Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and ever Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Open AI execs U turn and David Sachs says no
Speaker 3: on a federal backstop to fund AI infrastructure.
Speaker 4: Markets react, Plus Mosk's one trillion dollar compensation package gets
Speaker 4: approved by TESLRA investors seventy five percent of votes cast
Speaker 4: in favor.
Speaker 5: We dig into the bold new promises and we.
Speaker 3: Break down more tech earnings with the CEOs of a
Speaker 3: firm and draftings.
Speaker 4: Later this hour, we go to these markets, though in
Speaker 4: sell off mode ed on the day and on the week.
Speaker 4: Over the past five days, we've shed more than four
Speaker 4: percent in market capitalization. It is the worst weeks in
Speaker 4: April of the NASDAT.
Speaker 5: One hundred, and anxiety is.
Speaker 4: Really building when it comes to AI infrastructure and whether
Speaker 4: people have got the money you're digging into it.
Speaker 3: Yeah, here's a story that's played out driving markets. We
Speaker 3: begin with open AI and Wall streaks, anxiety that followed
Speaker 3: fresh comments about potential government financing in.
Speaker 2: The AI race.
Speaker 3: Speaking at The Wall Street Journal's Tech conference This Wednesday,
Speaker 3: Open Ai CFO Sarah Fryer called investors' attention after hinting
Speaker 3: at a potential government backstop for AI chip investment, to
Speaker 3: remark interpreted by some as Friar signaling open Ai had
Speaker 3: federal guarantees for the costly infrastructure behind large AI models.
Speaker 3: David Sachs the White House, AI and cryptos are seem
Speaker 3: to be paying attention and posted on X Thursday there
Speaker 3: will be no federal bailout for AI. The US has
Speaker 3: at least five major frontier model companies. If one fails,
Speaker 3: others will take its place. That in turn prompted open
Speaker 3: ai CEO Sam Altman to step in and clarify on X, writing,
Speaker 3: we do not have or want government guarantees for open
Speaker 3: ai data centers, emphasizing that the company is not seeking
Speaker 3: a federal safety net. Let's get the latest. Bloomberg's AI
Speaker 3: editor Seth Figgerman joins us, Now, where do we stand?
Speaker 3: This is a multi day story, markets paid attention to it.
Speaker 2: What's the net result? At least from open AI's perspective.
Speaker 6: Funny here, Ergre, is that really the intention behind Sarah
Speaker 6: Friar's overall remarks of that event was to kind of
Speaker 6: calm people's nerves about what has felt like growing anxiety
Speaker 6: this week on the markets about AI spending, and instead
Speaker 6: the takeaway was what felt like an off the cuff
Speaker 6: and vagrant mark that just heightened those concerns. I think
Speaker 6: where things currently stand as the company has repeated up
Speaker 6: and down that there's no discussions or plans for any
Speaker 6: kind of federal backstop. Instead, they're hinting at, well, maybe
Speaker 6: there's a role for government to invest in its own
Speaker 6: AI infrastructure that might somehow reduce some of the capital
Speaker 6: burdens here or other indirect ways in which government could
Speaker 6: help the wider market. But advice to say, the message
Speaker 6: that she intended to deliver seems to have been completely lost.
Speaker 4: Sam Altman went to great lengths to try and reverse
Speaker 4: or to correct in whatever way make clear, and talked
Speaker 4: about maybe chip manufacturing, if they went into fabrication of chips,
Speaker 4: that might be an area that they lean on for
Speaker 4: government input. But what's interesting is we then look at
Speaker 4: that piece from sam Altman saying that basically they've got
Speaker 4: one point four trillion dollars of commitments. This is where
Speaker 4: the market's trying to rab its head around how can
Speaker 4: they afford that, he's saying, they feel good about their
Speaker 4: prospects for revenue growth.
Speaker 6: They've big on the defense about this a little bit
Speaker 6: in recent days, including on a recent podcast where Altman's
Speaker 6: seemed taken off guard to even be asked that question.
Speaker 6: What he's trying to stress here is that our revenue
Speaker 6: is growing much faster than anyone has expected, you know,
Speaker 6: on pace for twenty billion and annualized run ray, and
Speaker 6: that we expect that these commitments over a seven or
Speaker 6: eight year time period are more than achievable based on
Speaker 6: that revenue growth that I think the overall market is
Speaker 6: looking at AI spending generally, Mega shares had their worst
Speaker 6: four day routes since chatgybut launched three years ago. You know,
Speaker 6: chipstocks are seeing slump right now on valuation concerns. Michael
Speaker 6: Burry is getting out there the one predicted the housing
Speaker 6: bubble and and basically pointing out to our graphic on
Speaker 6: uncircular investments that's center around opening eye across the industry
Speaker 6: and the markets. There's just really heighten concerned how achievable
Speaker 6: and sustainable the spending is.
Speaker 4: Megs sethimgan breaking all down. We thank you so much
Speaker 4: happy weekend. Now we're also watching shares of Nvidia. That's
Speaker 4: after its CEO Jensen Wang said that the company isn't
Speaker 4: in active discussions to sell its Blackwell AI chips to
Speaker 4: Chinese firms, waving off that speculation that it's trying to
Speaker 4: engineer a return to the world's largest chip maker market. Indeed,
Speaker 4: Quang explained that he merely intended to point out China's
Speaker 4: prowess in AI when he said, quote China will win
Speaker 4: the US China AI race ed.
Speaker 3: Let's look at shares of Tesla down almost four percent.
Speaker 3: More than seventy five percent of votes from shareholders were
Speaker 3: in favor approving the one trillion dollar compensation package for
Speaker 3: Elon Musk that is over ten years and has a
Speaker 3: very strong set of mandatory milestones he needs to achieve
Speaker 3: to unlock the comp but also the voting power that
Speaker 3: comes with it. Let's talk about that with Alexandra Mertz.
Speaker 3: She's the CEO of LLENF Investor Services, but also a
Speaker 3: Tesla shareholder who discusses her views about Tesla on social
Speaker 3: media under the handle Tesla boomer Mamma Mertz was present
Speaker 3: at the shareholder meeting last night. Was also acknowledged by
Speaker 3: other shareholders who are reading out a proposal for Tesla
Speaker 3: to invest in Xai, which we'll get to.
