Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
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Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: A possible de escalation in the Middle East ripples through
Speaker 3: markets as President Trump outlines talks to potentially end the
Speaker 3: war in Iran.
Speaker 4: Plus, we'll take a look at Mosque's grand plan to
Speaker 4: manufacture his own chips for robotics, AI and space data centers.
Speaker 3: And Nscale becomes one of Europe's most valuable startups with
Speaker 3: a fourteen point six billion dollar valuation and add Sheryl
Speaker 3: Sandberg to its boards.
Speaker 4: We'll discuss let's check on these markets first and foremost, though,
Speaker 4: because you called it rippling through the market said, there
Speaker 4: is talk of a de escalation, there is sites being
Speaker 4: set on the straight or four moves, and there isn't
Speaker 4: it another record move for Brent contract of like ten
Speaker 4: percent and one point it fell below ninety six dollars.
Speaker 5: This of course fuel some risk on sentiment.
Speaker 4: We see the NaSTA one hundred having its best day
Speaker 4: since the start of February. At one point it's best
Speaker 4: day since November. And this really as we see President
Speaker 4: Trump send shockwaves through the market with what seems to
Speaker 4: be an apparent discussion at a high level and maybe
Speaker 4: some movement towards the strait.
Speaker 5: Of hol moves. Just take a listen to what he
Speaker 5: said to reporters.
Speaker 6: Earlier that would be up in to their version if
Speaker 6: this worked, be a jointly control nine Maybe me, maybe me, thanks,
Speaker 6: me and the idola, whoever the idolla.
Speaker 3: Is President Trump speaking to reporters earlier today. Let's get
Speaker 3: to Bloombers Kyle Lyons, co host of Balance of Power
Speaker 3: for the latest, and what is the latest?
Speaker 7: You know?
Speaker 3: All morning long, so many headlines on the terminal about
Speaker 3: the state of talks between the United States in Iran.
Speaker 8: Yeah, and we have seen a major about face from
Speaker 8: President Trump here, from threatening within forty eight hours to
Speaker 8: attack Iranian power and energy infrastructure, they did not agree
Speaker 8: to open the strait of horror moves to now saying
Speaker 8: he's asked for a delay of such action for five
Speaker 8: days due to progress in talks that he said took
Speaker 8: place someday between his envoy Steve Whitcoff and Jared Kushner
Speaker 8: and their Iranian counterparts, in which he said, according to
Speaker 8: those discussions, Iran agreed not to restart its nuclear program
Speaker 8: and to relinquish nuclear material that is still in the country.
Speaker 8: He says, Iran is the one who was looking to
Speaker 8: make a deal here, though he would like to make
Speaker 8: a deal as well. But there are a few outstanding questions,
Speaker 8: one being who is it exactly that the US is
Speaker 8: negotiating with. As President Trump said, it is not the
Speaker 8: Iyatola Mushtaba Hamane, of course, the son of the late
Speaker 8: Supreme Leader, and the US has repeatedly heralded as well
Speaker 8: as Israel taking out much of Iran's top brass, from
Speaker 8: the national security chief to the defense chief to the
Speaker 8: head of the Iranian Revolutionary Guard card. It's not exactly
Speaker 8: clear who this person may be, though Axios is reporting
Speaker 8: that Whitcoff is speaking with the leader of the Iranian Parliament,
Speaker 8: so that may be the case. That we have not
Speaker 8: confirmed that here at Bloomberg. And beyond that, it is
Speaker 8: not clear that Iran is actually as eager to make
Speaker 8: a deal as the President suggests. Iranian state media have
Speaker 8: said that the president's statements is just psychological warfare and
Speaker 8: effort to get energy prices down, and that no talks
Speaker 8: are happening between Tehran and Washington. There's also the third
Speaker 8: party in this conflict to consider, Israel. Israeli officials have
Speaker 8: told Bloomberg that they do not see an imminent end
Speaker 8: to the war and they will continue strikes, though not
Speaker 8: looking at energy infrastructure. And so that does remain an
Speaker 8: open question. Even if the US and Israel are not
Speaker 8: going after the energy infrastructure, is the president threatened? That
Speaker 8: is not to say that military strikes and operations against
Speaker 8: other assets will not continue in the region all the same, Clearly,
Speaker 8: with the President's a more optimistic tone on a potential
Speaker 8: diplomatic offramp to this conflict is rippling its way through
Speaker 8: financial markets today, which may impart have been his.
Speaker 4: Intent, Katie, a very thorough state of affairs.
Speaker 5: Where do we look to next?
Speaker 8: Well, it's going to be a question of, as President
Speaker 8: Trump says that talks will continue by phone between the
Speaker 8: US and Iran today, if we get any further readout
Speaker 8: from those or if Iranian state media starts to signal
Speaker 8: that perhaps there is more effort toward a deal, not
Speaker 8: just on the US side, but on the Iranians as well,
Speaker 8: and if we hear any further developments for Israelis to
Speaker 8: whether or not they are willing to accept the terms
Speaker 8: that President Trump is outlining here, Certainly a degree of
Speaker 8: skepticism may be warranted until anything is more ironed out.
Speaker 8: Keeping in mind as well that we are coming off
Speaker 8: the deployment of more assets and personnel, including thousands of marines,
Speaker 8: to the Middle East, and a request by the Pentagon
Speaker 8: to the tune of some two hundred billion dollars to
Speaker 8: Congress for additional funding for this conflict, and of course
Speaker 8: to backfill stockpiles that we have deployed thus far in
Speaker 8: the Middle East. So it doesn't appear necessarily that the
Speaker 8: US at this time is fully willing to walk away
Speaker 8: from military operations, even as a diplomatic off ramp may
Speaker 8: be pursued here. I would also know that President Trump
Speaker 8: is scheduled to speak in Memphis at one pm. It's
Speaker 8: something more domestically focused on crime, but he could, as
Speaker 8: he speaks with officials they are and with reporters gathered,
Speaker 8: give even more signalists to what exactly he sees happening
Speaker 8: next when it comes to run.
Speaker 4: Bl most Kaylee lines from Washington, thank you very much. Indeed,
Speaker 4: look that's bringing the market reaction to all of this,
Speaker 4: Bluemost Billy Lipshitz joins us, Now, we always have a
Speaker 4: tech focus on this show, but to whiplash.
Speaker 9: In terms of the turnaround of the markets, Yeah, no,
Speaker 9: And in Bloomberg reporting just a few minutes ago that
Speaker 9: the president's decision was aimed in part at calming markets.
Speaker 2: So we did see that reaction.
Speaker 9: As you mentioned, we saw the SP five hundred absolutely
Speaker 9: rip when Trump talked down d escalator or talked about
Speaker 9: de escalation. There's so much uncertainty around what the path
Speaker 9: forward looks like. The main thing to keep in mind,
Speaker 9: the SP five hundred is really back to where it
Speaker 9: was on Wednesday. It's where essentially it was at the
Speaker 9: end of Friday a week.
Speaker 2: And a half ago.
Speaker 9: So as much volatility as there has been on the
Speaker 9: headline levels, you're not really seeing an actual move in
Speaker 9: either direction. Yes, the SP five hundred broke below it's
Speaker 9: two hundred and one hundred day moving averages back above that,
Speaker 9: but for all intents and purposes, you're still in essentially
Speaker 9: a banded region for the last few weeks.
Speaker 3: Remember that we ended Friday with the Nasdaq one hundred
Speaker 3: having its full straight week of declines, and the thing
Speaker 3: about the warring Iran is that the headlines change direction
Speaker 3: all the time. There's been big outperformance in chips as well,
Speaker 3: and it's a double take, but the Philadelphia Semiconductor Index
Speaker 3: is up twelve percent so far this year. Well, then
Speaker 3: as that one hundred and an S and P five
Speaker 3: hundred both down three percent. How much is this is energy, Bailey?
