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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live

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Speaker 1: from coast to coast with Caroline Hide in New York

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Speaker 1: and ever Low in San Francisco.

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Speaker 2: This is Bloomberg Tech coming up.

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Speaker 3: Open AI execs U turn and David Sachs says no

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Speaker 3: on a federal backstop to fund AI infrastructure.

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Speaker 4: Markets react, Plus Mosk's one trillion dollar compensation package gets

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Speaker 4: approved by TESLRA investors seventy five percent of votes cast

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Speaker 4: in favor.

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Speaker 5: We dig into the bold new promises and we.

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Speaker 3: Break down more tech earnings with the CEOs of a

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Speaker 3: firm and draftings.

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Speaker 4: Later this hour, we go to these markets, though in

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Speaker 4: sell off mode ed on the day and on the week.

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Speaker 4: Over the past five days, we've shed more than four

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Speaker 4: percent in market capitalization. It is the worst weeks in

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Speaker 4: April of the NASDAT.

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Speaker 5: One hundred, and anxiety is.

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Speaker 4: Really building when it comes to AI infrastructure and whether

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Speaker 4: people have got the money you're digging into it.

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Speaker 3: Yeah, here's a story that's played out driving markets. We

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Speaker 3: begin with open AI and Wall streaks, anxiety that followed

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Speaker 3: fresh comments about potential government financing in.

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Speaker 2: The AI race.

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Speaker 3: Speaking at The Wall Street Journal's Tech conference This Wednesday,

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Speaker 3: Open Ai CFO Sarah Fryer called investors' attention after hinting

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Speaker 3: at a potential government backstop for AI chip investment, to

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Speaker 3: remark interpreted by some as Friar signaling open Ai had

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Speaker 3: federal guarantees for the costly infrastructure behind large AI models.

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Speaker 3: David Sachs the White House, AI and cryptos are seem

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Speaker 3: to be paying attention and posted on X Thursday there

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Speaker 3: will be no federal bailout for AI. The US has

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Speaker 3: at least five major frontier model companies. If one fails,

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Speaker 3: others will take its place. That in turn prompted open

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Speaker 3: ai CEO Sam Altman to step in and clarify on X, writing,

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Speaker 3: we do not have or want government guarantees for open

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Speaker 3: ai data centers, emphasizing that the company is not seeking

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Speaker 3: a federal safety net. Let's get the latest. Bloomberg's AI

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Speaker 3: editor Seth Figgerman joins us, Now, where do we stand?

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Speaker 3: This is a multi day story, markets paid attention to it.

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Speaker 2: What's the net result? At least from open AI's perspective.

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Speaker 6: Funny here, Ergre, is that really the intention behind Sarah

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Speaker 6: Friar's overall remarks of that event was to kind of

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Speaker 6: calm people's nerves about what has felt like growing anxiety

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Speaker 6: this week on the markets about AI spending, and instead

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Speaker 6: the takeaway was what felt like an off the cuff

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Speaker 6: and vagrant mark that just heightened those concerns. I think

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Speaker 6: where things currently stand as the company has repeated up

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Speaker 6: and down that there's no discussions or plans for any

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Speaker 6: kind of federal backstop. Instead, they're hinting at, well, maybe

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Speaker 6: there's a role for government to invest in its own

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Speaker 6: AI infrastructure that might somehow reduce some of the capital

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Speaker 6: burdens here or other indirect ways in which government could

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Speaker 6: help the wider market. But advice to say, the message

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Speaker 6: that she intended to deliver seems to have been completely lost.

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Speaker 4: Sam Altman went to great lengths to try and reverse

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Speaker 4: or to correct in whatever way make clear, and talked

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Speaker 4: about maybe chip manufacturing, if they went into fabrication of chips,

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Speaker 4: that might be an area that they lean on for

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Speaker 4: government input. But what's interesting is we then look at

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Speaker 4: that piece from sam Altman saying that basically they've got

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Speaker 4: one point four trillion dollars of commitments. This is where

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Speaker 4: the market's trying to rab its head around how can

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Speaker 4: they afford that, he's saying, they feel good about their

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Speaker 4: prospects for revenue growth.

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Speaker 6: They've big on the defense about this a little bit

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Speaker 6: in recent days, including on a recent podcast where Altman's

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Speaker 6: seemed taken off guard to even be asked that question.

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Speaker 6: What he's trying to stress here is that our revenue

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Speaker 6: is growing much faster than anyone has expected, you know,

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Speaker 6: on pace for twenty billion and annualized run ray, and

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Speaker 6: that we expect that these commitments over a seven or

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Speaker 6: eight year time period are more than achievable based on

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Speaker 6: that revenue growth that I think the overall market is

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Speaker 6: looking at AI spending generally, Mega shares had their worst

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Speaker 6: four day routes since chatgybut launched three years ago. You know,

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Speaker 6: chipstocks are seeing slump right now on valuation concerns. Michael

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Speaker 6: Burry is getting out there the one predicted the housing

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Speaker 6: bubble and and basically pointing out to our graphic on

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Speaker 6: uncircular investments that's center around opening eye across the industry

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Speaker 6: and the markets. There's just really heighten concerned how achievable

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Speaker 6: and sustainable the spending is.

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Speaker 4: Megs sethimgan breaking all down. We thank you so much

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Speaker 4: happy weekend. Now we're also watching shares of Nvidia. That's

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Speaker 4: after its CEO Jensen Wang said that the company isn't

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Speaker 4: in active discussions to sell its Blackwell AI chips to

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Speaker 4: Chinese firms, waving off that speculation that it's trying to

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Speaker 4: engineer a return to the world's largest chip maker market. Indeed,

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Speaker 4: Quang explained that he merely intended to point out China's

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Speaker 4: prowess in AI when he said, quote China will win

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Speaker 4: the US China AI race ed.

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Speaker 3: Let's look at shares of Tesla down almost four percent.

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Speaker 3: More than seventy five percent of votes from shareholders were

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Speaker 3: in favor approving the one trillion dollar compensation package for

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Speaker 3: Elon Musk that is over ten years and has a

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Speaker 3: very strong set of mandatory milestones he needs to achieve

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Speaker 3: to unlock the comp but also the voting power that

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Speaker 3: comes with it. Let's talk about that with Alexandra Mertz.

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Speaker 3: She's the CEO of LLENF Investor Services, but also a

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Speaker 3: Tesla shareholder who discusses her views about Tesla on social

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Speaker 3: media under the handle Tesla boomer Mamma Mertz was present

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Speaker 3: at the shareholder meeting last night. Was also acknowledged by

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Speaker 3: other shareholders who are reading out a proposal for Tesla

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Speaker 3: to invest in Xai, which we'll get to.

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Speaker 2: Alexandra.

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Speaker 3: This paves a way for Elon Musk to take his

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Speaker 3: stake in Tesla to twenty five percent over the course

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Speaker 3: of the ten years. Could you just explain what the

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Speaker 3: sentiment was like last night into this morning about how

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Speaker 3: comfortable investors feel handing over that control to Elon Musk

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Speaker 3: and the belief that you do or do not have

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Speaker 3: that he can hit the milestones that have been set

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Speaker 3: for him by the.

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Speaker 7: Oh I'm very confident that he will hit the milestones.

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Speaker 7: Has shown us before what is possible. Nothing's never easy,

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Speaker 7: but if you set goals to Elon, he's very competitive.

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Speaker 7: He's obviously, in my views, the best executor there is

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Speaker 7: on this planet, and.

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Speaker 5: He will execute.

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Speaker 7: So that's not the question. The question is whether we

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Speaker 7: would get sufficient retail and institutional shareholder support, and we

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Speaker 7: should it. Seventy five percent is astoundingly high. It is

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Speaker 7: higher than the previous compensation packages votes and revotes in

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Speaker 7: twenty eighteen and twenty twenty four. So this was a

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Speaker 7: clear victory. I am so grateful for everybody who voted.

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Speaker 7: I would like to see the twenty five percent that

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Speaker 7: voted against it, because how can you be against this

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Speaker 7: if you are a shareholder.

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Speaker 2: But that's more of the topic.

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Speaker 3: For example, we had the investment director of Calper's on

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Speaker 3: the show yesterday. CalPERS voted no, and the rationale was

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Speaker 3: that in aggregate they saw Elon Musk and board members

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Speaker 3: already having sixteen percent of the company and.

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Speaker 2: The issue of key man risk.

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Speaker 3: So if Musk does get there right and achieves twenty

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Speaker 3: five percent stake, what if he something happens to him,

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Speaker 3: or what if something distracts him XAI SpaceX for example.

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Speaker 3: That was the concern they had. Why don't you share

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Speaker 3: the concern?

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Speaker 7: Well, first of all, that's the same concern at sixteen

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Speaker 7: percent or twenty five percent, right, So that Culpers argument

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Speaker 7: is just nonexistent, even though it's a nice world word salad.

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Speaker 7: There is no doubt in my mind that that's what

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Speaker 7: they try to do. It's not an issue about whether

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Speaker 7: he as a key man.