Speaker 2: Alexandra.
Speaker 3: This paves a way for Elon Musk to take his
Speaker 3: stake in Tesla to twenty five percent over the course
Speaker 3: of the ten years. Could you just explain what the
Speaker 3: sentiment was like last night into this morning about how
Speaker 3: comfortable investors feel handing over that control to Elon Musk
Speaker 3: and the belief that you do or do not have
Speaker 3: that he can hit the milestones that have been set
Speaker 3: for him by the.
Speaker 7: Oh I'm very confident that he will hit the milestones.
Speaker 7: Has shown us before what is possible. Nothing's never easy,
Speaker 7: but if you set goals to Elon, he's very competitive.
Speaker 7: He's obviously, in my views, the best executor there is
Speaker 7: on this planet, and.
Speaker 5: He will execute.
Speaker 7: So that's not the question. The question is whether we
Speaker 7: would get sufficient retail and institutional shareholder support, and we
Speaker 7: should it. Seventy five percent is astoundingly high. It is
Speaker 7: higher than the previous compensation packages votes and revotes in
Speaker 7: twenty eighteen and twenty twenty four. So this was a
Speaker 7: clear victory. I am so grateful for everybody who voted.
Speaker 7: I would like to see the twenty five percent that
Speaker 7: voted against it, because how can you be against this
Speaker 7: if you are a shareholder.
Speaker 2: But that's more of the topic.
Speaker 3: For example, we had the investment director of Calper's on
Speaker 3: the show yesterday. CalPERS voted no, and the rationale was
Speaker 3: that in aggregate they saw Elon Musk and board members
Speaker 3: already having sixteen percent of the company and.
Speaker 2: The issue of key man risk.
Speaker 3: So if Musk does get there right and achieves twenty
Speaker 3: five percent stake, what if he something happens to him,
Speaker 3: or what if something distracts him XAI SpaceX for example.
Speaker 3: That was the concern they had. Why don't you share
Speaker 3: the concern?
Speaker 7: Well, first of all, that's the same concern at sixteen
Speaker 7: percent or twenty five percent, right, So that Culpers argument
Speaker 7: is just nonexistent, even though it's a nice world word salad.
Speaker 7: There is no doubt in my mind that that's what
Speaker 7: they try to do. It's not an issue about whether
Speaker 7: he as a key man.
Speaker 2: Is a risk.
Speaker 7: To test that he is the same way he is
Speaker 7: the key person, he's also the key man risk. That
Speaker 7: is just a fact and actually part of the structure
Speaker 7: of this compensation plan addresses that as the last two
Speaker 7: tranches are linked to a succession plan, to a more
Speaker 7: formal succession plan, that what is currently in place. So
Speaker 7: sixteen or twenty five percent, that's not a question. But
Speaker 7: at twenty five percent, Elon is sufficiently strong to prevent
Speaker 7: activist shareholders trying to take over, bringing board members in
Speaker 7: that are not aligned with Tesla's mission. And I think
Speaker 7: that is the key point. Retail has always stood with
Speaker 7: Elon and has always been very active. Knows what this
Speaker 7: company is about, so that is not the concern. But
Speaker 7: it is institutional institutional funds that are in Tesla, despite
Speaker 7: the fact that they don't really like the company, don't
Speaker 7: understand the company, vote against interest of the company, and
Speaker 7: that can become stronger just by the pure mechanism of
Speaker 7: index funds of political activism. And he wants to make
Speaker 7: sure that that can be prevented. And he's right, and
Speaker 7: the fact of being in Texas helps a lot. But
Speaker 7: him getting to twenty five percent obviously.
Speaker 5: Is a good shield.
Speaker 4: But that's exactly the worry is that he does get
Speaker 4: the twenty five percent control and can fend off activism
Speaker 4: that might be in some way trying to course correct
Speaker 4: as others feel outside of Tesla. Why is that You're
Speaker 4: saying it's a word salad, But for many that's exactly
Speaker 4: the fear that he has control over what he calls
Speaker 4: a robot army.
Speaker 7: I understand that, I understand that there is a fear.
Speaker 7: But ask those activists what is their idea about Tesla?
Speaker 7: What is their idea about the better world? They never
Speaker 7: talk about that. They talk about the fact that they
Speaker 7: fear Elon is too powerful. They never talk about what
Speaker 7: Tesla is all about. I never hear a culpers or
Speaker 7: god forbid, a Klaus lewis Iss or the New York
Speaker 7: Controller talk about the mission of Tesla, talk about where
Speaker 7: Tesla is going. And you know, I rather, as a shareholder,
Speaker 7: have Elons have the keys to an army of bots
Speaker 7: than anybody else, including the four companies I just mentioned.
Speaker 5: We'll put that too coveries.
Speaker 4: I feel that he in many ways was trying to
Speaker 4: articulate that they are about the long term vision, whether
Speaker 4: it's about electric vehicles, whether it's about supporting the climate,
Speaker 4: whether it's about humanoid robots. They just don't think that
Speaker 4: perhaps another CEO couldn't achieve really significant phenomenal growth.
Speaker 5: For this business.
Speaker 4: Even if it wasn't Enon Musk, Why is he alone
Speaker 4: the only person who could meet these milestones and drive
Speaker 4: optimists to.
Speaker 5: Be on the moon on Mars?
Speaker 4: I mean that seemed to be the next area of growth.
Speaker 4: Was that what you wanted to hear that we're going
Speaker 4: to have optimists doing surgery but also eventually going to Mars.
Speaker 7: Yes, we should do. We should want to hear that.
Speaker 7: We also were absolutely excited thinking about chip manufacturing. I
Speaker 7: don't think that has really gotten through yet to the press,
Speaker 7: and I Holp Bloomberg is going to talk about it.
Speaker 7: If Tesla goes into chip manufacturing, can you imagine? So
Speaker 7: I would like to ask culpers, show me one other
Speaker 7: CEO would it even have for what Elon has accomplished?
Speaker 7: If you show me one where you would have the
Speaker 7: feeling that that person could do something even comparable. I
Speaker 7: am ready to sit down and discuss it with him,
Speaker 7: but we've got to wait for a long time.