Speaker 3: How much is this is still people trying to assess
Speaker 3: supply chains and how that might impact different sectors.
Speaker 2: It's a lot about the supply chain.
Speaker 9: It's a lot of uncertainty around what the ultimate knock
Speaker 9: on effects are, how long does this war conflict last,
Speaker 9: what the ultimate damage is to the infrastructure, anyrn on
Speaker 9: some of these oil fields and some of the oil
Speaker 9: refining projects. The big thing to keep in mind, though,
Speaker 9: at is that markets are tied. So we have been
Speaker 9: seeing pretty much the market move in lockstep to the
Speaker 9: downside of whatever oil's doing. So if oil's down twelve percent,
Speaker 9: logically you can expect the market to rally and vice versa.
Speaker 9: So again, it is still only Monday morning. We still
Speaker 9: have a lot of time. Even though Trump talked about
Speaker 9: a five day kind of pause, for attacking some of
Speaker 9: these energy projects. But the big thing to keep in
Speaker 9: mind is that we are seeing these moves play out
Speaker 9: in real time across.
Speaker 3: Assets, Bluebooks, Bay Lipschultz with the market some thank you
Speaker 3: very very much.
Speaker 7: Like coming up.
Speaker 2: Elon Musk Inc.
Speaker 3: Is proposing to put the entire chip industry under one
Speaker 3: roof up next the Tesla SpaceX terror Fab master plan.
Speaker 2: This is Bloomberg Tech.
Speaker 4: Tesla and SpaceX will jointly run an advanced chip manufacturing
Speaker 4: facility in Austin, Texas as according to Elon Musk, the
Speaker 4: CEO of both companies, now mask says, the semiconductor industry
Speaker 4: is moving too slowly to meet his robotics, his AI
Speaker 4: and his space ambitions. Let's get more on the plans
Speaker 4: of bloombergs Lauren Grush. So this is extraordinarily large. Was
Speaker 4: there any actual significant data we know that this will
Speaker 4: help spin things up for his companies?
Speaker 10: Well, I think a lot of you know, just like
Speaker 10: with Elon Musk and how he usually does things.
Speaker 11: There were a lot of promises, right.
Speaker 10: One thing that I took particular note of was you
Speaker 10: know how much this was going to benefit is data
Speaker 10: center in space project that they've been touting for some
Speaker 10: time now, and what we know is ultimately driving the
Speaker 10: planned IPO for SpaceX that may or may not occur
Speaker 10: later this year.
Speaker 11: We did get a rendering of what one of those
Speaker 11: data center.
Speaker 10: Satellites would look like, and so from what I understand,
Speaker 10: you know these chips will be a big factor in
Speaker 10: making those data center satellites a reality.
Speaker 4: And to you, because of course you're also our SpaceX
Speaker 4: Tesla reporter as well as being on TV with me
Speaker 4: luckily and talk to me about how you put it
Speaker 4: in the very top headline, this is trying to do
Speaker 4: everything all under one roof.
Speaker 5: We've never already seen this before in the chip industry.
Speaker 3: Yeah, so having logic, which is GPU, CPU, the GPUs
Speaker 3: going to the orbital data center, the Lauren outlined, memory
Speaker 3: and packaging. The industry doesn't work like that, and for
Speaker 3: good reason. They're done by specialists essentially as separate industries
Speaker 3: because the raw materials are completely different and the processes
Speaker 3: are are different. So it's not just the scale that's unprecedented,
Speaker 3: it's the approach. To give you an idea of that,
Speaker 3: Elon Musk is saying the facility will start at about
Speaker 3: one hundred thousand wafers a month. A lead edge fab
Speaker 3: right now probably does thirty to one hundred thousand, and
Speaker 3: then they want to scale up to one million a month.
Speaker 3: So that's about seventy percent of TSMC's global output. The
Speaker 3: footprint is kind of insane, so there's a lot of
Speaker 3: questions on how they'll fund it, and they basically said,
Speaker 3: we don't know yet, but it's going to cost a
Speaker 3: lot of money.
Speaker 2: Lauren.
Speaker 3: The other thing as well, is like eighty percent I
Speaker 3: think was the figure. I mean, you had the honor
Speaker 3: of staying up over the weekend watching the full presentation,
Speaker 3: but like we're showing on the screen now the bigger picture,
Speaker 3: which is the design for the orbital Data Center satellite
Speaker 3: form factor carried by Starship.
Speaker 2: But what Musk was saying was that the vast majority.
Speaker 3: Of activity will be to serve GPUs in space.
Speaker 12: Yeah.
Speaker 11: Absolutely.
Speaker 10: It's actually a full circle moment for me here in
Speaker 10: Arson because he made this announcement here and there had
Speaker 10: actually been a bunch of lights coming from Sea Home
Speaker 10: Power Plant, which a lot of Austinites were curious about,
Speaker 10: and then we learned Saturday.
Speaker 11: Night that yes, this was about this announcement. But yeah,
Speaker 11: as you can see on the screen.
Speaker 10: There, one of the big aspects of the orbital data
Speaker 10: centers are these massive solar panels that they're going to
Speaker 10: need in order to gather enough power to run these satellites.
Speaker 10: And that satellite is supposedly a mini satellite and it's
Speaker 10: only capable of having a capacity of think of a
Speaker 10: one hundred kilowats is what he said. But you know
Speaker 10: that they plan on launching a bunch of these satellites.
Speaker 10: You know, recently SpaceX filed with the FCC to launch
Speaker 10: up to one million data center satellites.
Speaker 11: So this is by no means a small project for them.
Speaker 4: It's an expensive project, and in many ways it's why
Speaker 4: we anticipate SpaceX is going to have to go to
Speaker 4: the public markets.
Speaker 5: Lauren, just how much more.
Speaker 4: Cost effective is it? Do we get any comparison versus
Speaker 4: doing it here on Earth?
Speaker 10: You know, the ELON has laid out the pros and
Speaker 10: cons of going to space. One of the big ones
Speaker 10: is that, you know, space is big, and there's a
Speaker 10: lot more room to move to lay all of these
Speaker 10: satellites out right. Also, the Sun is a big aspect
Speaker 10: of it. So here we have a lot of limits
Speaker 10: when it comes to getting enough power in order to run.
Speaker 11: These data centers.
Speaker 10: But the idea is to put these satellites into a
Speaker 10: specific orbit that would harness the Sun's energy practically twenty.
Speaker 11: Four to seven. So those are the reasons that are
Speaker 11: being laid out for going into space. Whether or not
Speaker 11: it's crass effective, I think, is the big question mark
Speaker 11: that we're all waiting to see.
Speaker 3: It's always sunny in space. Bluemboslare and grush, Thank you
Speaker 3: very much. Let's stick with it and get the investor perspective.
Speaker 3: We're joined by Karen Fronsky, Global head of Private Acuity
Speaker 3: Investments at Fidelity. Her teams invested in private companies for
Speaker 3: over fifteen years, currently has over fifty billion dollars deployed
Speaker 3: across one hundred and fifty private companies, County SpaceX as
Speaker 3: one of them. The idea that SpaceX is undertaking terror
Speaker 3: fab with Tesla at unprecedented scale to secure compute here
Speaker 3: on Earth and in orbit.
Speaker 2: Your reaction to that, Karen.
Speaker 13: Well, my reaction is they've actually been thinking about this
Speaker 13: for a long time. So Lauren just.
Speaker 14: Talked about the FCC application for a million SATs in space.