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Speaker 2: Is a risk.

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Speaker 7: To test that he is the same way he is

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Speaker 7: the key person, he's also the key man risk. That

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Speaker 7: is just a fact and actually part of the structure

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Speaker 7: of this compensation plan addresses that as the last two

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Speaker 7: tranches are linked to a succession plan, to a more

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Speaker 7: formal succession plan, that what is currently in place. So

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Speaker 7: sixteen or twenty five percent, that's not a question. But

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Speaker 7: at twenty five percent, Elon is sufficiently strong to prevent

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Speaker 7: activist shareholders trying to take over, bringing board members in

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Speaker 7: that are not aligned with Tesla's mission. And I think

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Speaker 7: that is the key point. Retail has always stood with

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Speaker 7: Elon and has always been very active. Knows what this

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Speaker 7: company is about, so that is not the concern. But

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Speaker 7: it is institutional institutional funds that are in Tesla, despite

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Speaker 7: the fact that they don't really like the company, don't

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Speaker 7: understand the company, vote against interest of the company, and

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Speaker 7: that can become stronger just by the pure mechanism of

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Speaker 7: index funds of political activism. And he wants to make

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Speaker 7: sure that that can be prevented. And he's right, and

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Speaker 7: the fact of being in Texas helps a lot. But

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Speaker 7: him getting to twenty five percent obviously.

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Speaker 5: Is a good shield.

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Speaker 4: But that's exactly the worry is that he does get

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Speaker 4: the twenty five percent control and can fend off activism

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Speaker 4: that might be in some way trying to course correct

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Speaker 4: as others feel outside of Tesla. Why is that You're

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Speaker 4: saying it's a word salad, But for many that's exactly

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Speaker 4: the fear that he has control over what he calls

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Speaker 4: a robot army.

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Speaker 7: I understand that, I understand that there is a fear.

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Speaker 7: But ask those activists what is their idea about Tesla?

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Speaker 7: What is their idea about the better world? They never

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Speaker 7: talk about that. They talk about the fact that they

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Speaker 7: fear Elon is too powerful. They never talk about what

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Speaker 7: Tesla is all about. I never hear a culpers or

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Speaker 7: god forbid, a Klaus lewis Iss or the New York

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Speaker 7: Controller talk about the mission of Tesla, talk about where

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Speaker 7: Tesla is going. And you know, I rather, as a shareholder,

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Speaker 7: have Elons have the keys to an army of bots

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Speaker 7: than anybody else, including the four companies I just mentioned.

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Speaker 5: We'll put that too coveries.

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Speaker 4: I feel that he in many ways was trying to

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Speaker 4: articulate that they are about the long term vision, whether

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Speaker 4: it's about electric vehicles, whether it's about supporting the climate,

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Speaker 4: whether it's about humanoid robots. They just don't think that

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Speaker 4: perhaps another CEO couldn't achieve really significant phenomenal growth.

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Speaker 5: For this business.

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Speaker 4: Even if it wasn't Enon Musk, Why is he alone

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Speaker 4: the only person who could meet these milestones and drive

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Speaker 4: optimists to.

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Speaker 5: Be on the moon on Mars?

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Speaker 4: I mean that seemed to be the next area of growth.

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Speaker 4: Was that what you wanted to hear that we're going

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Speaker 4: to have optimists doing surgery but also eventually going to Mars.

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Speaker 7: Yes, we should do. We should want to hear that.

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Speaker 7: We also were absolutely excited thinking about chip manufacturing. I

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Speaker 7: don't think that has really gotten through yet to the press,

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Speaker 7: and I Holp Bloomberg is going to talk about it.

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Speaker 7: If Tesla goes into chip manufacturing, can you imagine? So

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Speaker 7: I would like to ask culpers, show me one other

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Speaker 7: CEO would it even have for what Elon has accomplished?

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Speaker 7: If you show me one where you would have the

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Speaker 7: feeling that that person could do something even comparable. I

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Speaker 7: am ready to sit down and discuss it with him,

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Speaker 7: but we've got to wait for a long time.

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Speaker 3: Alexandro I would push back a little bit because I

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Speaker 3: wrote the story about Elon's comments from the Earning School

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Speaker 3: about clarifying the Samsung TSMC relationship, and I sent the

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Speaker 3: headline last night about his comments on chip manufacturing. So

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Speaker 3: I'm going to look into it. I need to ask

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Speaker 3: you about Xai. You were in the room and were

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Speaker 3: waiting on the eight K. What appeared to happen was

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Speaker 3: Brendan Arhart, the corporate secretary, say, there were more four

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Speaker 3: votes than against, but a very large number of abstentions,

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Speaker 3: and so they're basically reserving the right to wait, look

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Speaker 3: at the non binding proposal and go back to it.

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Speaker 3: Is that your understanding of where things stand, and also

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Speaker 3: just your reaction to it because you were involved in

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Speaker 3: the process of getting that proposal on the docket.

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Speaker 7: Yes, yes, well, thank you very much. Yes, very good question.

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Speaker 7: And as you point out, we haven't seen the eight

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Speaker 7: K yet, so I don't have the underlying numbers, but

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Speaker 7: I know exactly what happened. The's recommendation was neutral. They

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Speaker 7: did not give a recommendation. Lots of retail shareholders just

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Speaker 7: follow blindly the board's recommendation. So by going after the

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Speaker 7: board's recommendation instead of voting none, they abstained. That is

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Speaker 7: the logical way, and that's actually how it is automated.

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Speaker 7: We had this issue with a Norwegian bank who gave

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Speaker 7: their shareholders only a certain limited number of options to vote,

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Speaker 7: and then the shareholders from Norway, which are very numerous interests,

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Speaker 7: I could not vote for question six. They were abstaining.

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Speaker 7: So abstaining was also just a consequence of the way

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Speaker 7: the proxy was laid out, and there was no better choice.

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Speaker 7: It was a bad choice to not be able to

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Speaker 7: give a guidance, but there was another choice. Because what

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Speaker 7: the board is trying to do here, and we have

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Speaker 7: to understand why that is, is to stay out of

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Speaker 7: it until they get a clear mission from the shareholders.

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Speaker 7: Why are they doing that well, because it is a

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Speaker 7: conflicted situation. Elon is the key man in both Xai

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Speaker 7: and Tesla, and as Solar City has shown us, it

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Speaker 7: is always difficult to invest from one company A into

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Speaker 7: a company B that are both led by the same

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Speaker 7: by the same key person. So the board tries to

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Speaker 7: stay out of it until there is a clear mission.

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Speaker 7: Now we have to see the eight K numbers to

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Speaker 7: understand whether this is now a clear call from shareholders

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Speaker 7: to do it. If there were so many stains, it

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Speaker 7: may not be. But you also have to know that

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Speaker 7: this shareholder proposal number seven was always only advisory. It

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Speaker 7: was never that this vote would have been an automatic investment.

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Speaker 7: If the board now convinced that they want to invest,

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Speaker 7: we will certainly have another shareholder vote on the exact

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Speaker 7: proposal of investment, not just on the general idea.

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Speaker 4: Pushing us forward and with great energy after what was

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Speaker 4: a pretty extraordinary day the annual General Meeting yesterday. You

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Speaker 4: were there, We saw all the dancing. Alexandra maz We

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Speaker 4: love catching up with you. Thank you, a shareholder known

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Speaker 4: non social.

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Speaker 5: As Tesla Booma Mamma.

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Speaker 4: Now coming up, Grand Theft Auto six, it hits another

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Speaker 4: bump in the road. We'll discuss why the latest title

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Speaker 4: in the popular video game franchise is being delayed again.

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Speaker 5: This is a Bloomberg Tech.

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Speaker 4: Srees of Take two having their worst day since February

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Speaker 4: twenty twenty four, down almost eight percent. Yesterday, the video

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Speaker 4: game publisher pushed back the release of Grand Theft Auto

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Speaker 4: Six again until November twenty twenty six. Let's walk through

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Speaker 4: this of Bluebog's games reporter Jason Schreier. Basically, it's going

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Speaker 4: to be a year late. Now, Why this second pushback?

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Speaker 4: What's going on with Rock Start?

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Speaker 2: Yeah?

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Speaker 8: I mean video games are complicated. To make this is

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Speaker 8: going to be one of the biggest video games of

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Speaker 8: all time, will probably be the best selling entertainment product

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Speaker 8: of all time, and so the pressure is very high

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Speaker 8: Rockstar and take two. They want this game to be

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Speaker 8: as perfect as part. They wanted to hit ninety five

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Speaker 8: plus in Metacritic, that's the review score aggregator. And yeah,

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Speaker 8: in these games the.

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Speaker 3: Time I get that, you know, wanting to hit ninety

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Speaker 3: five plus on Metacritic. What you just said about it

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Speaker 3: probably being the biggest entertainment title to sell of all time,

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Speaker 3: go back to GTA five and explain the data that

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Speaker 3: tells us this might be worth waiting for. From Take

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Speaker 3: Two's perspective, they want to get this right. From a

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Speaker 3: sales point of view.