Speaker 3: Alexandro I would push back a little bit because I
Speaker 3: wrote the story about Elon's comments from the Earning School
Speaker 3: about clarifying the Samsung TSMC relationship, and I sent the
Speaker 3: headline last night about his comments on chip manufacturing. So
Speaker 3: I'm going to look into it. I need to ask
Speaker 3: you about Xai. You were in the room and were
Speaker 3: waiting on the eight K. What appeared to happen was
Speaker 3: Brendan Arhart, the corporate secretary, say, there were more four
Speaker 3: votes than against, but a very large number of abstentions,
Speaker 3: and so they're basically reserving the right to wait, look
Speaker 3: at the non binding proposal and go back to it.
Speaker 3: Is that your understanding of where things stand, and also
Speaker 3: just your reaction to it because you were involved in
Speaker 3: the process of getting that proposal on the docket.
Speaker 7: Yes, yes, well, thank you very much. Yes, very good question.
Speaker 7: And as you point out, we haven't seen the eight
Speaker 7: K yet, so I don't have the underlying numbers, but
Speaker 7: I know exactly what happened. The's recommendation was neutral. They
Speaker 7: did not give a recommendation. Lots of retail shareholders just
Speaker 7: follow blindly the board's recommendation. So by going after the
Speaker 7: board's recommendation instead of voting none, they abstained. That is
Speaker 7: the logical way, and that's actually how it is automated.
Speaker 7: We had this issue with a Norwegian bank who gave
Speaker 7: their shareholders only a certain limited number of options to vote,
Speaker 7: and then the shareholders from Norway, which are very numerous interests,
Speaker 7: I could not vote for question six. They were abstaining.
Speaker 7: So abstaining was also just a consequence of the way
Speaker 7: the proxy was laid out, and there was no better choice.
Speaker 7: It was a bad choice to not be able to
Speaker 7: give a guidance, but there was another choice. Because what
Speaker 7: the board is trying to do here, and we have
Speaker 7: to understand why that is, is to stay out of
Speaker 7: it until they get a clear mission from the shareholders.
Speaker 7: Why are they doing that well, because it is a
Speaker 7: conflicted situation. Elon is the key man in both Xai
Speaker 7: and Tesla, and as Solar City has shown us, it
Speaker 7: is always difficult to invest from one company A into
Speaker 7: a company B that are both led by the same
Speaker 7: by the same key person. So the board tries to
Speaker 7: stay out of it until there is a clear mission.
Speaker 7: Now we have to see the eight K numbers to
Speaker 7: understand whether this is now a clear call from shareholders
Speaker 7: to do it. If there were so many stains, it
Speaker 7: may not be. But you also have to know that
Speaker 7: this shareholder proposal number seven was always only advisory. It
Speaker 7: was never that this vote would have been an automatic investment.
Speaker 7: If the board now convinced that they want to invest,
Speaker 7: we will certainly have another shareholder vote on the exact
Speaker 7: proposal of investment, not just on the general idea.
Speaker 4: Pushing us forward and with great energy after what was
Speaker 4: a pretty extraordinary day the annual General Meeting yesterday. You
Speaker 4: were there, We saw all the dancing. Alexandra maz We
Speaker 4: love catching up with you. Thank you, a shareholder known
Speaker 4: non social.
Speaker 5: As Tesla Booma Mamma.
Speaker 4: Now coming up, Grand Theft Auto six, it hits another
Speaker 4: bump in the road. We'll discuss why the latest title
Speaker 4: in the popular video game franchise is being delayed again.
Speaker 5: This is a Bloomberg Tech.
Speaker 4: Srees of Take two having their worst day since February
Speaker 4: twenty twenty four, down almost eight percent. Yesterday, the video
Speaker 4: game publisher pushed back the release of Grand Theft Auto
Speaker 4: Six again until November twenty twenty six. Let's walk through
Speaker 4: this of Bluebog's games reporter Jason Schreier. Basically, it's going
Speaker 4: to be a year late. Now, Why this second pushback?
Speaker 4: What's going on with Rock Start?
Speaker 2: Yeah?
Speaker 8: I mean video games are complicated. To make this is
Speaker 8: going to be one of the biggest video games of
Speaker 8: all time, will probably be the best selling entertainment product
Speaker 8: of all time, and so the pressure is very high
Speaker 8: Rockstar and take two. They want this game to be
Speaker 8: as perfect as part. They wanted to hit ninety five
Speaker 8: plus in Metacritic, that's the review score aggregator. And yeah,
Speaker 8: in these games the.
Speaker 3: Time I get that, you know, wanting to hit ninety
Speaker 3: five plus on Metacritic. What you just said about it
Speaker 3: probably being the biggest entertainment title to sell of all time,
Speaker 3: go back to GTA five and explain the data that
Speaker 3: tells us this might be worth waiting for. From Take
Speaker 3: Two's perspective, they want to get this right. From a
Speaker 3: sales point of view.
Speaker 8: Yeah, there's a simple number here, which is that GTA five,
Speaker 8: the last game in the series, which was released in
Speaker 8: twenty thirteen, has sold two hundred and twenty million units,
Speaker 8: which I mean, that's more. This one game alone has
Speaker 8: sold more than most franchises Final Fantasy Assassin's Creed. This
Speaker 8: makes it the second best selling game of all time,
Speaker 8: only only second to Minecraft, which was released on phone.
Speaker 8: So that's kind of a different a different playing field.
Speaker 8: So yeah, I mean, the sixth are very high. And
Speaker 8: again I think that people tend to underestimate how difficult
Speaker 8: it is to make games, especially a game as big
Speaker 8: and ambitions and technologically impressive as this one. I mean,
Speaker 8: we've seen the trailers, We've seen what.
Speaker 2: It looks like.
Speaker 8: It looks more realistic than any game we've ever seen.
Speaker 8: It's going to have a huge open world. The people
Speaker 8: at Rucks are just are still working on it, still
Speaker 8: making new stuff for it, still building this world and
Speaker 8: fixing bugs and ed. You know well that games like
Speaker 8: Cyberpunk have come out in recent years and needed more
Speaker 8: time in the oven and came out too early, and
Speaker 8: that is just disastrous for the companies involved.
Speaker 3: City and they needed patch after patch. But I still
Speaker 3: went back and played it from the start after the patch.
