my next question. Is Chinese
Speaker 4: tech getting out perform US tech from a stock market
Speaker 4: point of view over the next year.
Speaker 1: Well, you know, the valuations are quite different. They're they're
Speaker 1: roughly half of what they are in the United States.
Speaker 1: We're very impressed at how quickly China is moving here.
Speaker 1: I think the Deepseek moment gave us an opportunity to
Speaker 1: understand that China is very focused on the open source
Speaker 1: software movement.
Speaker 3: We forced them into that.
Speaker 1: US did because our company stopped selling into China out
Speaker 1: of fear of IP theft. So they've gone the open
Speaker 1: source route and are moving very quickly.
Speaker 3: I think competition is a good thing.
Speaker 1: It's a good thing for the United States, it's a
Speaker 1: good thing for China. I also think what's good about
Speaker 1: China recently is it is focused now on the idea
Speaker 1: that maybe commoditization has gone too far, especially in the
Speaker 1: electric vehicle space, so called involution. They are thinking that
Speaker 1: means whatever that means, so they're thinking that, and it
Speaker 1: is true it is expensive to develop these large language models,
Speaker 1: even though they say it's not a lot of pre
Speaker 1: training that takes place before you get a deep seek
Speaker 1: And if you're not profitable as a company, you're you're
Speaker 1: going to have a lot of trouble competing in that space.
Speaker 1: So I think even that is changing, which is interesting.
Speaker 4: When does AI become profitable? When can I assume a
Speaker 4: margin on AI? And I'm talking about the large language
Speaker 4: model companies here, huge amount of investment going in at
Speaker 4: the moment, Kathy and everybody scratching their head wondering does
Speaker 4: all of it deliver? Does all of it produce a
Speaker 4: rate of return? Are we going to have to see
Speaker 4: some sort of Subbuterian sort of clearing of the clearing
Speaker 4: of the market at some point? What does that look like?
Speaker 4: What is your sense of kind of where we are
Speaker 4: at the moment.
Speaker 1: I think that the number of companies competing, truly competing
Speaker 1: in the large language model space has shrunk.
Speaker 3: These aquihires that.
Speaker 1: Open AI and meta that's all about you know, other
Speaker 1: companies not making it so.
Speaker 4: That the prices is already solved.
Speaker 3: The process has.
Speaker 4: Started, but do you think is going to win?
Speaker 3: Well, I think the.
Speaker 1: Big four right now are Open, Ai, Anthropic, XAI, and
Speaker 1: Gemini those four, and we don't know if this is
Speaker 1: going to be a four horse race or a two
Speaker 1: horse race. Let's see over time how they leapfrog one another,
Speaker 1: and they are doing that regularly.
Speaker 3: It's very interesting.
Speaker 1: But you ask about profitability companies that are not hiring people,
Speaker 1: the number of new job openings is falling. They are
Speaker 1: already enjoying huge productivity increases. That's why margins have been
Speaker 1: sustained even with the tariff hit recently. In fact, tariff's
Speaker 1: being put in place. The counter to that is, okay,
Speaker 1: we have to cut costs.
Speaker 3: And that has been and.
Speaker 1: They're willing to pay twenty dollars a month, some are
Speaker 1: willing to pay two hundred dollars a month, and those
Speaker 1: who are replacing PhDs, they're willing to pay two thousand
Speaker 1: dollars a month or more.
Speaker 3: And so as long.
Speaker 1: As these companies get that signaling that companies are willing
Speaker 1: to pay, they will continue to invest in this race.
Speaker 5: Kathy, you say competition is a good thing. We've talked
Speaker 5: about the landscape. Let's talk about you. So there's a
Speaker 5: lot more tech, innovation, robotics, ETFs out there.
Speaker 1: Now, how do you plan to compete? It's a great question, Lizzie.
Speaker 1: I think our differentiation is our research. We have what
Speaker 1: I believe is the first sharing economy company in the
Speaker 1: asset management space. When it comes to research, we give
Speaker 1: our research away. We have given our Tesla model away
Speaker 1: for example, approach, yes, the open source. From that point
Speaker 1: of view, I think we have a very loud voice
Speaker 1: out there when it comes to innovation, and I think
Speaker 1: some of the calls we've made start in twenty fifteen
Speaker 1: with bitcoin and at the same time roughly Tesla, Pallenteer, Coinbase,
Speaker 1: Nvidia in the earliest days, we were there when most
Speaker 1: people thought it was a PC gaming chip company. So
Speaker 1: I think we've got a loud voice. You're asking about
Speaker 1: conversion because we have these other companies out there which
Speaker 1: with huge distribution. Well thanks to Bloomberg, you know, we
Speaker 1: are able to share with you our research, and it's
Speaker 1: research that others aren't doing in quite the same way.