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Speaker 8: Yeah, there's a simple number here, which is that GTA five,

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Speaker 8: the last game in the series, which was released in

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Speaker 8: twenty thirteen, has sold two hundred and twenty million units,

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Speaker 8: which I mean, that's more. This one game alone has

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Speaker 8: sold more than most franchises Final Fantasy Assassin's Creed. This

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Speaker 8: makes it the second best selling game of all time,

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Speaker 8: only only second to Minecraft, which was released on phone.

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Speaker 8: So that's kind of a different a different playing field.

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Speaker 8: So yeah, I mean, the sixth are very high. And

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Speaker 8: again I think that people tend to underestimate how difficult

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Speaker 8: it is to make games, especially a game as big

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Speaker 8: and ambitions and technologically impressive as this one. I mean,

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Speaker 8: we've seen the trailers, We've seen what.

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Speaker 2: It looks like.

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Speaker 8: It looks more realistic than any game we've ever seen.

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Speaker 8: It's going to have a huge open world. The people

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Speaker 8: at Rucks are just are still working on it, still

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Speaker 8: making new stuff for it, still building this world and

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Speaker 8: fixing bugs and ed. You know well that games like

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Speaker 8: Cyberpunk have come out in recent years and needed more

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Speaker 8: time in the oven and came out too early, and

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Speaker 8: that is just disastrous for the companies involved.

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Speaker 3: City and they needed patch after patch. But I still

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Speaker 3: went back and played it from the start after the patch.

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Speaker 3: Bloombergs Jason Schreyer, thank you very much. Okay, Sticking with gaming,

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Speaker 3: A quick update. In the Google versus Epic Game case,

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Speaker 3: a federal judge is withholding approval of Google's anti trust

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Speaker 3: settlement with Epic Games. The company says it will improve

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Speaker 3: the distribution and monetization of apps on Android foes, but

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Speaker 3: US District Judge James Donato says he wants to look

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Speaker 3: closer at the terms of a deal first to make

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Speaker 3: sure it benefits consumers and boosts competition.

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Speaker 2: Caro.

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Speaker 5: Meanwhile, we've got a lot still to digest.

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Speaker 4: We speak with a firm holding CEO Max Levchin on

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Speaker 4: the lates's earnings results.

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Speaker 5: That's a bit big tech.

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Speaker 3: Shares of a firm off session highs up about five

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Speaker 3: percent at one point in the session up almost twelve percent.

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Speaker 3: The company posting a first quarter earning speed, But really

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Speaker 3: the focus is on it raising its twenty twenty six

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Speaker 3: forecast for gross merchandise volume, but it sets us up

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Speaker 3: for an incredible fiscal twenty six. Joining us on set

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Speaker 3: is Max Levchin at firm CEO. There's a lot of emphasis,

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Speaker 3: at least from Bloomberg Intelligence in house on card and

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Speaker 3: that driving volumes. But what we've learned across this early

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Speaker 3: period in your domain is it's worth spending a minute

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Speaker 3: on the underlying behaviors of your consumers that drove this

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Speaker 3: growth in the quarter.

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Speaker 9: What are you seeing so despite the vibe session we're

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Speaker 9: seeing in a market today in the last few days,

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Speaker 9: a firm's consumer is really healthy. They're shopping, they're buying,

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Speaker 9: they're paying their bills. They're energized by the upcoming holidays.

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Speaker 9: I think, frankly, the rumors of the American consumer's death

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Speaker 9: are greatly exaggerated.

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Speaker 3: It's interesting because, like different segments of the technology sector

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Speaker 3: tell different stories right now, is there a specific product

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Speaker 3: category or method of spending that is is demonstrating that

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Speaker 3: more than others.

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Speaker 9: I think we are quite unique in the sense a

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Speaker 9: firm's brand A promise really is use us when it

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Speaker 9: matters to you, because you'll have total control and great

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Speaker 9: degree of transparency. And as the outside pressures, you know,

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Speaker 9: even the stories you read wagh people down, it's easy

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Speaker 9: to say, you know what Affirm is at least one

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Speaker 9: thing that's going to keep me clear and in good control.

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Speaker 9: And so we think people are coming to us a

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Speaker 9: little bit more. Certainly, we saw great demand for our

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Speaker 9: recent zero day promotion, but you know, I think so far,

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Speaker 9: so good, at least in the Affirm consumer world.

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Speaker 4: The funny thing is max sometimes the market likes to

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Speaker 4: see use of Affirm or maybe more standard by now

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Speaker 4: pay later offerings as the VIBE session.

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Speaker 5: Is that not the case?

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Speaker 9: You know, we have twenty four more than sway from

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Speaker 9: a million active consumers last quarter. At this point, it's

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Speaker 9: really dangerous to just say, oh, the affirm consumer is

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Speaker 9: doing X or Y. We have quite a number of segments.

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Speaker 9: Folks that are using our zero pcent promotions are typically

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Speaker 9: leaning into just frankly, saving money, getting a great deal.

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Speaker 9: Folks that favor longer terms to repay care a lot

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Speaker 9: less about total costs, very much care about individual calf flow,

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Speaker 9: and so depending on sort of which segment you look at,

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Speaker 9: you'll see a slightly different behavior. I think the unifying

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Speaker 9: factor is they're all getting a really clear deal. There

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Speaker 9: are no late fees, there's no gimmis, there's no gotchas,

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Speaker 9: and that that's.

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Speaker 4: The way they keep coming back to us and why

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Speaker 4: you keep seeing growth merchandise volumes going up and to

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Speaker 4: the right. What's interesting is your partnership model and it

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Speaker 4: really works what Amazon, Shopify, Apple, Costco.

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Speaker 5: Where else do the partnerships make sense?

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Speaker 9: Max, you know, to be honest, everywhere. We just announced

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Speaker 9: a really strong push into services. So for a long

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Speaker 9: time you would think of buying out palliator as a

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Speaker 9: thing you buy and pay over time, people buy more

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Speaker 9: than things. They remodel their kitchens, they refurbish various parts

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Speaker 9: of their house and which announced the great partnership with

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Speaker 9: Service Titan are a variety of other platforms, so we

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Speaker 9: partner very widely because this model really works for any purchase,

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Speaker 9: you know, anything from a couple hundred dollars all the

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Speaker 9: way out of two thousands.

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Speaker 5: What about you leaning into the moment?

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Speaker 4: There is a lot of competition and smaller scale, and

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Speaker 4: many times you stand out because they're more dependent on

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Speaker 4: late fees and other such charges.

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Speaker 5: Would you do any m and A? Is this the

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Speaker 5: environment in which you'd look to do that?

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Speaker 9: You know, I think our current growth tracks so well,

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Speaker 9: I'm not sure. I have a lot of time to

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Speaker 9: consider and able to, you know, never saying obviously we're

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Speaker 9: doing really well. The company is performing. I always found

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Speaker 9: that building is my strong suit. But you know who knows.

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Speaker 3: Max This earning season, we've had the opportunity to speak

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Speaker 3: to the CEOs of Chime Robinhood so far and now

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Speaker 3: you I appreciate their differences in those companies, but in

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Speaker 3: how people transact with money, what you will have in

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Speaker 3: common is looking at varied products that you offer. What

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Speaker 3: is your new product strategy going into twenty six and

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Speaker 3: do you have any sort of ideas about this generational

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Speaker 3: wealth transfer that all the others are.

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Speaker 2: Going on about at the moment.

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Speaker 9: You know, I think we are a payment company first

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Speaker 9: and foremost. Our job is to be there, be available.

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Speaker 9: You know, we talk a lot about there are many

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Speaker 9: doors digital and real world where they're lots of little

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Speaker 9: logos of payment systems. Our job is to be on

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Speaker 9: every door, to be available, to make sure we are

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Speaker 9: there to serve when people are buying goods and services.

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Speaker 9: And so we're very, very focused on executing what we have.

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Speaker 9: You know, forty two percent doesn't come easy, and we

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Speaker 9: write book you trying to hit really good growth. You know,

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Speaker 9: I've learned the hard way not to pronounce new products.

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Speaker 9: We have all sorts of really exciting things we're cooking.

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Speaker 9: You know, have me back and I'll announce it.

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Speaker 2: But it's ready to go fair enough.

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Speaker 4: Beaten raised trajectory Sabloom, meg Intelligence, is it, Max Levchin,

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Speaker 4: we appreciate it if I'm CEO.

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Speaker 8: Six.

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Speaker 10: Then finally, on the twenty twenty five CEO Performance Award

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Speaker 10: to our founder and CEO Elon Musk, with over seventy

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Speaker 10: five percent voting in favor, Hop Road.

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Speaker 3: That was Brandon Eh reading the results of test, the

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Speaker 3: shelled about Yeah. Today, the company's corporate secretary and general counsel,

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Speaker 3: and as we've been discussing, Musk's pay package, worth potentially

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Speaker 3: up to a trillion dollars was approved today. The shares, however,

440
00:23:10,080 --> 00:23:12,600
Speaker 3: are lower by four percent. Is that sell the news?