Speaker 14: But if you rewind back to twenty twenty two, they
Speaker 14: had filed a patent around getting computing resources to SATs
Speaker 14: in space as well. So I think this is something
Speaker 14: that Elon and his team have been thinking about for
Speaker 14: a long time, frankly at least since the post chat
Speaker 14: GPT moment.
Speaker 13: I also think conceptually it makes a lot of sense.
Speaker 14: So you just talked about Lauren just talked about harnessing
Speaker 14: power in Sun synchronous orbit. But the other constraints on
Speaker 14: AI data centers here on Earth are not just power.
Speaker 14: It's land, it's permitting, it's getting contractors like electricians to
Speaker 14: put these blocks together, and those constraints don't exist in space.
Speaker 14: And so I think conceptually it makes a ton of
Speaker 14: sense to be thinking about in the longer term data
Speaker 14: centers in space. The question, of course becomes what you
Speaker 14: were just talking about, is it economical? And frankly, what
Speaker 14: we've been watching for as investors is Starship and Starship
Speaker 14: Flight twelve should happen in April. They're going to be
Speaker 14: launching their Gen three of the ship, which will carry
Speaker 14: up to one hundred tons of payload. And as a reminder,
Speaker 14: the plan is for Starship to be fully reusable in
Speaker 14: the future, and if it's fully reusable, ultimately the cost
Speaker 14: of launching it could come down very, very meaningfully, which
Speaker 14: would mean launching the AI data centers into space. Those
Speaker 14: payloads could make that whole concept very economical.
Speaker 3: Taran, you and your team at Fidelity, what research modeling
Speaker 3: have you done for the fact and the point at
Speaker 3: which orbital data center becomes profitable. A lot of people
Speaker 3: when I said you were coming on the program wanted
Speaker 3: to know if you've been shown at any evidence by
Speaker 3: SpaceX about the viability of an or data center this decade.
Speaker 3: But many people measure it in the dollar per kilogram equation.
Speaker 14: When it comes to Starship, absolutely we do measure it
Speaker 14: in dollar per kilogram. And again, as I mentioned, it
Speaker 14: really comes down to how quickly Starship can be up
Speaker 14: and fully reusable. So as a reminder Falcon nine, they
Speaker 14: just reuse the booster the first stage and Starship will
Speaker 14: be both the booster and the ship. They've now successfully
Speaker 14: caught the booster of Starship three times at the tower catch.
Speaker 14: People have probably seen that, and they've had successful atmospheric reentry.
Speaker 13: Of the ship as well, but have not yet caught that.
Speaker 14: The other thing that they haven't done as of yet
Speaker 14: is they actually haven't dispensed of any actual payloads into.
Speaker 13: Space as of yet.
Speaker 14: They've tested out the pez door which opens up to
Speaker 14: let the payloads out, but actual payloads have not been
Speaker 14: put out into space.
Speaker 13: So those are the milestones that were really following.
Speaker 14: But you can bet there is an Excel spreadsheet at
Speaker 14: Fidelity that measures that the cost for kill a watt
Speaker 14: and when we believe this will become economical.
Speaker 4: Oh, there's gonna be people who really want to see
Speaker 4: that Excel spreadsheet, Karen, in particular those who look a
Speaker 4: more cynical on the how outlook of the economy and
Speaker 4: the economic pros and cons of this. For example, the
Speaker 4: Jim chainos well known for betting against certain key themes,
Speaker 4: but he asks in a post in particular, how much
Speaker 4: one giga what data central space would save in terms
Speaker 4: of power costs versus one giga? What terrestrial data center
Speaker 4: can you push out where you think it could go
Speaker 4: at least?
Speaker 13: Yeah?
Speaker 14: I mean listen, I think again, we're talking not this year,
Speaker 14: not next year, we are talking about several years out.
Speaker 13: But it could it could move down the cost pretty meaningfully.
Speaker 14: I won't give you an exact dollar amount, but we
Speaker 14: do believe it could be pretty material.
Speaker 13: In the here and now.
Speaker 4: What we're looking for materiality is up to a one
Speaker 4: point two five trillion dollar evaluation. If SpaceX does indeed
Speaker 4: go public, how realistic do you think that is at
Speaker 4: the moment? What momentum do we need to see? Because
Speaker 4: at the moment we're all sort of at the behest
Speaker 4: of the markets.
Speaker 13: We are at the behest of the market.
Speaker 14: Obviously the markets are feeling quite good this morning as well.
Speaker 13: But I think it's important to remember that SpaceX has
Speaker 13: a lot going for it right now.
Speaker 14: You know, when we first invested at Fidelity back in
Speaker 14: twenty fifteen in SpaceX, they had done thirteen Falcon nine
Speaker 14: launches to date. Today they launch every other day. They're
Speaker 14: putting up somewhere between eighty to ninety percent of the
Speaker 14: world's payload one company. They when we first invested, they
Speaker 14: didn't have a single Starlink satellite or Starlink sub to that,
Speaker 14: they have ten million.
Speaker 13: Subscribers across the globe.
Speaker 14: Obviously, there are ambitions to do more on the wireless
Speaker 14: carrier front. So SpaceX has a lot going for it,
Speaker 14: and of course, you know the cherry on top would
Speaker 14: be the future of orbital data.
Speaker 3: Centers, right, incredible capital efficiency, right, twelve billion dollars raised
Speaker 3: in its lifetime, and you think about what it's done
Speaker 3: with that. The next thing is, what's a scenario where
Speaker 3: SpaceX merges with Tesla and why? Because that's the reaction
Speaker 3: that people have had since TERRAFAB was announced over the weekend.
Speaker 14: Yeah, I mean, obviously people have been talking about that
Speaker 14: possibility for a little while, and SpaceX acquiring XAI certainly
Speaker 14: catalyze those conversations even further. And I think Elon is,
Speaker 14: you know, kind of putting his cards on the table,
Speaker 14: if you will, as it relates to his ambitions to
Speaker 14: vertically integrate the ability to be a chip manufacturer, as
Speaker 14: difficult as it may be, but also in putting in
Speaker 14: aggregate data centers. Remember he's done it here on Earth
Speaker 14: CLASSUS one and CLASSUS two. He done it, he did
Speaker 14: in record time CLASSUS one specifically, and very large GPU clusters,
Speaker 14: and so from an engineering perspective, I think he knows
Speaker 14: how to do it. I'm not trying to be flippant
Speaker 14: about how difficult some of these things are, but he
Speaker 14: is an expert at vertically integrating companies and.
Speaker 5: A thinking beyond all of this in many ways.
Speaker 4: Karin Frosky, I wish we could it done the whole
Speaker 4: show with you and gone so much more into some
Speaker 4: of the investments. Global head of Private Equity Investments of
Speaker 4: Fidelity Thanking now coming up. Tim Cook's succession plans remain
Speaker 4: a mystery, but details emerge in the air apparent that's next.
Speaker 5: This is pretty bad Tech.
Speaker 3: CEO Tim Kirk is now sixty five and has been
Speaker 3: tight lit about his retirement and succession plans, but a
Speaker 3: leading candidate is beginning to emerge. John Turnus, Apple's senior
Speaker 3: VP of hardware Engineering, has taken on a growing role
Speaker 3: overseeing the company's products and marketing. For more, let's get
Speaker 3: to Bloomberg's Mark German, who leads our coverage when all
Speaker 3: things Apple and consumer technology. And this is an important
Speaker 3: piece of writing, right, this is what people have been
Speaker 3: asking about for quite some time.
Speaker 7: What do we need to know?
Speaker 2: Yeah, you know.