Speaker 3: Bloombergs Jason Schreyer, thank you very much. Okay, Sticking with gaming,
Speaker 3: A quick update. In the Google versus Epic Game case,
Speaker 3: a federal judge is withholding approval of Google's anti trust
Speaker 3: settlement with Epic Games. The company says it will improve
Speaker 3: the distribution and monetization of apps on Android foes, but
Speaker 3: US District Judge James Donato says he wants to look
Speaker 3: closer at the terms of a deal first to make
Speaker 3: sure it benefits consumers and boosts competition.
Speaker 2: Caro.
Speaker 5: Meanwhile, we've got a lot still to digest.
Speaker 4: We speak with a firm holding CEO Max Levchin on
Speaker 4: the lates's earnings results.
Speaker 5: That's a bit big tech.
Speaker 3: Shares of a firm off session highs up about five
Speaker 3: percent at one point in the session up almost twelve percent.
Speaker 3: The company posting a first quarter earning speed, But really
Speaker 3: the focus is on it raising its twenty twenty six
Speaker 3: forecast for gross merchandise volume, but it sets us up
Speaker 3: for an incredible fiscal twenty six. Joining us on set
Speaker 3: is Max Levchin at firm CEO. There's a lot of emphasis,
Speaker 3: at least from Bloomberg Intelligence in house on card and
Speaker 3: that driving volumes. But what we've learned across this early
Speaker 3: period in your domain is it's worth spending a minute
Speaker 3: on the underlying behaviors of your consumers that drove this
Speaker 3: growth in the quarter.
Speaker 9: What are you seeing so despite the vibe session we're
Speaker 9: seeing in a market today in the last few days,
Speaker 9: a firm's consumer is really healthy. They're shopping, they're buying,
Speaker 9: they're paying their bills. They're energized by the upcoming holidays.
Speaker 9: I think, frankly, the rumors of the American consumer's death
Speaker 9: are greatly exaggerated.
Speaker 3: It's interesting because, like different segments of the technology sector
Speaker 3: tell different stories right now, is there a specific product
Speaker 3: category or method of spending that is is demonstrating that
Speaker 3: more than others.
Speaker 9: I think we are quite unique in the sense a
Speaker 9: firm's brand A promise really is use us when it
Speaker 9: matters to you, because you'll have total control and great
Speaker 9: degree of transparency. And as the outside pressures, you know,
Speaker 9: even the stories you read wagh people down, it's easy
Speaker 9: to say, you know what Affirm is at least one
Speaker 9: thing that's going to keep me clear and in good control.
Speaker 9: And so we think people are coming to us a
Speaker 9: little bit more. Certainly, we saw great demand for our
Speaker 9: recent zero day promotion, but you know, I think so far,
Speaker 9: so good, at least in the Affirm consumer world.
Speaker 4: The funny thing is max sometimes the market likes to
Speaker 4: see use of Affirm or maybe more standard by now
Speaker 4: pay later offerings as the VIBE session.
Speaker 5: Is that not the case?
Speaker 9: You know, we have twenty four more than sway from
Speaker 9: a million active consumers last quarter. At this point, it's
Speaker 9: really dangerous to just say, oh, the affirm consumer is
Speaker 9: doing X or Y. We have quite a number of segments.
Speaker 9: Folks that are using our zero pcent promotions are typically
Speaker 9: leaning into just frankly, saving money, getting a great deal.
Speaker 9: Folks that favor longer terms to repay care a lot
Speaker 9: less about total costs, very much care about individual calf flow,
Speaker 9: and so depending on sort of which segment you look at,
Speaker 9: you'll see a slightly different behavior. I think the unifying
Speaker 9: factor is they're all getting a really clear deal. There
Speaker 9: are no late fees, there's no gimmis, there's no gotchas,
Speaker 9: and that that's.
Speaker 4: The way they keep coming back to us and why
Speaker 4: you keep seeing growth merchandise volumes going up and to
Speaker 4: the right. What's interesting is your partnership model and it
Speaker 4: really works what Amazon, Shopify, Apple, Costco.
Speaker 5: Where else do the partnerships make sense?
Speaker 9: Max, you know, to be honest, everywhere. We just announced
Speaker 9: a really strong push into services. So for a long
Speaker 9: time you would think of buying out palliator as a
Speaker 9: thing you buy and pay over time, people buy more
Speaker 9: than things. They remodel their kitchens, they refurbish various parts
Speaker 9: of their house and which announced the great partnership with
Speaker 9: Service Titan are a variety of other platforms, so we
Speaker 9: partner very widely because this model really works for any purchase,
Speaker 9: you know, anything from a couple hundred dollars all the
Speaker 9: way out of two thousands.
Speaker 5: What about you leaning into the moment?
Speaker 4: There is a lot of competition and smaller scale, and
Speaker 4: many times you stand out because they're more dependent on
Speaker 4: late fees and other such charges.
Speaker 5: Would you do any m and A? Is this the
Speaker 5: environment in which you'd look to do that?
Speaker 9: You know, I think our current growth tracks so well,
Speaker 9: I'm not sure. I have a lot of time to
Speaker 9: consider and able to, you know, never saying obviously we're
Speaker 9: doing really well. The company is performing. I always found
Speaker 9: that building is my strong suit. But you know who knows.
Speaker 3: Max This earning season, we've had the opportunity to speak
Speaker 3: to the CEOs of Chime Robinhood so far and now
Speaker 3: you I appreciate their differences in those companies, but in
Speaker 3: how people transact with money, what you will have in
Speaker 3: common is looking at varied products that you offer. What
Speaker 3: is your new product strategy going into twenty six and
Speaker 3: do you have any sort of ideas about this generational
Speaker 3: wealth transfer that all the others are.
Speaker 2: Going on about at the moment.
Speaker 9: You know, I think we are a payment company first
Speaker 9: and foremost. Our job is to be there, be available.
Speaker 9: You know, we talk a lot about there are many
Speaker 9: doors digital and real world where they're lots of little
Speaker 9: logos of payment systems. Our job is to be on
Speaker 9: every door, to be available, to make sure we are
Speaker 9: there to serve when people are buying goods and services.
Speaker 9: And so we're very, very focused on executing what we have.