441
00:23:12,720 --> 00:23:16,080
Speaker 3: Is there something in reaction to the vote itself? Not

442
00:23:16,200 --> 00:23:17,800
Speaker 3: SURECARC that's.

443
00:23:17,640 --> 00:23:18,560
Speaker 5: Got an invest to take.

444
00:23:18,600 --> 00:23:21,359
Speaker 4: Then we bring in Gene Monthster, managing partner at Deepwater

445
00:23:21,400 --> 00:23:22,120
Speaker 4: Asset Management.

446
00:23:22,200 --> 00:23:22,959
Speaker 5: Thrilled to have you on.

447
00:23:23,000 --> 00:23:25,800
Speaker 4: So much to talk about, but the seventy five percent

448
00:23:25,960 --> 00:23:29,000
Speaker 4: is a lot, but there also comes some significant milestones

449
00:23:29,240 --> 00:23:32,920
Speaker 4: and also then talk of fifty percent growth in car

450
00:23:32,960 --> 00:23:34,880
Speaker 4: production by the end of twenty twenty six.

451
00:23:34,920 --> 00:23:36,240
Speaker 5: Can he make that, Gene.

452
00:23:37,520 --> 00:23:40,720
Speaker 11: Now, The simple answer is that probably not. But that's

453
00:23:40,720 --> 00:23:44,159
Speaker 11: what Elon did. A master class is as ultimately is

454
00:23:44,359 --> 00:23:48,080
Speaker 11: throwing a ball out there that is difficult to achieve,

455
00:23:48,760 --> 00:23:51,199
Speaker 11: but he has the wherewith to do that.

456
00:23:51,320 --> 00:23:52,400
Speaker 2: And so that ball you.

457
00:23:52,400 --> 00:23:56,800
Speaker 11: Talked about, the production piece, this fifty percent, He puts

458
00:23:56,840 --> 00:23:59,640
Speaker 11: that target out there, but then he adds these kind

459
00:23:59,600 --> 00:24:02,280
Speaker 11: of qualqualifiers that say that yes, we can do it,

460
00:24:02,280 --> 00:24:04,800
Speaker 11: but we can only move as fast as the slowest

461
00:24:04,840 --> 00:24:07,680
Speaker 11: part of the production chain that pipeline to get them

462
00:24:07,720 --> 00:24:12,439
Speaker 11: to build the whole capacity, to get them to build capacity.

463
00:24:12,840 --> 00:24:15,280
Speaker 11: And separately, when he thinks about Optimists and what the

464
00:24:15,280 --> 00:24:17,720
Speaker 11: potential is there, I mean, this is something that he

465
00:24:17,840 --> 00:24:21,080
Speaker 11: outlined as a kind of a five year ten year plan,

466
00:24:21,440 --> 00:24:25,760
Speaker 11: but it is ultimately something that you know, getting the

467
00:24:25,840 --> 00:24:27,720
Speaker 11: ten million robots here, I just want to put that

468
00:24:27,760 --> 00:24:31,120
Speaker 11: in a perspective. Ten million a year. They're doing two

469
00:24:31,119 --> 00:24:34,399
Speaker 11: million cars a year and they really got moving in

470
00:24:34,560 --> 00:24:37,560
Speaker 11: earnest on the car production in twenty nineteen, and so

471
00:24:37,600 --> 00:24:39,800
Speaker 11: it's taken them six years to get to two million.

472
00:24:40,080 --> 00:24:43,159
Speaker 11: These are huge targets and Caroline at the most basic level,

473
00:24:43,480 --> 00:24:46,080
Speaker 11: he put big targets out there. That's what he does,

474
00:24:46,119 --> 00:24:49,719
Speaker 11: and that's the mandate that investors gave him with this

475
00:24:49,840 --> 00:24:52,440
Speaker 11: vote of this pay package is they want these big

476
00:24:52,480 --> 00:24:55,199
Speaker 11: targets out there, and he's delivering on that, whether it's

477
00:24:55,240 --> 00:24:57,679
Speaker 11: the production or the commentary about optimists.

478
00:24:57,800 --> 00:24:59,479
Speaker 5: Best is excited. Your dog's excited.

479
00:24:59,520 --> 00:25:04,080
Speaker 4: Gene interested about what therefore he has to do to

480
00:25:04,280 --> 00:25:07,399
Speaker 4: keep up with the momentum. Now, because look, let's just

481
00:25:07,440 --> 00:25:10,720
Speaker 4: ask your basic question. Many were worried about a twenty

482
00:25:10,720 --> 00:25:13,960
Speaker 4: five percent ownership for Elon because of the control. Not

483
00:25:14,000 --> 00:25:16,400
Speaker 4: so much the one trillion dollar pay package. It's more

484
00:25:16,440 --> 00:25:18,680
Speaker 4: about that he's going to be controlling a robot army.

485
00:25:18,880 --> 00:25:21,240
Speaker 4: Is that something you want to see that generally society

486
00:25:21,280 --> 00:25:21,800
Speaker 4: wants to see.

487
00:25:23,720 --> 00:25:27,080
Speaker 11: Well, that's what he wants control. And the answer is no.

488
00:25:27,119 --> 00:25:30,240
Speaker 11: One wants an army of robots to be controlled by

489
00:25:30,240 --> 00:25:34,240
Speaker 11: one person. But most seventy five percent plus of Tesla

490
00:25:34,359 --> 00:25:38,520
Speaker 11: investors want a company that's building that to be controlled

491
00:25:38,560 --> 00:25:41,960
Speaker 11: by one person or controlled by Elon, And I think

492
00:25:42,000 --> 00:25:45,119
Speaker 11: that that makes sense. Elon has been very clear that

493
00:25:45,200 --> 00:25:47,240
Speaker 11: if he wants to build this army, if he wants

494
00:25:47,280 --> 00:25:49,919
Speaker 11: to build this AI vision company, he doesn't want to

495
00:25:49,960 --> 00:25:53,560
Speaker 11: be pushed out. He also left open the option for

496
00:25:53,760 --> 00:25:56,080
Speaker 11: him to get pushed out, in his words, if I

497
00:25:56,119 --> 00:25:59,440
Speaker 11: go insane, and so I think that's an important distinction too.

498
00:25:59,480 --> 00:26:01,720
Speaker 11: He has, But that doesn't mean that he's going to

499
00:26:01,720 --> 00:26:02,679
Speaker 11: be a tussle forever.

500
00:26:04,560 --> 00:26:07,480
Speaker 3: I think going back to basics is really critical here, Gene.

501
00:26:07,760 --> 00:26:10,320
Speaker 3: So there's the mechanics of what happened the vote past.

502
00:26:10,400 --> 00:26:14,160
Speaker 3: The package was approved, and then Elon Musk spoke afterwards,

503
00:26:14,760 --> 00:26:18,639
Speaker 3: and he actually gave some information that relates directly to

504
00:26:18,680 --> 00:26:21,280
Speaker 3: the milestones the company is set. So in the middle there,

505
00:26:21,280 --> 00:26:23,800
Speaker 3: we're saying the board is tasking him over ten years

506
00:26:24,160 --> 00:26:26,240
Speaker 3: to deliver twenty million vehicles.

507
00:26:26,320 --> 00:26:26,520
Speaker 7: Right.

508
00:26:28,240 --> 00:26:31,920
Speaker 3: He told us in his remarks that twenty twenty six

509
00:26:31,960 --> 00:26:36,280
Speaker 3: would see fifty percent annualized growth. That was something material,

510
00:26:36,400 --> 00:26:36,760
Speaker 3: was it not?

511
00:26:38,359 --> 00:26:40,800
Speaker 11: He said fifty percent in yourized growth. But then he

512
00:26:40,840 --> 00:26:44,320
Speaker 11: put the caveat if the if the supply chain can

513
00:26:44,440 --> 00:26:47,000
Speaker 11: provide the components to get them to increase the capacity

514
00:26:47,000 --> 00:26:50,080
Speaker 11: about that much. It's a similar caveat that happens when

515
00:26:50,119 --> 00:26:54,000
Speaker 11: he says we're going to have Autonomy full first approved

516
00:26:54,040 --> 00:26:56,120
Speaker 11: in one or two months. That was his comments yesterday,

517
00:26:56,200 --> 00:26:57,440
Speaker 11: pending regulatory approval.

518
00:26:57,840 --> 00:26:58,160
Speaker 12: And so.

519
00:26:59,680 --> 00:27:02,560
Speaker 11: I'm a shareholder of Tesla. I think that this company

520
00:27:02,600 --> 00:27:05,199
Speaker 11: is grossly undervalued. That may sound like it's out of

521
00:27:05,200 --> 00:27:08,080
Speaker 11: touch with reality, that comment, but I think it's grossly undervalued.

522
00:27:08,320 --> 00:27:10,680
Speaker 11: But I also am realistic about what goes on here.

523
00:27:10,720 --> 00:27:13,440
Speaker 11: There's this these targets that could put out there, but

524
00:27:13,480 --> 00:27:17,280
Speaker 11: then there's these caveats that are out of his control

525
00:27:17,320 --> 00:27:19,520
Speaker 11: that will be put on any sort of Some of

526
00:27:19,560 --> 00:27:20,840
Speaker 11: these really big targets.