Speaker 15: Tim Cook is not ready to talk about retirement. He
Speaker 15: says that he can't live without Apple. He can't imagine
Speaker 15: a time where he's not at Apple. And the good
Speaker 15: news for him and for shareholders is we probably don't
Speaker 15: have to imagine a time with Tim Cook not at
Speaker 15: Apple for at least another ten ten years or so,
Speaker 15: right because when he steps down as CEO, he will
Speaker 15: stay involved at the company in some sort of capacity,
Speaker 15: probably executive chairman. But the wheels are in motion for
Speaker 15: Tim Cook to step down in the next half decade
Speaker 15: at the very latest and be replaced by John turnis
Speaker 15: the senior vice president of hardware Engineering. He's responsible for
Speaker 15: the development of all of Apple's products. Obviously those generate
Speaker 15: eighty percent or so of Apple's revenue. He's worked at
Speaker 15: Apple for about half his life, just under twenty five years.
Speaker 15: He understands the culture. This is someone who would be
Speaker 15: more product focused than Tim Cook, but in many ways
Speaker 15: operates like Cook and would surprisingly be a continuity.
Speaker 4: Choice mark What stayed you to really feel that he
Speaker 4: is the heir apparent. What's been happening underneath the hood
Speaker 4: of Apple that makes you think this is the guy.
Speaker 13: There's a lot going on internally.
Speaker 15: There's been a very steady expansion of his responsibilities. He's
Speaker 15: received oversight a couple of years ago of Apple's Vision
Speaker 15: Products Group, which is responsible for the in development smart glasses,
Speaker 15: which are a big upcoming product launch for Apple. He's
Speaker 15: taken over the robotics teams. At the end of last year,
Speaker 15: he took oversight of Apple's design team, so software design
Speaker 15: and hardware design. That's a very critical role in the company.
Speaker 15: That's something that only you know, people like Tim Cook,
Speaker 15: Johnny Ives Steve jobs people of that ILK have overseen
Speaker 15: in the past. He's fifteen years younger than Cook. He's
Speaker 15: about ten years younger than any other option for Apple's
Speaker 15: next CEO on the company's executive team. Apple has been
Speaker 15: putting him front and center in product announcements. He introduced
Speaker 15: the MacBook Neo earlier this month, which is obviously a
Speaker 15: big business lever for Apple for the Mac Specifically, the
Speaker 15: day after the introduction of that computer, he was the
Speaker 15: one who went on Good Morning America to talk about it.
Speaker 15: These are traditionally things that the CEO Tim Cook has
Speaker 15: done for years for major new products, but now it's
Speaker 15: turnus doing.
Speaker 2: It Mark very very quickly.
Speaker 3: Where does Apple's strategy with AI generate to AI and
Speaker 3: voice based AI fit in with this story?
Speaker 15: You know, the big question is if Apple is going
Speaker 15: to try to evolve into an AI company or after
Speaker 15: and Services company. If that's the case, Turnis is probably
Speaker 15: not the right pick, but I do believe they are
Speaker 15: going to be a hardware company at heart for the
Speaker 15: forest yeable future, which makes Turnus front center of the action.
Speaker 4: Bloomberg's Mark Gummon, as always with one of the most
Speaker 4: highly read pieces.
Speaker 5: We so appreciate you joining on it. Thank you.
Speaker 4: Coming up, Elliot Well, it's said to take a big
Speaker 4: stake in synopsis pressing for changes in mid AI pressure.
Speaker 5: That's up next. This is Bloomberg Tech.
Speaker 2: Welcome back to Bloomberg Tech.
Speaker 3: The status of the war in Iran is a big
Speaker 3: driver of markets, particularly for technology. Look at a Nazdak
Speaker 3: one hundred pushing higher outperformance in the Philadelphia Semiconductor Index.
Speaker 3: The President easing off on threats with Iran and talking
Speaker 3: up the talks that are taking place. There's been out
Speaker 3: performance for chips all year long, and one reason being
Speaker 3: that the region is a principal producer of both helium
Speaker 3: and sulfur critical elements in Chippridut coming out of Patar,
Speaker 3: Saudi Arabia and the UAE, and supply is tight was
Speaker 3: impacted by the straight off of the moves, but it's
Speaker 3: oil Brent the global benchmark now below one hundred dollars
Speaker 3: a barrow. Again, a really sharp turn of events overnight, Caroline.
Speaker 3: But continuing to try and link this to the tech sector,
Speaker 3: because while it seems like talks might yield an end
Speaker 3: of the war in Iran, there is not yet an
Speaker 3: end to the war in Iran.
Speaker 4: Good context, Let's talk a little bit more with Blimugs
Speaker 4: tech equity reporter common Ryanikey. And look at the moment
Speaker 4: I'm looking on the Nasdaq one hundred, only twelve slocks.
Speaker 5: Are in the red.
Speaker 4: Video leads the charge Tesla up in terms of points perspective.
Speaker 4: But where do people who go in this period of volatility.
Speaker 16: Yeah, so I think when we see things kind of
Speaker 16: go more risk on, there's so many flows back to
Speaker 16: big tech because those are the names. You know, they
Speaker 16: have a lot of excitement, They have these solid balance sheets,
Speaker 16: you know, over urchingly, they're what works. So there's what
Speaker 16: have worked at least in the past four investors. And
Speaker 16: something that we've actually seen recently is that a correlation
Speaker 16: between the Equoid index and the Magni magnificent seven has
Speaker 16: become less tethered and well that maybe sounds like it's
Speaker 16: not a good thing, it actually could mean that there's
Speaker 16: some outperformance coming for tech. So the last time this
Speaker 16: happened was in twenty twenty three, right before we saw
Speaker 16: these huge gains from the release of chatch Ept and
Speaker 16: all of the AI frenzy that's come into the market.
Speaker 16: So with things especially looking better, potentially with the war
Speaker 16: in Iran, we're seeing maybe some more risk on coming back.
Speaker 16: Valuations have been really washed out from the MAG seven
Speaker 16: and this really could be a good moment for investors
Speaker 16: to buy and start feeling better about that sector.
Speaker 3: Come and you make a technical analysis and look at
Speaker 3: the correlation, as you said, but you also speak to
Speaker 3: the street and one of the conclusions you reach in
Speaker 3: the piece is that analysts do see big tech, megacap
Speaker 3: tech MAG seven reclaiming leadership in the market.
Speaker 2: What are the reasons why.
Speaker 16: Well, one of the reasons that we're really seeing is
Speaker 16: that there had been some large flows from big tech
Speaker 16: into international equities sort of around some of the AI fears,
Speaker 16: sort of that the gains, the momentum in this trade,
Speaker 16: it's started to peter out. That something we've seen over
Speaker 16: the last few months. But now with the macro sort
Speaker 16: of shifting back, we could really start to see some
Speaker 16: influence coming back into big tech, back into those US equities,
Speaker 16: and into some of the areas of the market that
Speaker 16: have previously worked that have sort of been on hiatus.
Speaker 16: Maybe in terms of you know, gains over the last
Speaker 16: few months, one of.
Speaker 4: The biggest players in the market, you'd say, was black Rock,
Speaker 4: just across all benchmarks, all indices. Look, Larry Fink has
Speaker 4: done one of his really important notes to his investor base,
Speaker 4: and he's worried about AI and the inequality that's bringing,
Speaker 4: particularly about access to some of the equity markets.
Speaker 5: How do you think that could be playing through?
Speaker 16: You know, I think this is such a good point,
Speaker 16: and it's something that I always try to remember as
Speaker 16: we're you know, speaking about markets, that there are just
Speaker 16: real people on the other end, right, Like this is
Speaker 16: so important for anyone investing in a FOURH on K
Speaker 16: or four or three B. What he is saying is basically,
Speaker 16: because gains have been so strong in some of these
Speaker 16: big companies, that could you make the disparity of inequality
Speaker 16: larger in the market if you're not participating. So it's
Speaker 16: just speak to the fact that you know, if you
Speaker 16: can be engaged in the market, if you can be invested,
Speaker 16: you want to be taking advantage of these games and
Speaker 16: technology and in AI. And so he was looking at
Speaker 16: some ways to potentially, you know, level the playing field the.