Speaker 9: You know, forty two percent doesn't come easy, and we
Speaker 9: write book you trying to hit really good growth. You know,
Speaker 9: I've learned the hard way not to pronounce new products.
Speaker 9: We have all sorts of really exciting things we're cooking.
Speaker 9: You know, have me back and I'll announce it.
Speaker 2: But it's ready to go fair enough.
Speaker 4: Beaten raised trajectory Sabloom, meg Intelligence, is it, Max Levchin,
Speaker 4: we appreciate it if I'm CEO.
Speaker 8: Six.
Speaker 10: Then finally, on the twenty twenty five CEO Performance Award
Speaker 10: to our founder and CEO Elon Musk, with over seventy
Speaker 10: five percent voting in favor, Hop Road.
Speaker 3: That was Brandon Eh reading the results of test, the
Speaker 3: shelled about Yeah. Today, the company's corporate secretary and general counsel,
Speaker 3: and as we've been discussing, Musk's pay package, worth potentially
Speaker 3: up to a trillion dollars was approved today. The shares, however,
Speaker 3: are lower by four percent. Is that sell the news?
Speaker 3: Is there something in reaction to the vote itself? Not
Speaker 3: SURECARC that's.
Speaker 5: Got an invest to take.
Speaker 4: Then we bring in Gene Monthster, managing partner at Deepwater
Speaker 4: Asset Management.
Speaker 5: Thrilled to have you on.
Speaker 4: So much to talk about, but the seventy five percent
Speaker 4: is a lot, but there also comes some significant milestones
Speaker 4: and also then talk of fifty percent growth in car
Speaker 4: production by the end of twenty twenty six.
Speaker 5: Can he make that, Gene.
Speaker 11: Now, The simple answer is that probably not. But that's
Speaker 11: what Elon did. A master class is as ultimately is
Speaker 11: throwing a ball out there that is difficult to achieve,
Speaker 11: but he has the wherewith to do that.
Speaker 2: And so that ball you.
Speaker 11: Talked about, the production piece, this fifty percent, He puts
Speaker 11: that target out there, but then he adds these kind
Speaker 11: of qualqualifiers that say that yes, we can do it,
Speaker 11: but we can only move as fast as the slowest
Speaker 11: part of the production chain that pipeline to get them
Speaker 11: to build the whole capacity, to get them to build capacity.
Speaker 11: And separately, when he thinks about Optimists and what the
Speaker 11: potential is there, I mean, this is something that he
Speaker 11: outlined as a kind of a five year ten year plan,
Speaker 11: but it is ultimately something that you know, getting the
Speaker 11: ten million robots here, I just want to put that
Speaker 11: in a perspective. Ten million a year. They're doing two
Speaker 11: million cars a year and they really got moving in
Speaker 11: earnest on the car production in twenty nineteen, and so
Speaker 11: it's taken them six years to get to two million.
Speaker 11: These are huge targets and Caroline at the most basic level,
Speaker 11: he put big targets out there. That's what he does,
Speaker 11: and that's the mandate that investors gave him with this
Speaker 11: vote of this pay package is they want these big
Speaker 11: targets out there, and he's delivering on that, whether it's
Speaker 11: the production or the commentary about optimists.
Speaker 5: Best is excited. Your dog's excited.
Speaker 4: Gene interested about what therefore he has to do to
Speaker 4: keep up with the momentum. Now, because look, let's just
Speaker 4: ask your basic question. Many were worried about a twenty
Speaker 4: five percent ownership for Elon because of the control. Not
Speaker 4: so much the one trillion dollar pay package. It's more
Speaker 4: about that he's going to be controlling a robot army.
Speaker 4: Is that something you want to see that generally society
Speaker 4: wants to see.
Speaker 11: Well, that's what he wants control. And the answer is no.
Speaker 11: One wants an army of robots to be controlled by
Speaker 11: one person. But most seventy five percent plus of Tesla
Speaker 11: investors want a company that's building that to be controlled
Speaker 11: by one person or controlled by Elon, And I think
Speaker 11: that that makes sense. Elon has been very clear that
Speaker 11: if he wants to build this army, if he wants
Speaker 11: to build this AI vision company, he doesn't want to
Speaker 11: be pushed out. He also left open the option for
Speaker 11: him to get pushed out, in his words, if I
Speaker 11: go insane, and so I think that's an important distinction too.
Speaker 11: He has, But that doesn't mean that he's going to
Speaker 11: be a tussle forever.
Speaker 3: I think going back to basics is really critical here, Gene.
Speaker 3: So there's the mechanics of what happened the vote past.
Speaker 3: The package was approved, and then Elon Musk spoke afterwards,
Speaker 3: and he actually gave some information that relates directly to
Speaker 3: the milestones the company is set. So in the middle there,
Speaker 3: we're saying the board is tasking him over ten years
Speaker 3: to deliver twenty million vehicles.
Speaker 7: Right.
Speaker 3: He told us in his remarks that twenty twenty six
Speaker 3: would see fifty percent annualized growth. That was something material,
Speaker 3: was it not?
Speaker 11: He said fifty percent in yourized growth. But then he
Speaker 11: put the caveat if the if the supply chain can
Speaker 11: provide the components to get them to increase the capacity
Speaker 11: about that much. It's a similar caveat that happens when
Speaker 11: he says we're going to have Autonomy full first approved
Speaker 11: in one or two months. That was his comments yesterday,
Speaker 11: pending regulatory approval.
Speaker 12: And so.
Speaker 11: I'm a shareholder of Tesla. I think that this company
Speaker 11: is grossly undervalued. That may sound like it's out of
Speaker 11: touch with reality, that comment, but I think it's grossly undervalued.
Speaker 11: But I also am realistic about what goes on here.
Speaker 11: There's this these targets that could put out there, but
Speaker 11: then there's these caveats that are out of his control
Speaker 11: that will be put on any sort of Some of
Speaker 11: these really big targets.
Speaker 3: You noted, as many have done, Musk's comments on Silicon,
Speaker 3: and it was a throwaway comment that the idea that
Speaker 3: Tesla might do its own fab Are you taking that seriously?
Speaker 11: So I'm not taking it seriously. I think that you know,
Speaker 11: Elon wants to make a point, and the point is
Speaker 11: I think he's frustrated about what he is paying for Silicon.