527
00:27:22,359 --> 00:27:26,840
Speaker 3: You noted, as many have done, Musk's comments on Silicon,

528
00:27:27,480 --> 00:27:30,200
Speaker 3: and it was a throwaway comment that the idea that

529
00:27:30,640 --> 00:27:34,400
Speaker 3: Tesla might do its own fab Are you taking that seriously?

530
00:27:36,640 --> 00:27:39,919
Speaker 11: So I'm not taking it seriously. I think that you know,

531
00:27:40,000 --> 00:27:42,159
Speaker 11: Elon wants to make a point, and the point is

532
00:27:42,200 --> 00:27:44,880
Speaker 11: I think he's frustrated about what he is paying for Silicon.

533
00:27:45,280 --> 00:27:50,119
Speaker 11: If you look at all of his enterprises, SpaceX XAI, Tesla, Neuralink,

534
00:27:50,160 --> 00:27:54,200
Speaker 11: all those combined, the biggest line item on those outside

535
00:27:54,200 --> 00:27:57,520
Speaker 11: of people is around Silicon. I mean, there's he spends

536
00:27:57,520 --> 00:27:59,640
Speaker 11: a ton of money on that. What he talked about

537
00:27:59,680 --> 00:28:03,240
Speaker 11: here is having similar performance as Blackwell and videos black

538
00:28:03,240 --> 00:28:05,760
Speaker 11: Ole GPU at a ten percent.

539
00:28:05,400 --> 00:28:05,920
Speaker 2: Of the cost.

540
00:28:06,000 --> 00:28:08,320
Speaker 11: You think that that's doable, And I just want to

541
00:28:08,440 --> 00:28:12,320
Speaker 11: kind of put that to the test. Is that kind

542
00:28:12,359 --> 00:28:15,639
Speaker 11: of performance, that kind of costs performance is something that

543
00:28:15,800 --> 00:28:18,679
Speaker 11: is I think unrealistic at least for the next few years.

544
00:28:19,040 --> 00:28:22,240
Speaker 11: It's the same reason why in Nvidia has been so

545
00:28:22,359 --> 00:28:26,160
Speaker 11: bullish on their business is that these customers would love

546
00:28:26,400 --> 00:28:29,159
Speaker 11: to find an alternative, whether it's through customs, Silicon or

547
00:28:29,200 --> 00:28:32,840
Speaker 11: through AMD for example. But the reality is is that

548
00:28:32,920 --> 00:28:35,560
Speaker 11: in Nvidia still is the best bang for the buck

549
00:28:35,600 --> 00:28:38,640
Speaker 11: when it comes to silicon, and that's a very expensive

550
00:28:38,640 --> 00:28:41,600
Speaker 11: buck in this case. So I think that I generally

551
00:28:41,640 --> 00:28:46,280
Speaker 11: don't think Tesla is going to or should do their

552
00:28:46,320 --> 00:28:48,920
Speaker 11: own fab. I think twenty billion dollars can be spent

553
00:28:49,360 --> 00:28:52,040
Speaker 11: in much better places. He kind of threw the lifeline

554
00:28:52,040 --> 00:28:55,040
Speaker 11: out there. Maybe we work through Intel has been a

555
00:28:55,120 --> 00:28:58,840
Speaker 11: challenging road for Intel on the fab side, and building

556
00:28:58,840 --> 00:29:02,440
Speaker 11: a fab advances fab is really tough. These advanced nodes

557
00:29:02,800 --> 00:29:05,520
Speaker 11: are very tough, and Intel's never shown they were competent

558
00:29:05,560 --> 00:29:05,720
Speaker 11: in that.

559
00:29:06,080 --> 00:29:09,680
Speaker 4: Gene broadened that out therefore, because the whole market has

560
00:29:09,720 --> 00:29:12,280
Speaker 4: a lot of anxiety on its shoulders right now around

561
00:29:12,480 --> 00:29:15,600
Speaker 4: the build out a generative AI infrastructure. Now, in particular,

562
00:29:15,640 --> 00:29:19,560
Speaker 4: we saw at sam Altman trying to navigate what had

563
00:29:19,600 --> 00:29:22,840
Speaker 4: become a bit of a explosion that the CFO had

564
00:29:22,880 --> 00:29:25,360
Speaker 4: set off on Wednesday by saying maybe they'd looked to

565
00:29:25,400 --> 00:29:28,040
Speaker 4: some sort of government to support for their infrastructure spend.

566
00:29:28,560 --> 00:29:30,120
Speaker 4: Sam Altman came out and said, look, the only way

567
00:29:30,120 --> 00:29:32,480
Speaker 4: when one government support is perhaps if we became a

568
00:29:32,480 --> 00:29:35,280
Speaker 4: fabricator of chips. But what do you make about the

569
00:29:35,280 --> 00:29:38,680
Speaker 4: weight that is currently on this market about vindicating one

570
00:29:38,680 --> 00:29:41,160
Speaker 4: point four trillion dollars spending by a company that's making

571
00:29:41,320 --> 00:29:43,640
Speaker 4: maybe twelve billion, call it, maybe even twenty billion a

572
00:29:43,680 --> 00:29:44,640
Speaker 4: year in terms of revenue.

573
00:29:46,360 --> 00:29:51,120
Speaker 11: So there is a switch that flipped since the end

574
00:29:51,200 --> 00:29:53,360
Speaker 11: of October. I think it was like the twentieth of

575
00:29:53,360 --> 00:29:57,200
Speaker 11: October is when Jensen came out and said that video

576
00:29:57,320 --> 00:30:01,400
Speaker 11: is going to essentially beat the expectation by fifteen percent

577
00:30:01,440 --> 00:30:03,400
Speaker 11: plus over the next five quarters. He put out this

578
00:30:03,480 --> 00:30:08,000
Speaker 11: five hundred billion dollars in Blackwell revenue, and that was

579
00:30:08,080 --> 00:30:11,040
Speaker 11: a really big point. And then we had the hyperscalers,

580
00:30:11,160 --> 00:30:14,280
Speaker 11: and then this conversation started to shift. There's a change

581
00:30:14,320 --> 00:30:18,120
Speaker 11: in terms of how the AI investor is thinking about this,

582
00:30:18,160 --> 00:30:21,280
Speaker 11: and this shift is this sense of like, wow, maybe

583
00:30:21,320 --> 00:30:23,120
Speaker 11: this is just getting to be too much. We saw

584
00:30:23,160 --> 00:30:25,480
Speaker 11: what happen with MetaStock, and then on top of that,

585
00:30:25,600 --> 00:30:29,200
Speaker 11: Sarah Fry and the Sam Altman and the Golden or

586
00:30:29,200 --> 00:30:32,680
Speaker 11: the Wall Street Journal event, all that kind of I

587
00:30:32,720 --> 00:30:35,840
Speaker 11: think you put all this together and there all of

588
00:30:35,920 --> 00:30:39,600
Speaker 11: a sudden, this vortex of what's really going on here,

589
00:30:40,080 --> 00:30:43,120
Speaker 11: whether it's the government piece, whether it's the expectations that

590
00:30:43,280 --> 00:30:45,480
Speaker 11: VIDIA has about how much they're going to sell over

591
00:30:45,520 --> 00:30:48,040
Speaker 11: the next few quarters, whether it's Meta saying how much

592
00:30:48,040 --> 00:30:51,320
Speaker 11: they're going to spend and Amazon, it just feels like

593
00:30:51,360 --> 00:30:54,680
Speaker 11: there's investors are now at a point where they're uncomfortable

594
00:30:54,800 --> 00:30:57,920
Speaker 11: that they don't believe that this ultimately is going to

595
00:30:57,920 --> 00:31:01,400
Speaker 11: be prosper There's going to be a press around this investment,

596
00:31:01,440 --> 00:31:03,760
Speaker 11: and so I think that's the shift we've seen. That's

597
00:31:03,800 --> 00:31:05,880
Speaker 11: why I think we've seen sell off in these companies.

598
00:31:06,080 --> 00:31:10,640
Speaker 11: The fundamentals are rock solid. Opening Eye doesn't need government support,

599
00:31:10,640 --> 00:31:14,080
Speaker 11: there's no question, but there's a psychology piece to this trade,

600
00:31:14,120 --> 00:31:16,760
Speaker 11: and I think it's just gotten softened by some of

601
00:31:16,800 --> 00:31:20,240
Speaker 11: these conversations. Just too many moving parts now for our investors.

602
00:31:20,680 --> 00:31:23,920
Speaker 11: That will settle down once they start to see the

603
00:31:23,960 --> 00:31:27,400
Speaker 11: December quarter results and understand that in fact, we are

604
00:31:27,480 --> 00:31:29,040
Speaker 11: still early in this AI build out.

605
00:31:30,720 --> 00:31:33,840
Speaker 3: Gem Monster managing partner at Deepwater Asset Management. Great to

606
00:31:33,840 --> 00:31:35,840
Speaker 3: have you back on the show, Thank you very much.