Speaker 2: Most calm and ronicky. Thank you very much.
Speaker 3: Elliott Investment Management is said to have taken a multi
Speaker 3: billion dollar investment in Synopsis. That's according to sources, The
Speaker 3: activist investor is pushing for changes at the chip design
Speaker 3: software maker as broad concerns loom from AI's impact.
Speaker 2: Let's bring in Bloomberg's.
Speaker 3: Leanna Baker, who leads our coverage in the US of deals.
Speaker 3: And I have to say, Leanna, you know, Karen and
Speaker 3: I just had a conversation with the CEO. I think
Speaker 3: it was last week. Harry can correct me if I'm wrong.
Speaker 3: That's what we talked about. How it threat is your
Speaker 3: business from AI that basically, you know, either renders it
Speaker 3: redundant or less valuable. What's Elliot's play here with Synopsis?
Speaker 17: So Synopsis plays in a really interesting space, the eeda
Speaker 17: space electronic design automation software. It's a doopoly with a
Speaker 17: company called Cadence. They're kind of the coke and pepsi
Speaker 17: of the industry, and you can't make a chip without them.
Speaker 17: So Elliott is trying to see, you know, what are
Speaker 17: these stocks that could benefit long term from AI and
Speaker 17: the growth of AI with Nvidia, you know, being an
Speaker 17: investor in Synopsis, they kind of view this one as
Speaker 17: a long term winner. But the stock has underperformed and
Speaker 17: there's a lot of things the company could do to
Speaker 17: raise margins. Maybe they raise prices because they're in this
Speaker 17: really lucrative duopoly. They have a lot of levers to
Speaker 17: pull to maybe, you know, boost the top line.
Speaker 3: Carol hit me on the IB it was March eleventh
Speaker 3: that the CEO is on the show. Could you explain
Speaker 3: the activist investor part of the story? I guess the
Speaker 3: mechanics of how it works. So Elliott takes a stake
Speaker 3: and then what happens.
Speaker 17: So Elliott is one of the world's biggest activists investors,
Speaker 17: and they've been in a lot of tech names over
Speaker 17: the years, Western Digital, they're in Pinterest right now. And
Speaker 17: what they do is they work behind the scenes. They
Speaker 17: sort of indicated in the statement.
Speaker 13: If you read that.
Speaker 17: Jesse Cohen, the head of activism at Elliott, said that
Speaker 17: you know, things are sort of constructive with the company,
Speaker 17: so they're trying to help Synopsis, you know, get these
Speaker 17: things in order and make a few changes at the
Speaker 17: company that long term will benefit both Elliott and Synopsis
Speaker 17: and all the shareholders.
Speaker 4: Synopsis response so farly on it because it cools it.
Speaker 4: Shay has happened under pressure leading into this.
Speaker 17: Nanna oh the response, Sorry, you're showing it on the screen.
Speaker 17: So that's Jesse Cohen's response. Who's the Elliott partner? But
Speaker 17: the company Synopsis has sort of said they take all
Speaker 17: shareholders you know, into account and h they're clearly engaging
Speaker 17: here with Elliott, and they haven't put out any statement
Speaker 17: that makes it sound like things could get ugly or
Speaker 17: in a fight, because that's the flip side when you
Speaker 17: bring an activist into your stock, things could go the
Speaker 17: other way. In this case, it seems like things are
Speaker 17: friendly and it won't go to a proxy fight or
Speaker 17: anything like that. But that is a risk when you
Speaker 17: have an activist in your shares.
Speaker 4: Yes, not just saying in an email center statement that
Speaker 4: it doesn't comment on specific conversations with individual in shareholders
Speaker 4: by the bord of Directors and management team and regularly
Speaker 4: engage with shareholders on arrange of issues. Lenna Baker with
Speaker 4: all the news on the latest activist engagement. Meanwhile, let's
Speaker 4: talk about the bond market. JP Morgan has kicked off
Speaker 4: that sale of eight billion dollars in junk debt to
Speaker 4: fund the record leverage buyout of electronic arts.
Speaker 5: That's according to source now.
Speaker 4: JP Morgan earlier and mender the EA by out debt package,
Speaker 4: increasing the size of a US dollar loan offering by
Speaker 4: billion dollars while trimming back the bond sale by the
Speaker 4: same amounted.
Speaker 7: What have we got?
Speaker 2: Okay?
Speaker 3: Coming out, We're going to speak with KTO Network CEO
Speaker 3: Shlomo Kramer about their latest innovations in cybersecurity amid growing
Speaker 3: geopolitical threats. There's a lot to do with Iran and
Speaker 3: then the cyber space.
Speaker 2: This is Bloomberg Tech.
Speaker 3: The RSA conference kicks off this week right here in
Speaker 3: San Francisco, bringing together thousands of cyber security leaders and
Speaker 3: policymakers amid rising global tensions and digital threats. CATO Networks
Speaker 3: is among the companies attending, and CEO Shlomocramer joins us
Speaker 3: now frankly, and I think, obviously what is happening with
Speaker 3: the war in Iran will be discussed by you and
Speaker 3: your colleagues. You know, Iran poses at a nation state
Speaker 3: level a cyber threat to this country, the United States.
Speaker 3: What are you seeing, what are you hearing, and what
Speaker 3: are you talking about with colleagues this week?
Speaker 12: So obviously the cyber threat from Iran and other other
Speaker 12: facilities is serious. But imagine a room full of Iranian
Speaker 12: cyber warriors and then transformed there to an army, to
Speaker 12: an ergentic army of AI agents.
Speaker 2: You're saying that Iran has competence in that.
Speaker 7: That's amaying that the future.
Speaker 12: Delivers a much more radically dangerous threat landscape than what
Speaker 12: the presence is through the AI transformation.
Speaker 3: I think about what CATO does and I'm trying to
Speaker 3: summarize it for everyday people that might not know. Instead
Speaker 3: of having a box on your premises in terms of
Speaker 3: networks and your own firewall and your own VPN, you
Speaker 3: just offer a cloud based solution.
Speaker 7: For all of it.
Speaker 12: It's a cloud based solution, and think of Blockbusters moving
Speaker 12: to nettrics.
Speaker 3: If an enterprise or company of any size in this
Speaker 3: country does face a threat from Iran or any other
Speaker 3: threat actor. What's the benefit of going through that technology.
Speaker 7: You don't need to be technologist.
Speaker 12: You just connect to the net, to the cloud network,
Speaker 12: very simple for an agent or a small box, and
Speaker 12: you are protected wherever you are, wherever your applications are,
Speaker 12: wherever your critical assets are in minutes.
Speaker 4: Of course, you're Israeli based company, and we hope that
Speaker 4: colleagues are safe at CATO Networks. But I'm interested as
Speaker 4: to watch Lomo is happening at the moment when you
Speaker 4: mentioned agent now before the Iran war erupted and we
Speaker 4: focused on that conflict, of course from a humanitarian perspective,
Speaker 4: we also were thinking about the market impact before this
Speaker 4: of software and being disrupted by generator AI of the
Speaker 4: latest plugin suddenly sending cybersecurity stocks lower.
Speaker 5: How have you seen and digested that move in the market.
Speaker 7: This is very good question, Thank you for asking it.
Speaker 12: AI, like any other technology revolution, and this is perhaps
Speaker 12: the biggest in my life, has beneath it a set
Speaker 12: of technologies and capabilities that are required that are enablers
Speaker 12: to this technology, like in the case of AI. Compute,
Speaker 12: energy and cyber cyber is essential for the enterprise to
Speaker 12: consume AI because without security enterprises will not consumer Above
Speaker 12: that layer of technology, there are the winners, there are
Speaker 12: the neutrals, and there are the road kills of this.