Speaker 11: If you look at all of his enterprises, SpaceX XAI, Tesla, Neuralink,
Speaker 11: all those combined, the biggest line item on those outside
Speaker 11: of people is around Silicon. I mean, there's he spends
Speaker 11: a ton of money on that. What he talked about
Speaker 11: here is having similar performance as Blackwell and videos black
Speaker 11: Ole GPU at a ten percent.
Speaker 2: Of the cost.
Speaker 11: You think that that's doable, And I just want to
Speaker 11: kind of put that to the test. Is that kind
Speaker 11: of performance, that kind of costs performance is something that
Speaker 11: is I think unrealistic at least for the next few years.
Speaker 11: It's the same reason why in Nvidia has been so
Speaker 11: bullish on their business is that these customers would love
Speaker 11: to find an alternative, whether it's through customs, Silicon or
Speaker 11: through AMD for example. But the reality is is that
Speaker 11: in Nvidia still is the best bang for the buck
Speaker 11: when it comes to silicon, and that's a very expensive
Speaker 11: buck in this case. So I think that I generally
Speaker 11: don't think Tesla is going to or should do their
Speaker 11: own fab. I think twenty billion dollars can be spent
Speaker 11: in much better places. He kind of threw the lifeline
Speaker 11: out there. Maybe we work through Intel has been a
Speaker 11: challenging road for Intel on the fab side, and building
Speaker 11: a fab advances fab is really tough. These advanced nodes
Speaker 11: are very tough, and Intel's never shown they were competent
Speaker 11: in that.
Speaker 4: Gene broadened that out therefore, because the whole market has
Speaker 4: a lot of anxiety on its shoulders right now around
Speaker 4: the build out a generative AI infrastructure. Now, in particular,
Speaker 4: we saw at sam Altman trying to navigate what had
Speaker 4: become a bit of a explosion that the CFO had
Speaker 4: set off on Wednesday by saying maybe they'd looked to
Speaker 4: some sort of government to support for their infrastructure spend.
Speaker 4: Sam Altman came out and said, look, the only way
Speaker 4: when one government support is perhaps if we became a
Speaker 4: fabricator of chips. But what do you make about the
Speaker 4: weight that is currently on this market about vindicating one
Speaker 4: point four trillion dollars spending by a company that's making
Speaker 4: maybe twelve billion, call it, maybe even twenty billion a
Speaker 4: year in terms of revenue.
Speaker 11: So there is a switch that flipped since the end
Speaker 11: of October. I think it was like the twentieth of
Speaker 11: October is when Jensen came out and said that video
Speaker 11: is going to essentially beat the expectation by fifteen percent
Speaker 11: plus over the next five quarters. He put out this
Speaker 11: five hundred billion dollars in Blackwell revenue, and that was
Speaker 11: a really big point. And then we had the hyperscalers,
Speaker 11: and then this conversation started to shift. There's a change
Speaker 11: in terms of how the AI investor is thinking about this,
Speaker 11: and this shift is this sense of like, wow, maybe
Speaker 11: this is just getting to be too much. We saw
Speaker 11: what happen with MetaStock, and then on top of that,
Speaker 11: Sarah Fry and the Sam Altman and the Golden or
Speaker 11: the Wall Street Journal event, all that kind of I
Speaker 11: think you put all this together and there all of
Speaker 11: a sudden, this vortex of what's really going on here,
Speaker 11: whether it's the government piece, whether it's the expectations that
Speaker 11: VIDIA has about how much they're going to sell over
Speaker 11: the next few quarters, whether it's Meta saying how much
Speaker 11: they're going to spend and Amazon, it just feels like
Speaker 11: there's investors are now at a point where they're uncomfortable
Speaker 11: that they don't believe that this ultimately is going to
Speaker 11: be prosper There's going to be a press around this investment,
Speaker 11: and so I think that's the shift we've seen. That's
Speaker 11: why I think we've seen sell off in these companies.
Speaker 11: The fundamentals are rock solid. Opening Eye doesn't need government support,
Speaker 11: there's no question, but there's a psychology piece to this trade,
Speaker 11: and I think it's just gotten softened by some of
Speaker 11: these conversations. Just too many moving parts now for our investors.
Speaker 11: That will settle down once they start to see the
Speaker 11: December quarter results and understand that in fact, we are
Speaker 11: still early in this AI build out.
Speaker 3: Gem Monster managing partner at Deepwater Asset Management. Great to
Speaker 3: have you back on the show, Thank you very much.
Speaker 3: Coming up, we're going to be joined by Draft Kings
Speaker 3: CEO Jason Robbins following the company's earnings and it's new
Speaker 3: deal with Disney.
Speaker 2: More on that next. This has been bag Tech.
Speaker 3: Welcome to our TV and radio audiences worldwide. We head
Speaker 3: back to earnings with Draft Kings out with every Results,
Speaker 3: cutting its revenue forecast for the full year. The company
Speaker 3: also out though, with news that Disney signed a new
Speaker 3: multi year deal to make the Sports Betting Company the
Speaker 3: official betting site and odds provider for the ESPN Sports Network.
Speaker 3: Let's bring in Draftking CEO Jason Robbins. It's an interesting
Speaker 3: partnership and I think that's where we should start. How
Speaker 3: much does this move the needle for you? You know,
Speaker 3: we've talked in the past on this program, Jason with
Speaker 3: you about the integration of the live sports event and
Speaker 3: the broadcast with the betting activity.
Speaker 2: Your big picture goal with this deal. Well, first of all.
Speaker 13: ESPN is a you know, iconic brand. It's you know,
Speaker 13: by far the biggest name in sports in the United States,
Speaker 13: and they have an incredible portfolio, unmatched portfolio of sports content, influencers, talent.
Speaker 13: So it's really, you know, for us, just the greatest
Speaker 13: partner you can have when you're in the space we're
Speaker 13: in and Jimmy Pataro runs it really understands in I think,
Speaker 13: values the sports betting space and understands that the customer
Speaker 13: overlap is high, and it's important that they engage their
Speaker 13: customers by being partnered with somebody like Drafting, so really excited.
Speaker 2: To embark on it.