607
00:31:36,200 --> 00:31:38,200
Speaker 3: Coming up, we're going to be joined by Draft Kings

608
00:31:38,320 --> 00:31:41,800
Speaker 3: CEO Jason Robbins following the company's earnings and it's new

609
00:31:41,880 --> 00:31:43,440
Speaker 3: deal with Disney.

610
00:31:43,920 --> 00:31:46,240
Speaker 2: More on that next. This has been bag Tech.

611
00:31:54,080 --> 00:31:57,680
Speaker 3: Welcome to our TV and radio audiences worldwide. We head

612
00:31:57,760 --> 00:32:00,440
Speaker 3: back to earnings with Draft Kings out with every Results,

613
00:32:00,480 --> 00:32:03,000
Speaker 3: cutting its revenue forecast for the full year. The company

614
00:32:03,000 --> 00:32:05,720
Speaker 3: also out though, with news that Disney signed a new

615
00:32:05,800 --> 00:32:08,440
Speaker 3: multi year deal to make the Sports Betting Company the

616
00:32:08,480 --> 00:32:12,600
Speaker 3: official betting site and odds provider for the ESPN Sports Network.

617
00:32:12,640 --> 00:32:16,440
Speaker 3: Let's bring in Draftking CEO Jason Robbins. It's an interesting

618
00:32:16,480 --> 00:32:19,120
Speaker 3: partnership and I think that's where we should start. How

619
00:32:19,280 --> 00:32:21,640
Speaker 3: much does this move the needle for you? You know,

620
00:32:21,720 --> 00:32:24,239
Speaker 3: we've talked in the past on this program, Jason with

621
00:32:24,240 --> 00:32:27,800
Speaker 3: you about the integration of the live sports event and

622
00:32:27,840 --> 00:32:30,440
Speaker 3: the broadcast with the betting activity.

623
00:32:31,400 --> 00:32:37,000
Speaker 2: Your big picture goal with this deal. Well, first of all.

624
00:32:37,160 --> 00:32:40,560
Speaker 13: ESPN is a you know, iconic brand. It's you know,

625
00:32:40,800 --> 00:32:44,080
Speaker 13: by far the biggest name in sports in the United States,

626
00:32:44,120 --> 00:32:49,959
Speaker 13: and they have an incredible portfolio, unmatched portfolio of sports content, influencers, talent.

627
00:32:50,120 --> 00:32:53,760
Speaker 13: So it's really, you know, for us, just the greatest

628
00:32:53,800 --> 00:32:56,440
Speaker 13: partner you can have when you're in the space we're

629
00:32:56,480 --> 00:33:00,920
Speaker 13: in and Jimmy Pataro runs it really understands in I think,

630
00:33:01,040 --> 00:33:04,120
Speaker 13: values the sports betting space and understands that the customer

631
00:33:04,200 --> 00:33:07,400
Speaker 13: overlap is high, and it's important that they engage their

632
00:33:07,440 --> 00:33:12,200
Speaker 13: customers by being partnered with somebody like Drafting, so really excited.

633
00:33:11,760 --> 00:33:12,400
Speaker 2: To embark on it.

634
00:33:12,440 --> 00:33:14,520
Speaker 13: We've been partners with them many times in the past,

635
00:33:14,560 --> 00:33:16,840
Speaker 13: so it's familiar territory. We know all the people there

636
00:33:16,840 --> 00:33:19,360
Speaker 13: and we're looking forward to working together. And you add

637
00:33:19,400 --> 00:33:23,240
Speaker 13: that to our deals with NBC, Universal and Amazon and others,

638
00:33:23,240 --> 00:33:26,000
Speaker 13: we have an unmatched I think, presence across the sports

639
00:33:26,040 --> 00:33:30,600
Speaker 13: landscape over the next several years prediction markets.

640
00:33:31,560 --> 00:33:34,280
Speaker 3: Wednesday night, we were with Robin Hood at their in

641
00:33:34,360 --> 00:33:35,400
Speaker 3: person earning school.

642
00:33:35,560 --> 00:33:36,160
Speaker 2: That was wacky.

643
00:33:36,240 --> 00:33:38,760
Speaker 3: Don't know if you consider that, but the month of

644
00:33:38,800 --> 00:33:42,959
Speaker 3: October massive volumes for them. You're being super thoughtful about predictions.

645
00:33:43,080 --> 00:33:46,240
Speaker 3: I understand that, and you have a clear strategy. My

646
00:33:46,360 --> 00:33:49,000
Speaker 3: question has always been how much a growth in a

647
00:33:49,160 --> 00:33:53,640
Speaker 3: nascent predictions market cannibalizes other offerings that you have.

648
00:33:55,480 --> 00:33:56,560
Speaker 2: I think very little.

649
00:33:57,000 --> 00:33:59,920
Speaker 13: If you look at the UK, for example, exchange based

650
00:34:00,440 --> 00:34:04,040
Speaker 13: is about five percent of the total pie, so you

651
00:34:04,080 --> 00:34:05,840
Speaker 13: know that's probably about right. And I think a lot

652
00:34:05,880 --> 00:34:09,880
Speaker 13: of it is largely incremental because they're market makers and

653
00:34:09,920 --> 00:34:12,480
Speaker 13: others that are not present on traditional sports books to

654
00:34:12,600 --> 00:34:15,000
Speaker 13: generate a lot of the volume. So I think it's

655
00:34:15,160 --> 00:34:18,080
Speaker 13: very much an incremental opportunity for us, and that's why.

656
00:34:17,880 --> 00:34:19,040
Speaker 2: We're so excited about it.

657
00:34:19,560 --> 00:34:22,640
Speaker 13: We acquire real Bird and we're also looking to you know,

658
00:34:22,800 --> 00:34:25,520
Speaker 13: enter the market sometime in the next couple months.

659
00:34:25,960 --> 00:34:29,879
Speaker 4: What's interesting, Jason is investors analysts out there called out

660
00:34:29,880 --> 00:34:34,080
Speaker 4: on the actual earning script talking about how marketing expenses,

661
00:34:34,200 --> 00:34:37,719
Speaker 4: higher sales expenses did eat into the results, and they

662
00:34:37,760 --> 00:34:40,239
Speaker 4: call them also some ugly outcomes when it comes to

663
00:34:40,280 --> 00:34:43,000
Speaker 4: the sports games for that you can't control. But what

664
00:34:43,080 --> 00:34:45,080
Speaker 4: about the expenses you're going to have to have on

665
00:34:45,200 --> 00:34:46,240
Speaker 4: the predictions markets.

666
00:34:47,600 --> 00:34:50,319
Speaker 13: Well, we do plan to make some investment there. We

667
00:34:50,400 --> 00:34:52,520
Speaker 13: mentioned this on the call that we're going to be

668
00:34:52,560 --> 00:34:55,520
Speaker 13: more i think conservative in terms of the paybacks we're

669
00:34:55,520 --> 00:34:57,799
Speaker 13: looking for, just given how nis in a space it

670
00:34:57,920 --> 00:35:00,399
Speaker 13: is and the fact that you know, it's unclear kind

671
00:35:00,440 --> 00:35:02,480
Speaker 13: of how this will all play out, but we are

672
00:35:02,520 --> 00:35:05,000
Speaker 13: going to make some investment there. First, of course, and

673
00:35:05,000 --> 00:35:07,680
Speaker 13: getting a product developed and making sure that that's the

674
00:35:07,719 --> 00:35:09,799
Speaker 13: best in class. You can't win, and we've always said

675
00:35:09,800 --> 00:35:12,359
Speaker 13: this product is the most important thing. You can't win

676
00:35:12,400 --> 00:35:15,440
Speaker 13: if you don't have a great product. And then assuming

677
00:35:15,480 --> 00:35:18,560
Speaker 13: that the numbers check out, will spend marketing Accordingly, We're

678
00:35:18,600 --> 00:35:20,440
Speaker 13: going to be very data driven like we always are,

679
00:35:20,440 --> 00:35:21,280
Speaker 13: and everything we will.

680
00:35:21,200 --> 00:35:22,000
Speaker 2: Test into it.

681
00:35:22,480 --> 00:35:24,160
Speaker 13: But we did want to make sure as we guided

682
00:35:24,160 --> 00:35:26,520
Speaker 13: that we were thoughtful about giving the team some space

683
00:35:26,600 --> 00:35:29,200
Speaker 13: to be able to accelerate spend if the numbers look good.

684
00:35:29,600 --> 00:35:33,440
Speaker 4: And therefore the guide did pull back rather than uplift

685
00:35:33,600 --> 00:35:34,160
Speaker 4: going forward.

686
00:35:34,280 --> 00:35:35,840
Speaker 5: Jason, but you say it's conservative.

687
00:35:35,920 --> 00:35:39,680
Speaker 4: You talk about an incremental opportunity from predictions, and I'm

688
00:35:39,719 --> 00:35:41,439
Speaker 4: really interested as to how you make sure this doesn't

689
00:35:41,480 --> 00:35:43,239
Speaker 4: cannibalize what you already.