Speaker 5: But when you look at the numbers arcs of about
Speaker 5: forty percent this year, flows are absolutely flat. What can
Speaker 5: you do about that? If great performance just isn't drawing
Speaker 5: people in.
Speaker 3: Well.
Speaker 1: What's interesting about that is most active managers are outflowing today,
Speaker 1: So the fact that we're flat is very interesting. And
Speaker 1: what's more interesting to us and very gratifying having entered
Speaker 1: UK and Europe, is that we are about to cross
Speaker 1: one billion dollars here in Europe and the UK, which
Speaker 1: in two years time we acquired rise in two years ago,
Speaker 1: is very significant.
Speaker 3: I think.
Speaker 1: I think here in Europe a quarter of our reader base,
Speaker 1: even before we launched was in Europe and the question
Speaker 1: was when are you coming to Europe. So we are
Speaker 1: getting the flows here in the UK and Europe, and
Speaker 1: we're really excited about the momentum behind those flows.
Speaker 2: Kathy, I want to get your take on a deal
Speaker 2: that was preliminarily announced on Friday between the United States
Speaker 2: and China when it comes to TikTok, and I think
Speaker 2: you're a unique person to have this conversation with given
Speaker 2: your early exposure to Chinese tech stocks. TikTok has now
Speaker 2: been We're still waiting for all the details, but we
Speaker 2: understand is being given seven board seats to Americans. There's
Speaker 2: a question of a licensing agreement. There's a question of
Speaker 2: some of the holders, including the Murdos or Larry Ellison,
Speaker 2: among others. What kind of precedent does that set for
Speaker 2: you as someone who is exposed to Chinese tech. Is
Speaker 2: this the new norm or is this an idiosyncratic story.
Speaker 1: I think this is idiosyncratic. I think during our election
Speaker 1: President Trump promised that he would be open minded to
Speaker 1: keeping TikTok us. It's so important to the young people
Speaker 1: and many more people in the United States. So I
Speaker 1: do think it's a one off, special case. I also
Speaker 1: think it's a part of a broader negotiation with China.
Speaker 1: I think if anyone can re enact a Nixon in
Speaker 1: China moment, it is President Trump. He has been toughest
Speaker 1: on China. Everyone trusts that he will strike a good deal.
Speaker 1: In everyone in the US trust he will strike a
Speaker 1: good deal with China, and I think we're probably going
Speaker 1: to get more better than expected news longer term. You'll
Speaker 1: hear a lot of saber rattling in the meantime, but
Speaker 1: this is one indication of that.
Speaker 2: If TikTok a good investment, if the US has more
Speaker 2: hold over it, and counter to that is byedance, a
Speaker 2: good investment. If this is a deal that's being created.
Speaker 1: You know, the one question we always have when there
Speaker 1: is a breakup like that is does a company lose
Speaker 1: some of the network effect in some way? Now they
Speaker 1: were already supposed to be separate China and the US.
Speaker 3: We'll see, We'll see.
Speaker 1: TikTok has been an amazing company. Has taught us a lot.
Speaker 1: This is what I mean about Chinese competition. They taught
Speaker 1: our companies a lot. I will say. I will say
Speaker 1: that a company called Vine in the US was the precursor,
Speaker 1: and Twitter at the time bought it was not able
Speaker 1: to activate it in the way TikTok has.
Speaker 3: TikTok ran away with that. You would you want a
Speaker 3: piece of it?
Speaker 1: You know, we have to do a deeper dive when
Speaker 1: we get into the data room.
Speaker 4: Kryptos down a little bit. Bitcoin's selling off this morning,
Speaker 4: like these kind of levels of you buya Rosilla.
Speaker 1: Well, we've been increasing our exposure generally to the digital
Speaker 1: asset space. I think Bitcoin has been the leader of
Speaker 1: the back. The others are following. Ether has followed now
Speaker 1: Solona and hyper liquid is a new one, the new
Speaker 1: kid on the block. We think this is three revolutions
Speaker 1: in one a monetary revolution, a financial services revolution, and really,
Speaker 1: in a much broader sense, a digital property rights. Immutable
Speaker 1: property rights online never happened before, only possible because of
Speaker 1: blockchain technology.
Speaker 4: Okay, down by a round, cryptozed down big coin is
Speaker 4: that around two? Said this morning Kathy grac very much. Indeed,
Speaker 4: Kathy Wood, founder and CEO of ARC invest