Speaker 13: We've been partners with them many times in the past,
Speaker 13: so it's familiar territory. We know all the people there
Speaker 13: and we're looking forward to working together. And you add
Speaker 13: that to our deals with NBC, Universal and Amazon and others,
Speaker 13: we have an unmatched I think, presence across the sports
Speaker 13: landscape over the next several years prediction markets.
Speaker 3: Wednesday night, we were with Robin Hood at their in
Speaker 3: person earning school.
Speaker 2: That was wacky.
Speaker 3: Don't know if you consider that, but the month of
Speaker 3: October massive volumes for them. You're being super thoughtful about predictions.
Speaker 3: I understand that, and you have a clear strategy. My
Speaker 3: question has always been how much a growth in a
Speaker 3: nascent predictions market cannibalizes other offerings that you have.
Speaker 2: I think very little.
Speaker 13: If you look at the UK, for example, exchange based
Speaker 13: is about five percent of the total pie, so you
Speaker 13: know that's probably about right. And I think a lot
Speaker 13: of it is largely incremental because they're market makers and
Speaker 13: others that are not present on traditional sports books to
Speaker 13: generate a lot of the volume. So I think it's
Speaker 13: very much an incremental opportunity for us, and that's why.
Speaker 2: We're so excited about it.
Speaker 13: We acquire real Bird and we're also looking to you know,
Speaker 13: enter the market sometime in the next couple months.
Speaker 4: What's interesting, Jason is investors analysts out there called out
Speaker 4: on the actual earning script talking about how marketing expenses,
Speaker 4: higher sales expenses did eat into the results, and they
Speaker 4: call them also some ugly outcomes when it comes to
Speaker 4: the sports games for that you can't control. But what
Speaker 4: about the expenses you're going to have to have on
Speaker 4: the predictions markets.
Speaker 13: Well, we do plan to make some investment there. We
Speaker 13: mentioned this on the call that we're going to be
Speaker 13: more i think conservative in terms of the paybacks we're
Speaker 13: looking for, just given how nis in a space it
Speaker 13: is and the fact that you know, it's unclear kind
Speaker 13: of how this will all play out, but we are
Speaker 13: going to make some investment there. First, of course, and
Speaker 13: getting a product developed and making sure that that's the
Speaker 13: best in class. You can't win, and we've always said
Speaker 13: this product is the most important thing. You can't win
Speaker 13: if you don't have a great product. And then assuming
Speaker 13: that the numbers check out, will spend marketing Accordingly, We're
Speaker 13: going to be very data driven like we always are,
Speaker 13: and everything we will.
Speaker 2: Test into it.
Speaker 13: But we did want to make sure as we guided
Speaker 13: that we were thoughtful about giving the team some space
Speaker 13: to be able to accelerate spend if the numbers look good.
Speaker 4: And therefore the guide did pull back rather than uplift
Speaker 4: going forward.
Speaker 5: Jason, but you say it's conservative.
Speaker 4: You talk about an incremental opportunity from predictions, and I'm
Speaker 4: really interested as to how you make sure this doesn't
Speaker 4: cannibalize what you already.
Speaker 5: Have out there.
Speaker 4: You've talked a lot about how this might actually make
Speaker 4: more states accessible to sports better because at the moment
Speaker 4: you can get fifty states with this predictions market, but
Speaker 4: what you've got twenty five at the moment for your offering,
Speaker 4: and you're about to have and you also have DC
Speaker 4: and then you're adding Missouri.
Speaker 13: Yeah, I mean, I think you're exactly right that this
Speaker 13: will hopefully lead more states to decide that they might
Speaker 13: as well legalize sports betting. It's I think predictions are
Speaker 13: a powerful talking point for that, because you know, same
Speaker 13: as the illegal market, same as anything in this case,
Speaker 13: it's regulated, but the bottom line is it's activity that's
Speaker 13: already happening in the state at some level that they
Speaker 13: are not directly benefiting from and regulating. So I do
Speaker 13: think that'll motivate some states, But for us, really the
Speaker 13: cannibalization thing isn't a huge concern. We haven't seen that happen,
Speaker 13: not just here, but as I mentioned, overseas where there's
Speaker 13: long established I mean, it's not a brand new thing
Speaker 13: like it is here. There's been predictions and sports exchanges
Speaker 13: around for decades in the UK, for example, So we
Speaker 13: feel like there's pretty good data out there to show
Speaker 13: that head to head, the traditional sports betting product is
Speaker 13: a much far superior product for customers.
Speaker 3: Jason, you said that this is the most bullish you've
Speaker 3: ever felt about the company's future. What are the underlying trends,
Speaker 3: data points, behaviors of your customer? Is that give you
Speaker 3: that conviction? Why do you have it now that you
Speaker 3: didn't have previously?
Speaker 13: Well, I think if you take a step back, you know,
Speaker 13: it really starts with the progress that we've made over
Speaker 13: the last few years in the position we put ourselves in.
Speaker 13: Remember two years ago, we weren't even profitable. Three years ago,
Speaker 13: we had nearly a billion dollar adjusted EBIT to loss.
Speaker 13: At that point, you know, we were getting killed in
Speaker 13: the market because people thought we were going to run
Speaker 13: out of money and go out of business. We really
Speaker 13: buckled down, we grew revenues, we managed costs, and you know,
Speaker 13: just a few years later we've had an over billion
Speaker 13: and a half swing. So I think that shows that
Speaker 13: we are in a great position. But also more importantly
Speaker 13: now we're in a position to play offense. We are profitable,
Speaker 13: we have scale, we have the best product in the market,
Speaker 13: we have the absolute best partnerships and presence across the
Speaker 13: media landscape. We're about to launch Sports Predictions, which I
Speaker 13: believe represents a huge incremental opportunity for us. So a
Speaker 13: lot of really exciting things going on, and the only
Speaker 13: real negative on the quarter was the sport outcomes. I
Speaker 13: think think all the stereover predictions is kind of nonsense,
Speaker 13: but the really only negative sport outcomes. But that's a
Speaker 13: temporary thing, that's not something that has anything to do
Speaker 13: with the fundamentals of the business.
Speaker 3: Draftking CEO Jason Robbins, thank you very much, Caroline.