690
00:35:43,000 --> 00:35:43,520
Speaker 5: Have out there.

691
00:35:43,640 --> 00:35:45,680
Speaker 4: You've talked a lot about how this might actually make

692
00:35:45,760 --> 00:35:48,160
Speaker 4: more states accessible to sports better because at the moment

693
00:35:48,160 --> 00:35:51,239
Speaker 4: you can get fifty states with this predictions market, but

694
00:35:51,560 --> 00:35:53,760
Speaker 4: what you've got twenty five at the moment for your offering,

695
00:35:53,960 --> 00:35:55,560
Speaker 4: and you're about to have and you also have DC

696
00:35:55,640 --> 00:35:57,000
Speaker 4: and then you're adding Missouri.

697
00:35:58,280 --> 00:36:01,560
Speaker 13: Yeah, I mean, I think you're exactly right that this

698
00:36:01,640 --> 00:36:04,399
Speaker 13: will hopefully lead more states to decide that they might

699
00:36:04,440 --> 00:36:07,880
Speaker 13: as well legalize sports betting. It's I think predictions are

700
00:36:07,920 --> 00:36:11,120
Speaker 13: a powerful talking point for that, because you know, same

701
00:36:11,120 --> 00:36:12,960
Speaker 13: as the illegal market, same as anything in this case,

702
00:36:12,960 --> 00:36:16,480
Speaker 13: it's regulated, but the bottom line is it's activity that's

703
00:36:16,520 --> 00:36:19,600
Speaker 13: already happening in the state at some level that they

704
00:36:19,600 --> 00:36:22,279
Speaker 13: are not directly benefiting from and regulating. So I do

705
00:36:22,360 --> 00:36:25,440
Speaker 13: think that'll motivate some states, But for us, really the

706
00:36:25,480 --> 00:36:29,080
Speaker 13: cannibalization thing isn't a huge concern. We haven't seen that happen,

707
00:36:29,840 --> 00:36:32,279
Speaker 13: not just here, but as I mentioned, overseas where there's

708
00:36:32,360 --> 00:36:34,960
Speaker 13: long established I mean, it's not a brand new thing

709
00:36:35,040 --> 00:36:38,239
Speaker 13: like it is here. There's been predictions and sports exchanges

710
00:36:38,280 --> 00:36:41,560
Speaker 13: around for decades in the UK, for example, So we

711
00:36:41,600 --> 00:36:43,719
Speaker 13: feel like there's pretty good data out there to show

712
00:36:43,760 --> 00:36:46,880
Speaker 13: that head to head, the traditional sports betting product is

713
00:36:46,880 --> 00:36:49,320
Speaker 13: a much far superior product for customers.

714
00:36:50,440 --> 00:36:52,799
Speaker 3: Jason, you said that this is the most bullish you've

715
00:36:52,800 --> 00:36:57,720
Speaker 3: ever felt about the company's future. What are the underlying trends,

716
00:36:57,840 --> 00:37:00,880
Speaker 3: data points, behaviors of your customer? Is that give you

717
00:37:00,920 --> 00:37:03,840
Speaker 3: that conviction? Why do you have it now that you

718
00:37:03,880 --> 00:37:04,840
Speaker 3: didn't have previously?

719
00:37:06,280 --> 00:37:08,719
Speaker 13: Well, I think if you take a step back, you know,

720
00:37:08,800 --> 00:37:11,440
Speaker 13: it really starts with the progress that we've made over

721
00:37:11,480 --> 00:37:13,799
Speaker 13: the last few years in the position we put ourselves in.

722
00:37:14,160 --> 00:37:17,319
Speaker 13: Remember two years ago, we weren't even profitable. Three years ago,

723
00:37:17,719 --> 00:37:20,440
Speaker 13: we had nearly a billion dollar adjusted EBIT to loss.

724
00:37:20,480 --> 00:37:22,880
Speaker 13: At that point, you know, we were getting killed in

725
00:37:22,880 --> 00:37:24,799
Speaker 13: the market because people thought we were going to run

726
00:37:24,840 --> 00:37:27,440
Speaker 13: out of money and go out of business. We really

727
00:37:27,480 --> 00:37:31,239
Speaker 13: buckled down, we grew revenues, we managed costs, and you know,

728
00:37:31,440 --> 00:37:33,640
Speaker 13: just a few years later we've had an over billion

729
00:37:33,680 --> 00:37:36,560
Speaker 13: and a half swing. So I think that shows that

730
00:37:36,600 --> 00:37:38,960
Speaker 13: we are in a great position. But also more importantly

731
00:37:39,360 --> 00:37:42,200
Speaker 13: now we're in a position to play offense. We are profitable,

732
00:37:42,280 --> 00:37:45,240
Speaker 13: we have scale, we have the best product in the market,

733
00:37:45,520 --> 00:37:48,440
Speaker 13: we have the absolute best partnerships and presence across the

734
00:37:48,520 --> 00:37:51,880
Speaker 13: media landscape. We're about to launch Sports Predictions, which I

735
00:37:51,960 --> 00:37:55,239
Speaker 13: believe represents a huge incremental opportunity for us. So a

736
00:37:55,280 --> 00:37:57,560
Speaker 13: lot of really exciting things going on, and the only

737
00:37:57,600 --> 00:37:59,840
Speaker 13: real negative on the quarter was the sport outcomes. I

738
00:37:59,840 --> 00:38:02,800
Speaker 13: think think all the stereover predictions is kind of nonsense,

739
00:38:02,880 --> 00:38:05,239
Speaker 13: but the really only negative sport outcomes. But that's a

740
00:38:05,280 --> 00:38:07,640
Speaker 13: temporary thing, that's not something that has anything to do

741
00:38:07,680 --> 00:38:09,160
Speaker 13: with the fundamentals of the business.

742
00:38:11,320 --> 00:38:16,359
Speaker 3: Draftking CEO Jason Robbins, thank you very much, Caroline.

743
00:38:16,920 --> 00:38:19,200
Speaker 4: Well it's time now for talking tech ed first up

744
00:38:19,360 --> 00:38:22,239
Speaker 4: Bitcoin when it's fallen as much as twelve percent of

745
00:38:22,239 --> 00:38:24,120
Speaker 4: per cent so far this week on trap for its

746
00:38:24,120 --> 00:38:26,520
Speaker 4: worst weekly performances all the way back in March. Since

747
00:38:26,520 --> 00:38:29,080
Speaker 4: spite of President Trump's push to cement US as the

748
00:38:29,120 --> 00:38:32,520
Speaker 4: world's crypto epicenter, the market value of the digital assets

749
00:38:32,560 --> 00:38:35,399
Speaker 4: is now lower than I Need took office Plus China

750
00:38:35,480 --> 00:38:37,880
Speaker 4: when it's allowing Dutch chip maker and Nick Sperior to

751
00:38:37,960 --> 00:38:40,840
Speaker 4: export again from its operations in the country. This sets

752
00:38:40,840 --> 00:38:43,239
Speaker 4: the stage for the Netherlands government to kind of back

753
00:38:43,280 --> 00:38:46,280
Speaker 4: down and suspend its powers over the Chinese own company

754
00:38:46,440 --> 00:38:49,520
Speaker 4: after a conflict that had threatened to disrupt global automotive

755
00:38:49,560 --> 00:38:53,360
Speaker 4: production and Apple's streaming service when it went down briefly

756
00:38:53,520 --> 00:38:56,239
Speaker 4: for some users last night, shortly after the debut of

757
00:38:56,280 --> 00:38:57,240
Speaker 4: the widely.

758
00:38:56,880 --> 00:39:00,239
Speaker 5: Anticipated pluribus It's a new series from the Career or

759
00:39:00,239 --> 00:39:00,959
Speaker 5: are breaking bad?

760
00:39:01,120 --> 00:39:01,279
Speaker 11: Look?

761
00:39:01,360 --> 00:39:03,920
Speaker 5: This came and a bad time for Apple, which build plur.

762
00:39:03,840 --> 00:39:06,560
Speaker 4: Of us as one of the major exclusive attractions at

763
00:39:14,040 --> 00:39:16,560
Speaker 4: We're at a time when consumers are more cost conscious

764
00:39:16,600 --> 00:39:19,480
Speaker 4: than ever. Brands well, they're racing to meet them where

765
00:39:19,480 --> 00:39:23,600
Speaker 4: they actually shop. Creator commerce platform LTK is expanding to

766
00:39:23,640 --> 00:39:27,040
Speaker 4: include brand profiles, giving companies a new way to connect

767
00:39:27,080 --> 00:39:29,960
Speaker 4: directly with value driven shoppers within the creator community.

768
00:39:30,200 --> 00:39:33,040
Speaker 5: For more Ammaven's Box. LTK co found it joins us.