Speaker 7: New AI technology.
Speaker 12: And obviously this is exactly where investors do not know
Speaker 12: how the card will reshuffle itself and are very hesitant
Speaker 12: in terms of investing. I will call the world, I
Speaker 12: will call it almost a freeze. But in that sense,
Speaker 12: Cyber is absolutely a winner. And that goes back to
Speaker 12: my previous comment about the warriors of cyber versus an
Speaker 12: army of Argentic attackers. The threat landscape based on AI
Speaker 12: is going to change dramatically and for the worse. So
Speaker 12: cyber is key in addressing that threat and it's going
Speaker 12: to be unfortunately a huge beneficiary from that transformation.
Speaker 4: Unfortunately or fortunately, If you happen to have a CEO
Speaker 4: of Acto Networks and it's currently privately fund and you
Speaker 4: might be looking at the public markets, at what point, showma,
Speaker 4: do you think you will to beef up the business
Speaker 4: continue to grow, will need turn to broader investment areas.
Speaker 12: So we are as a growth company, continue to invest
Speaker 12: heaving in our growth, and we will you know, consider
Speaker 12: all options both private and public funding in order to
Speaker 12: continue to drive this.
Speaker 7: We are in the very early in the.
Speaker 12: Cycle of this category of network securities. It's called SASE.
Speaker 12: I didn't invent the name, and you know, a decade
Speaker 12: from now, this is going to make Keto the largest
Speaker 12: leader in modern network security.
Speaker 3: SAC secure Access service EDGE which basically again I'm trying
Speaker 3: to make it digestible, but you combine firewall, threat protection,
Speaker 3: secure gateways, everything into one single cloud based platform. Can
Speaker 3: ask you this this week in RSAY, let's put geopolitics
Speaker 3: to one side and threat level. What's the threat within
Speaker 3: industry on who's innovating and using competence in artificial intelligence
Speaker 3: to add value to their products? Like who is it
Speaker 3: that you look at and go wow, they're doing really
Speaker 3: good things.
Speaker 12: So the key to answer this question is who is
Speaker 12: using AI in order to fight AI? Who is implementing
Speaker 12: AI capabilities because that is the only way to fend
Speaker 12: off this.
Speaker 3: Army gentic swarm. Defense against the gentic swarm.
Speaker 7: Off exactly right.
Speaker 12: And companies such as Kato, but many other companies all
Speaker 12: already have been using AI for many years and are
Speaker 12: doubling down on debt and there companies that not and
Speaker 12: that is going to determine the winners from the losers.
Speaker 3: Schlimokramer, Cada Network CEO here with us in San Francisco
Speaker 3: in town for RSA this week.
Speaker 2: Caro plenty more headlines about there is.
Speaker 4: And It's time now for Talking Tech and First Up,
Speaker 4: A come back concept by K pop group BTS drew
Speaker 4: a smaller crowd than expected now that led the shares
Speaker 4: to the agency that represents them High to their largest
Speaker 4: decline since twenty twenty two. The group's return after four
Speaker 4: year hiatus has high stakes for High, which, despite acquisitions
Speaker 4: of labels from Hollywood to Latin America, has added sluggish
Speaker 4: profit growth due to BTS's time on the sidelines. Plus Sony,
Speaker 4: while it's nearing a one billion dollar deal to sell
Speaker 4: a majority stake in its home entertainment business to a
Speaker 4: Chinese rival TCL that's called to sources, the company's announced
Speaker 4: an agreement in January for a home entertainment joint venture
Speaker 4: then include Sony's Bravian television brand and startup pandu Ai
Speaker 4: has raised two hundred and twenty five million dollars from
Speaker 4: investors including Maverick, Silicon SoftBank, and Synopsis. Now the company
Speaker 4: CEO that's shrewd Linger is former Golm and Sax managing director.
Speaker 4: He has pivoted the startup towards aim structure since taking
Speaker 4: over last year.
Speaker 3: Ed sticking with Chips, Tune into the Close tomorrow afternoon
Speaker 3: for a conversation with Rene Haas arm CEO. That's a
Speaker 3: three thirty pm in New York, twelve thirty pm Pacific time.
Speaker 3: All right, coming up, we're going to speak with Mitchell
Speaker 3: Green of lead Edge Capital after the closing of its
Speaker 3: Fund seven with three point five billion dollars in commits.
Speaker 2: What's next the Cisplinberg Tech.
Speaker 3: Lead Edge Capital has announced the closing of its Fund
Speaker 3: seven with three point five billion dollars in commitments, bringing
Speaker 3: its total capital raise since inception to nine billion dollars.
Speaker 3: Here to discussed is lead Edge Capital founder and managing
Speaker 3: partner Mitchell Green.
Speaker 2: And it's great to have you back on the show.
Speaker 3: Let's just start with the basic three point five billion
Speaker 3: dollars for fund seven. What the intention is, the strategy
Speaker 3: the thesis in how you deploy out of this fund?
Speaker 18: Sure welled, Karen, thanks so much for having me on.
Speaker 18: Thesis continues to be as the same it's been, you
Speaker 18: know in funds three, four or five, six seven.
Speaker 19: This this will just be a continuation of you know,
Speaker 19: what we're already doing.
Speaker 18: And we have a very specific framework, which we call
Speaker 18: the lead edge eight, you know, which is certain financial
Speaker 18: criteria are ten million plus in revenue or you're growing
Speaker 18: twenty five.
Speaker 19: Percent plus a year.
Speaker 18: Will continue to do that across the across the life
Speaker 18: cycle of different types of you know. Literally, we can
Speaker 18: lead a primary around, put money in the balance sheet
Speaker 18: of a company. We can buy out early investors or
Speaker 18: early employees. We can fund the continuation vehicle from an
Speaker 18: investor that needs to get out. We can buy an
Speaker 18: entire company and a buyout. It's really like the full
Speaker 18: life cycle. And then actually we also invest in some
Speaker 18: companies in their public as.
Speaker 3: Well, the rules based which is very interesting whether you
Speaker 3: call it bench capital or private growth equity, because I'm
Speaker 3: curious how it works in practice. So if you're saying, okay,
Speaker 3: we only invest in companies that reach these criteria, do
Speaker 3: you find them or do they find you?
Speaker 19: It's a great question.
Speaker 18: So the way we've always sourced, and it's the way
Speaker 18: the three of us who run the firms, our backgrounds
Speaker 18: are best preventure partners and insight. So we have a
Speaker 18: team of about eighteen twenty two to twenty four year
Speaker 18: olds that pick up the phone and call companies all
Speaker 18: day long. You know, some you know gone are kind
Speaker 18: of the days of cold calling company or actually leading voicemails.
Speaker 19: But you know, our team of you know, eighteen twenty
Speaker 19: two to twenty four year olds.
Speaker 18: Think of these people as a lot of like former
Speaker 18: college athletes, people that were debaters, people who are entrepreneurs.
Speaker 18: We want people that are really persistent because the great
Speaker 18: company doesn't call you back right away.
Speaker 19: Sometimes call that CEO a half dozen times before.
Speaker 18: They call you back right But again, we'll speak to
Speaker 18: about nine thousand companies a year, and if I said
Speaker 18: you had to meet all eight criteria, it only be
Speaker 18: about ninety or one percent. But we say that if
Speaker 18: you meet at least five, it's about a ten percent yield.
Speaker 18: Sort of nine thousand companies nine hundred meters five or
Speaker 18: more criteria due diligence on one hundred and fifty to
Speaker 18: do five to seven deals a year.