Speaker 4: Well it's time now for talking tech ed first up
Speaker 4: Bitcoin when it's fallen as much as twelve percent of
Speaker 4: per cent so far this week on trap for its
Speaker 4: worst weekly performances all the way back in March. Since
Speaker 4: spite of President Trump's push to cement US as the
Speaker 4: world's crypto epicenter, the market value of the digital assets
Speaker 4: is now lower than I Need took office Plus China
Speaker 4: when it's allowing Dutch chip maker and Nick Sperior to
Speaker 4: export again from its operations in the country. This sets
Speaker 4: the stage for the Netherlands government to kind of back
Speaker 4: down and suspend its powers over the Chinese own company
Speaker 4: after a conflict that had threatened to disrupt global automotive
Speaker 4: production and Apple's streaming service when it went down briefly
Speaker 4: for some users last night, shortly after the debut of
Speaker 4: the widely.
Speaker 5: Anticipated pluribus It's a new series from the Career or
Speaker 5: are breaking bad?
Speaker 11: Look?
Speaker 5: This came and a bad time for Apple, which build plur.
Speaker 4: Of us as one of the major exclusive attractions at
Speaker 4: We're at a time when consumers are more cost conscious
Speaker 4: than ever. Brands well, they're racing to meet them where
Speaker 4: they actually shop. Creator commerce platform LTK is expanding to
Speaker 4: include brand profiles, giving companies a new way to connect
Speaker 4: directly with value driven shoppers within the creator community.
Speaker 5: For more Ammaven's Box. LTK co found it joins us.
Speaker 4: Now it's really interesting because you have what I think
Speaker 4: forty million monthly users globally on LTK. But they come
Speaker 4: because they're creators, their favorite creator is they're telling them,
Speaker 4: advising them on what they could purchase. Why is therefore
Speaker 4: Nike putting itself there as a brand individually?
Speaker 12: You know, LTK is the single largest creator commerce platform.
Speaker 5: We have thirty percent of Gen.
Speaker 12: Z and millennial women in the US using the platform.
Speaker 12: There's spending every sixty seconds. Let's see, they're going I
Speaker 12: think sixty people shopping every second. They're buying eleven thousand
Speaker 12: dollars with a product every single minute.
Speaker 5: That's six billion a year.
Speaker 12: That's the equivalent of an Eras tour every single quarter.
Speaker 12: There's a lot of demand here and that's only growing
Speaker 12: by a billion since twenty twenty four. You're seeing that
Speaker 12: consumers are rotating their trust directly into creators. That creator
Speaker 12: trust is up over twenty percent year over year, and
Speaker 12: brands want to have more opportunity to reach their customer
Speaker 12: on the platform where they are today. So just this week,
Speaker 12: we've had brands like you mentioned, whether it's Nike Target
Speaker 12: in the beauty category, Alta, Sephora, Tart on the sport
Speaker 12: and athletic, it's Alo, it's Nike gets Adidas, huge global
Speaker 12: brands launching their presence on the LTK social app to
Speaker 12: be able to meet creators and their audiences in a
Speaker 12: high trust environment.
Speaker 5: That's so unique right now. So what are they actually doing?
Speaker 5: I went onto the Nike offering for example, and the moment.
Speaker 4: It looks like they're getting creative content and sort of
Speaker 4: putting it onto their own landing.
Speaker 5: How will they differentiate do you think going forward?
Speaker 12: Yeah, so this is a whole new experience. This doesn't
Speaker 12: exist anywhere else. What we've done is we've launched a
Speaker 12: platform where these brands can come in and see all
Speaker 12: the content that's being written about them on the LTK platform.
Speaker 12: So that's been about seven million pieces of original content
Speaker 12: just on the LTK platform alone from these.
Speaker 5: Creators year over year.
Speaker 12: So for example, Nike would come in, they see all
Speaker 12: the content written about them, they can curate for their audience,
Speaker 12: their favorite creators and the best content talking about the
Speaker 12: products that they love. So if I'm a Nike fan,
Speaker 12: not only can I go through my favorite creators to
Speaker 12: find that product, but I can just search Nike, follow
Speaker 12: Nike and see the things that they are curating. So
Speaker 12: brands are not creating the content on LTK. It's still
Speaker 12: creator driven, but they are able to curate it, which
Speaker 12: is giving their audience really another path to discovery. On
Speaker 12: the LTK app we found that one in five searches has.
Speaker 5: A brand name.
Speaker 12: So people might be looking for like Nike running shoes,
Speaker 12: maybe they're looking for Abercrombie Dnum, they're looking for a
Speaker 12: Christmas tree from Target. We see that happening one in
Speaker 12: five times, and so this gives our brands the opportunity
Speaker 12: to have a little bit more influence over the curation
Speaker 12: of what that customer ultimately sees. By following that brand,
Speaker 12: it takes a little further because what's unique on LTK
Speaker 12: is when you follow someone, it actually means something. Our
Speaker 12: following feed means that you get to choose that content
Speaker 12: that shows up and when they want to meet their
Speaker 12: customers every day. That's a really important part of building community.
Speaker 12: It's something that is unique to LTK given the age
Speaker 12: of AI and algorithms, but very.
Speaker 3: Quickly we had thirty seconds. You have rich data about
Speaker 3: behaviors in September and October. Is the consumer healthy through
Speaker 3: your data?
Speaker 2: They are.
Speaker 12: We're seeing that they're spending average order values up seven
Speaker 12: percent year over year on LTK. They're spending almost a
Speaker 12: billion more this year than they did last year. The
Speaker 12: biggest shift on the consumer side is that they are
Speaker 12: expecting for out of stock products. So we saw search
Speaker 12: for gifting gope over three hundred percent in September, more
Speaker 12: than half of those in our consumer studies. So they
Speaker 12: expect for creators to help them source alternative the products.
Speaker 12: This is a huge shift because last year it was
Speaker 12: all about price. This year it's all about in stock.
Speaker 12: We're excited to help our brands navigate this. D're all new,
Speaker 12: all in one creator platform that's completely free for brands
Speaker 12: that we've just launched, where they're paying for success, not access.
Speaker 5: It's bring it all together for them this year.
Speaker 3: Amber Ven'sbox LTK co founder, Thank you very much. Sadly
Speaker 3: that does it for the edition of Bloomberg Tech. Check
Speaker 3: out the podcast you know where to find it. Happy Friday.
Speaker 3: This is Bloomberg Tech