769
00:39:33,080 --> 00:39:35,319
Speaker 4: Now it's really interesting because you have what I think

770
00:39:35,400 --> 00:39:39,919
Speaker 4: forty million monthly users globally on LTK. But they come

771
00:39:39,960 --> 00:39:43,240
Speaker 4: because they're creators, their favorite creator is they're telling them,

772
00:39:43,440 --> 00:39:46,160
Speaker 4: advising them on what they could purchase. Why is therefore

773
00:39:46,239 --> 00:39:48,880
Speaker 4: Nike putting itself there as a brand individually?

774
00:39:50,440 --> 00:39:54,000
Speaker 12: You know, LTK is the single largest creator commerce platform.

775
00:39:54,040 --> 00:39:55,400
Speaker 5: We have thirty percent of Gen.

776
00:39:55,360 --> 00:39:58,719
Speaker 12: Z and millennial women in the US using the platform.

777
00:39:59,080 --> 00:40:03,680
Speaker 12: There's spending every sixty seconds. Let's see, they're going I

778
00:40:03,680 --> 00:40:06,880
Speaker 12: think sixty people shopping every second. They're buying eleven thousand

779
00:40:06,920 --> 00:40:08,720
Speaker 12: dollars with a product every single minute.

780
00:40:08,719 --> 00:40:09,960
Speaker 5: That's six billion a year.

781
00:40:10,000 --> 00:40:13,320
Speaker 12: That's the equivalent of an Eras tour every single quarter.

782
00:40:13,800 --> 00:40:16,200
Speaker 12: There's a lot of demand here and that's only growing

783
00:40:16,239 --> 00:40:19,600
Speaker 12: by a billion since twenty twenty four. You're seeing that

784
00:40:19,640 --> 00:40:23,120
Speaker 12: consumers are rotating their trust directly into creators. That creator

785
00:40:23,160 --> 00:40:26,000
Speaker 12: trust is up over twenty percent year over year, and

786
00:40:26,120 --> 00:40:29,280
Speaker 12: brands want to have more opportunity to reach their customer

787
00:40:29,320 --> 00:40:31,960
Speaker 12: on the platform where they are today. So just this week,

788
00:40:32,200 --> 00:40:35,000
Speaker 12: we've had brands like you mentioned, whether it's Nike Target

789
00:40:35,560 --> 00:40:40,080
Speaker 12: in the beauty category, Alta, Sephora, Tart on the sport

790
00:40:40,120 --> 00:40:43,880
Speaker 12: and athletic, it's Alo, it's Nike gets Adidas, huge global

791
00:40:43,880 --> 00:40:47,440
Speaker 12: brands launching their presence on the LTK social app to

792
00:40:47,440 --> 00:40:50,080
Speaker 12: be able to meet creators and their audiences in a

793
00:40:50,200 --> 00:40:51,320
Speaker 12: high trust environment.

794
00:40:51,360 --> 00:40:53,600
Speaker 5: That's so unique right now. So what are they actually doing?

795
00:40:53,600 --> 00:40:55,880
Speaker 5: I went onto the Nike offering for example, and the moment.

796
00:40:55,800 --> 00:40:58,440
Speaker 4: It looks like they're getting creative content and sort of

797
00:40:58,440 --> 00:40:59,799
Speaker 4: putting it onto their own landing.

798
00:41:00,280 --> 00:41:02,360
Speaker 5: How will they differentiate do you think going forward?

799
00:41:03,000 --> 00:41:05,200
Speaker 12: Yeah, so this is a whole new experience. This doesn't

800
00:41:05,200 --> 00:41:07,759
Speaker 12: exist anywhere else. What we've done is we've launched a

801
00:41:07,760 --> 00:41:10,279
Speaker 12: platform where these brands can come in and see all

802
00:41:10,320 --> 00:41:13,240
Speaker 12: the content that's being written about them on the LTK platform.

803
00:41:13,360 --> 00:41:16,520
Speaker 12: So that's been about seven million pieces of original content

804
00:41:16,920 --> 00:41:19,760
Speaker 12: just on the LTK platform alone from these.

805
00:41:19,560 --> 00:41:20,879
Speaker 5: Creators year over year.

806
00:41:21,239 --> 00:41:23,600
Speaker 12: So for example, Nike would come in, they see all

807
00:41:23,640 --> 00:41:27,240
Speaker 12: the content written about them, they can curate for their audience,

808
00:41:27,480 --> 00:41:30,120
Speaker 12: their favorite creators and the best content talking about the

809
00:41:30,120 --> 00:41:32,040
Speaker 12: products that they love. So if I'm a Nike fan,

810
00:41:32,400 --> 00:41:34,560
Speaker 12: not only can I go through my favorite creators to

811
00:41:34,640 --> 00:41:36,759
Speaker 12: find that product, but I can just search Nike, follow

812
00:41:36,840 --> 00:41:39,120
Speaker 12: Nike and see the things that they are curating. So

813
00:41:39,440 --> 00:41:42,000
Speaker 12: brands are not creating the content on LTK. It's still

814
00:41:42,080 --> 00:41:44,920
Speaker 12: creator driven, but they are able to curate it, which

815
00:41:45,000 --> 00:41:48,399
Speaker 12: is giving their audience really another path to discovery. On

816
00:41:48,480 --> 00:41:51,480
Speaker 12: the LTK app we found that one in five searches has.

817
00:41:51,360 --> 00:41:51,920
Speaker 5: A brand name.

818
00:41:52,120 --> 00:41:54,680
Speaker 12: So people might be looking for like Nike running shoes,

819
00:41:55,120 --> 00:41:58,400
Speaker 12: maybe they're looking for Abercrombie Dnum, they're looking for a

820
00:41:58,600 --> 00:42:01,600
Speaker 12: Christmas tree from Target. We see that happening one in

821
00:42:01,680 --> 00:42:04,120
Speaker 12: five times, and so this gives our brands the opportunity

822
00:42:04,160 --> 00:42:06,280
Speaker 12: to have a little bit more influence over the curation

823
00:42:06,440 --> 00:42:09,800
Speaker 12: of what that customer ultimately sees. By following that brand,

824
00:42:10,040 --> 00:42:12,280
Speaker 12: it takes a little further because what's unique on LTK

825
00:42:12,480 --> 00:42:15,040
Speaker 12: is when you follow someone, it actually means something. Our

826
00:42:15,080 --> 00:42:17,360
Speaker 12: following feed means that you get to choose that content

827
00:42:17,400 --> 00:42:19,400
Speaker 12: that shows up and when they want to meet their

828
00:42:19,400 --> 00:42:22,759
Speaker 12: customers every day. That's a really important part of building community.

829
00:42:23,200 --> 00:42:26,040
Speaker 12: It's something that is unique to LTK given the age

830
00:42:26,120 --> 00:42:29,560
Speaker 12: of AI and algorithms, but very.

831
00:42:29,520 --> 00:42:32,440
Speaker 3: Quickly we had thirty seconds. You have rich data about

832
00:42:32,480 --> 00:42:36,839
Speaker 3: behaviors in September and October. Is the consumer healthy through

833
00:42:36,880 --> 00:42:38,520
Speaker 3: your data?

834
00:42:38,640 --> 00:42:38,920
Speaker 2: They are.

835
00:42:38,960 --> 00:42:41,479
Speaker 12: We're seeing that they're spending average order values up seven

836
00:42:41,480 --> 00:42:43,880
Speaker 12: percent year over year on LTK. They're spending almost a

837
00:42:43,880 --> 00:42:46,440
Speaker 12: billion more this year than they did last year. The

838
00:42:46,480 --> 00:42:49,120
Speaker 12: biggest shift on the consumer side is that they are

839
00:42:49,200 --> 00:42:51,799
Speaker 12: expecting for out of stock products. So we saw search

840
00:42:51,840 --> 00:42:55,359
Speaker 12: for gifting gope over three hundred percent in September, more

841
00:42:55,400 --> 00:42:57,640
Speaker 12: than half of those in our consumer studies. So they

842
00:42:57,680 --> 00:43:00,680
Speaker 12: expect for creators to help them source alternative the products.

843
00:43:00,800 --> 00:43:02,600
Speaker 12: This is a huge shift because last year it was

844
00:43:02,640 --> 00:43:05,440
Speaker 12: all about price. This year it's all about in stock.

845
00:43:05,880 --> 00:43:08,399
Speaker 12: We're excited to help our brands navigate this. D're all new,

846
00:43:08,719 --> 00:43:11,880
Speaker 12: all in one creator platform that's completely free for brands

847
00:43:11,880 --> 00:43:15,040
Speaker 12: that we've just launched, where they're paying for success, not access.

848
00:43:15,080 --> 00:43:16,719
Speaker 5: It's bring it all together for them this year.

849
00:43:17,400 --> 00:43:20,640
Speaker 3: Amber Ven'sbox LTK co founder, Thank you very much. Sadly

850
00:43:20,680 --> 00:43:23,239
Speaker 3: that does it for the edition of Bloomberg Tech. Check

851
00:43:23,239 --> 00:43:26,120
Speaker 3: out the podcast you know where to find it. Happy Friday.

852
00:43:26,400 --> 00:43:27,479
Speaker 3: This is Bloomberg Tech