Speaker 4: Mitchell true help, but feel that those ex college athletes
Speaker 4: and those twenty to twenty four year olds are going
Speaker 4: to be very well helped or maybe disrupted by agenta
Speaker 4: KI and I want to hear your play on the
Speaker 4: whole software investment thesis because this is what called my attention.
Speaker 20: Yeah, so what I would what I would say is
Speaker 20: is again somebody asks you, as long as the person
Speaker 20: that works at lee edge of twenty two to twenty
Speaker 20: four old is on the other end of a phone.
Speaker 18: Talking to another human being like a CEO or CFO
Speaker 18: of a company, in the human interaction is still really
Speaker 18: really important. However, where AI.
Speaker 19: Can be really helpful now is and where I did this.
Speaker 18: You know, the three of us who run the firm
Speaker 18: all started our career is doing this fifteen twenty plus
Speaker 18: years ago. And you know today an analyst or an
Speaker 18: associate cold calon companies can be a lot can use
Speaker 18: AI to be a lot more educated. When talking to
Speaker 18: an entrepreneur, you know they can have done a bunch
Speaker 18: of research that would have taken a couple hours before,
Speaker 18: they can do.
Speaker 19: It in five minutes. You can chat our clawed you.
Speaker 18: Know, they can look up all the competitors, they can
Speaker 18: get the value prop they can ask like what do
Speaker 18: you think the right questions to ask are?
Speaker 19: So actually AI it can help you find more I say, hey,
Speaker 19: I just.
Speaker 18: Spoke to ABC company like toast in the restaurant point
Speaker 18: of sales system, give me all the competitors so I
Speaker 18: can then call them as well. So it actually like
Speaker 18: makes the analyst associates even more powerful.
Speaker 4: And Mitchell, how many therefore of the calls do you
Speaker 4: think will still be going to software companies that have
Speaker 4: been beaten up that you think still look attractive, because
Speaker 4: that has been the narrative that a GENDERKI is coming
Speaker 4: to eat their lunch and therefore they're going to see
Speaker 4: significant pressure on their ars and their future growth.
Speaker 18: For us, it's always been about Look, software is a
Speaker 18: very broad word, right, there's lots of different types of
Speaker 18: software companies. Just like if you say I'm going to Europe,
Speaker 18: like there's lots of places in Europe, you coun could
Speaker 18: be like, oh in Europe, it rains no place, lot
Speaker 18: of places in Europe it doesn't rain. So for US
Speaker 18: like software, So we're looking for companies, and we always
Speaker 18: look for companies that have like very high grows dollar attention.
Speaker 18: Now again you might say, well AI is going to
Speaker 18: change all that, Well, then you're looking for software companies
Speaker 18: that have a mode, that have that own the data
Speaker 18: that are systems of record that tend to sell the
Speaker 18: large enterprises.
Speaker 19: You know, you could have most you know, if you
Speaker 19: have people on here from most banks. Most banks still
Speaker 19: don't even.
Speaker 18: Allow their employees to access US, you know, access AI
Speaker 18: from their systems. These big enterprises when they buy software,
Speaker 18: want security.
Speaker 7: You know.
Speaker 18: Look, you've been able to buy open source software for decades. Yeah,
Speaker 18: Companies like Elastic and Grafana and Data Bricks and red
Speaker 18: hat exist because they provide an enterprise level on top
Speaker 18: of what was already free software. And see, I think
Speaker 18: you're going to continue again, We've met outside of software
Speaker 18: as well. We invest in consumer internet, We invest in marketplaces,
Speaker 18: we invest in financial exchanges, we invest in payments companies
Speaker 18: like transfer Wise.
Speaker 19: But yeah, we will continue to definitely invest in software.
Speaker 4: Mitchell Green need edge capital come back as you deploy
Speaker 4: that seventh fund. Congratulations on the fundraise and like talking
Speaker 4: about the use of AI for that you need infrastructure.
Speaker 5: We can talk about that now.
Speaker 4: Nscale, UK developer for AI Data Centers, is now one
Speaker 4: of your most valuable startups after raising two billion dollars
Speaker 4: in a recent round, which now values the company at
Speaker 4: a call fourteen point six billion dollars.
Speaker 5: Now the AI hyperscalers are.
Speaker 4: Also looking to this particular company because they want to
Speaker 4: be looking for more compute. But also they've got some
Speaker 4: significant leaders coming in directors including former British politician Nick Clegg,
Speaker 4: Showel Samburg as well longtime chief operating officer of Facebook
Speaker 4: and its parent Meta. And I'm very really to say
Speaker 4: we can welcome the leadership now n Scale CEO Josh
Speaker 4: Payin along with Cheryl Sanmdburg. It is a joy to
Speaker 4: have you both on the show. And Josh, some huge
Speaker 4: ambitions from nd scale and just the computing power that
Speaker 4: you can bring online, the revenues you're going to be
Speaker 4: generated in the next few years, just talk to us
Speaker 4: about how you achieve that that necessary infrastructure.
Speaker 21: Josh, Well, thank you, Caroline, it's great to be here.
Speaker 21: First of what I'll say is this is the fourth
Speaker 21: Industrial Revolution. This market is moving so fast and we're
Speaker 21: still at the beginning. We're talking about a technology that
Speaker 21: is going to lead to atomized automated drug discovery, the
Speaker 21: extension of human life, truly autonomous agents, and that the
Speaker 21: only thing that prevents that future is access to the
Speaker 21: scarce resource, which is the compute, and so n scale
Speaker 21: solves this problem. We buy and build and deploy all
Speaker 21: of that infrastructure to allow for these products to be
Speaker 21: built and operated.
Speaker 2: And so not only is there just huge demand for
Speaker 2: the sector, but we're capturing it.
Speaker 4: That's huge demand for your expertise, Cheryl, and to join boards.
Speaker 4: Why did you choose Josh? Why did you back end scale?
Speaker 4: Why on the board?
Speaker 11: Well, the funny part of the story starts with his part.
Speaker 21: Which is, well, so thinking about how I build the
Speaker 21: next great AI platform, what was most important to me
Speaker 21: is speaking to executives that have built great platforms before
Speaker 21: of global scale, and so certainly none better than Cheryl Sandberg.
Speaker 21: And so I tried for some time to get an
Speaker 21: introduction to Cheryl, and upon finally doing so, we scheduled
Speaker 21: a thirty minute call. And the first thing that she
Speaker 21: said to me was I don't do boards, and I
Speaker 21: don't do these calls.
Speaker 13: Right, So it was an inauspicious beginning.
Speaker 11: But I didn't do boards and I didn't do these calls.
Speaker 22: But what I saw in Josh ninety minutes into our
Speaker 22: thirty minute phone call was what I considered real visionary leadership.
Speaker 22: Over the next few weeks, as he was trying to
Speaker 22: get me to consider joining the board. He went away
Speaker 22: and he wrote a letter to his management team. And
Speaker 22: the only person I'd ever seen right like that was
Speaker 22: Mark Zuckerberg. This combination of a relentless, relentless desire for great,
Speaker 22: relentless desire for execution, you know. And from my point
Speaker 22: of view, I joined Google when it was at two
Speaker 22: hundred and fifty people left at twenty thousand. I joined
Speaker 22: Facebook when it was five hundred and fifty people left,
Speaker 22: you know, almost one hundred thousand.
Speaker 13: So the opportunity to work with.
Speaker 11: The founder I believe in.
Speaker 22: I joined right as the company was about three hundred
Speaker 22: and four hundred people, so that same spot, and try
Speaker 22: to take some of the lessons we've learned and help
Speaker 22: a company. I believe in this much scale really matters.
Speaker 22: I also really believe in the power of AI. I
Speaker 22: think we're at the very beginning I started my career
Speaker 22: in global health. AI is going to mean that anyone
Speaker 22: in a remote village anywhere in the world could get
Speaker 22: skin cancer diagnosed at the same efficacy rate as someone
Speaker 22: in the Mayo clinic. But that is going to take
Speaker 22: a build out and a buildout of infrastructure and compute,
Speaker 22: and I really believe in Josh and Nscale's ability to
Speaker 22: do that, so I'm happy to be here, Josh.
Speaker 3: The term neo cloud has actually also become quite broad.
Speaker 3: When I talk to people about nscale, they say, well,
Speaker 3: nscale is modular. How do you set yourselves apart from
Speaker 3: the other neoclouds out there, many of whom come on
Speaker 3: this program and make quite similar pitches.
Speaker 21: Yeah, So I think the key distinction with n scale
Speaker 21: is we are fully vertically integrated. Again, if you think
Speaker 21: about the challenge for the sector, it's actually landing the
Speaker 21: infrastructure on the ground and getting it plugged in. And
Speaker 21: the true scarcity given that the demand in the sector
Speaker 21: is the land, the power, and then the chips, and
Speaker 21: so by and large, the neocloud sector is not really
Speaker 21: vertically integrated in that they don't own their own land
Speaker 21: and power.
Speaker 2: N scale does.
Speaker 21: We own the and power, we own the chips, and
Speaker 21: we own the software delivering an end to end service
Speaker 21: to the counterparty. In addition, we recently acquired a company
Speaker 21: called American Intelligence Corporation in West Virginia, which adds an
Speaker 21: even further segment to that, which is the ownership of
Speaker 21: the power. This is a behind the meter site, which
Speaker 21: means that we're effectively taking natural gas and producing our
Speaker 21: own energy, which means it's not connected to the local
Speaker 21: grid and therefore subject to any kind of price increases
Speaker 21: for consumers.
Speaker 3: So it's great to have you back on on Bloomberg
Speaker 3: Television and on Bloomberg Tech. You said, I don't do
Speaker 3: boards historically with this role with end Scale, I think
Speaker 3: a lot of people are really interested if you go
Speaker 3: back to being an operator. You know, with time, if
Speaker 3: you adjoin the executive ranks at end Scale, and whether
Speaker 3: you do or don't kind of operationally, how you think
Speaker 3: you can help the company grow.
Speaker 22: So I've joined as both a board member as an advisor.
Speaker 22: I'm spending real time with Jajh and his team. I
Speaker 22: have no plans to go on board full time. They
Speaker 22: have an incredible exec team and my goal is to
Speaker 22: help them Scale, help figure out how we structure, how
Speaker 22: we do corporate governance. I've helped recruit some other great
Speaker 22: board members Nick Clegg you mentioned joined the board with me,
Speaker 22: Sue Decker, who has decades of experience chearing audit committees
Speaker 22: and in the financial world, and work with them to
Speaker 22: really scale their company. What I see in Josh is
Speaker 22: two things is really ambition, like real ambition to make
Speaker 22: a difference in how the AI build out happens, make
Speaker 22: it sustainable, make it clean, commitment to local jobs as
Speaker 22: we scale and build. But also a commitment to excellence,
Speaker 22: to hiring the best people, to getting people into the
Speaker 22: right jobs, to structuring so that we can really execute.
Speaker 22: And it's been it already has been a great pleasure
Speaker 22: to work this closely with someone I believe in, and
Speaker 22: also Caroline, I know you always care about this really
Speaker 22: strong team of senior women. Hew do AI Infrastructure CFO
Speaker 22: head of Security.
Speaker 11: Josh before me hired what.
Speaker 22: He considers who he considers the best people on a
Speaker 22: lot of great women in those jobs.
Speaker 5: I love that because it is something I'm passionate about.
Speaker 4: It's something that you spent your career advocating for, Cheryl
Speaker 4: is diversity within the ranks of talent. But also you're
Speaker 4: advocating as well for clean energy. And I notice what
Speaker 4: one other boards seeing with terror dot and that is
Speaker 4: about carbon neutrality. So Josh, I asked you, what about
Speaker 4: carbon neutrality for West Virginia, because that's about the actual gas.
Speaker 5: How do you think about that in the longer term.
Speaker 7: Yeah, sure.
Speaker 21: So broadly, the company thesis is to take sustainable energy
Speaker 21: and convert it into intelligence. So we first do this
Speaker 21: in the North of Norway. So we operate in the
Speaker 21: North of Norway using only hydropower. The North of Norway
Speaker 21: has such a large oversupply of energy due to basically
Speaker 21: the seasons. Effectively, during the winter all of the glaciers
Speaker 21: melt over, and then in the summer they all melt
Speaker 21: and create enormous waterfall, and the Norwegian government has built
Speaker 21: large hydropower dams to capture that energy. But the challenge
Speaker 21: is it can't be exported and so it's got to
Speaker 21: be consumed in region. So n Scale is building some
Speaker 21: of the largest AI infrastructure projects on the European continent
Speaker 21: in the North of Norway, taking otherwise stranded energy and
Speaker 21: converting it to intelligence. The same goes for our projects
Speaker 21: in Texas as an example. In Texas, you've got a
Speaker 21: similar oversupply of renewables and other energy, but it's in
Speaker 21: remote location. So we're building some of the largest infrastructure
Speaker 21: projects in North America in this location in order to
Speaker 21: convert that to intelligence. Now in West Virginia, we're doing
Speaker 21: the same thing but slightly different. In West Virginia, we're
Speaker 21: producing our own energy. One of the challenges with the
Speaker 21: North American grid is constrained, and so we felt that
Speaker 21: producing our own energy with natural gas generators I behind
Speaker 21: the meta was the best way to scale sustainably but
Speaker 21: also not impact local prices.
Speaker 2: And the grid.
Speaker 3: Cheryl, you're very used to being inside companies that are
Speaker 3: just truly global, right, listening to what Josh is saying,
Speaker 3: and Scale gets a lot of credit because it's a
Speaker 3: kind of a leader in Europe. It is a footprint
Speaker 3: in the United Kingdom. But we've just been talking about America.
Speaker 3: How much do you want Josh, I know he's sitting
Speaker 3: next to you, to shift gears a little bit and
Speaker 3: move this company in himself to the US. Do you
Speaker 3: want him to focus on the Middle East, where there
Speaker 3: is the capital, there is the will, there is energy
Speaker 3: supply for example.
Speaker 2: Well, I'll let him answer that.
Speaker 22: But certainly this is global, right, This is a global
Speaker 22: company started in London and continuing to expand all.
Speaker 19: Over the world. Yeah, I mean today.
Speaker 21: Today we're operating in five countries. We have plans for fifteen. Naturally,
Speaker 21: North America is the center of the universe for artificial intelligence,
Speaker 21: both with startups, with life your customers, with access to capital,
Speaker 21: and so naturally I spent a lot of my time here,
Speaker 21: but as Cheryl said, this is a global market, and
Speaker 21: I'm spending most of my time on a plane as
Speaker 21: a result.
Speaker 3: That's a very familiar tale that you appears have told
Speaker 3: us on this program. To n Scale CEO Josh Payin,
Speaker 3: n Scale board member and advisor Cheryl Sandberg, it's great
Speaker 3: to have you both on the program that does it
Speaker 3: for this edition of Bloomberg Tech, Tune in tomorrow for
Speaker 3: a special edition of the show, live from the Hill
Speaker 3: and Valley Forum in Washington, DC, will sit down with
Speaker 3: some of the biggest names in government, industry and technology.
Speaker 5: Carrot don't forget to check out the podcast.
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Speaker 5: This is a Bloomberg Tech