Speaker 1: From Mahart where Innovation, money and power Collie in Silicon
Speaker 1: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: Ed Ludlow.
Speaker 2: I'm Caroline Heide Bloomberg's world headquarters in New York, and
Speaker 2: I'm Ed Ludlow in San Francisco.
Speaker 3: This is Bloomberg Technology.
Speaker 2: Coming up full earnings coverage ahead of shares of Spotify
Speaker 2: and Palanteer. They surge on strong results details to come.
Speaker 4: Plus strategists from Citybank warm positioning in technology stocks is
Speaker 4: so bullish that any sell off in the sector could
Speaker 4: spark a market route will break down.
Speaker 2: The report and Adam Newman and other investors they're exploring
Speaker 2: an offer to buy we work out of bankruptcy or
Speaker 2: bringing the latest reporting on the matter. But first that's
Speaker 2: checking on these markets, because as a macro story, it's
Speaker 2: our to the sell off. Significant sell off in the
Speaker 2: bond market. We see just a little bit of calmness
Speaker 2: as we anticipate, of course, a lot of fed speak
Speaker 2: to come. We're off by about tenth of a percent
Speaker 2: on the Nasdaq. More broadly, Tenure yield down five basis
Speaker 2: points after having risen and risen fast in the last
Speaker 2: two training days. But I look at what's happening in China.
Speaker 2: This really is the story of a global nature today.
Speaker 2: Ed we see, of course the talk that Chijinping, at
Speaker 2: the very top hierarchy chain of China is starting to
Speaker 2: debate what to do about the route the sell off
Speaker 2: that continues to afflict some of the Chinese stocks, and
Speaker 2: therefore some of the internet names do well today. Training
Speaker 2: of Chinese stocks up some five percent. When you're looking
Speaker 2: at the Nasdak Golden Dragon today we're up five point
Speaker 2: four percent. Moving on, let's a happening in the world
Speaker 2: of crypto. We're up more than two percent in fact,
Speaker 2: sort of outperforming the rest of the tech names. At
Speaker 2: the day, we're currently training at forty three thousand.
Speaker 4: What if you've got on the micro This is an
Speaker 4: AI story, and this is Palenteered. The shares actually off
Speaker 4: session highs where they are up thirty percent, but on
Speaker 4: track for their biggest jump since May. Netting come of
Speaker 4: two hundred and ten million dollars in the year, just
Speaker 4: gone their first full annual profit ahead of expectations, and
Speaker 4: what Palenteer's saying is that for four year twenty four
Speaker 4: operating income will be up to eight hundred and fifty
Speaker 4: million dollars, way above what the street thought that they
Speaker 4: could do. The story unbelievable demand for AI products. In fact,
Speaker 4: so great is the demand. Palenteer CEO doctor Addix carp
Speaker 4: told Bloomberg last night that they can't cope. They don't
Speaker 4: know what to do about all of the incoming for
Speaker 4: their AI platform. A really big move to the upside
Speaker 4: in that stock will get deeper in that with our
Speaker 4: analysts in just a moment. Spotify is interesting before the bell.
Speaker 4: This is a global name of a lot of US investors.
Speaker 4: It is on track for its biggest jump since October.
Speaker 4: Are two hundred and thirty six million subscribers, a one
Speaker 4: million beat against what the street was expecting.
Speaker 3: But I kind of reflect on the last.
Speaker 4: Few weeks with shows Caro and we've been talking a
Speaker 4: lot about the difficulty in the streaming landscape, all the
Speaker 4: changes that are happening. They're still seeing growth and the
Speaker 4: streets cheering it. Let's get more on the details with
Speaker 4: Bloombo Lucas Shaw, who leads our screen time vertical, and
Speaker 4: is this just about the subscriber beat, the premium subscriber beat.
Speaker 3: I think it's that they beat on everything.
Speaker 5: You know, oftentimes when Spotify has earnings, they delivered consistent
Speaker 5: user growth really for years, but there was there's always something.
Speaker 5: It feels like that investors can nitpick. The margins are
Speaker 5: a little off, the revenue is a little off, the
Speaker 5: forecast is a little off. This time, they really beat
Speaker 5: across the board. You know, they're growing fast and they've
Speaker 5: ever grown, which is pretty impressive for a fifteen sixteen
Speaker 5: year old company. They're doing it with free users, they're
Speaker 5: doing with paid users, and the margins are starting to
Speaker 5: get a little bit better. You know, it's still an
Speaker 5: unprofitable company, not great, but between raising prices, cutting costs,
Speaker 5: and cutting back on some of the expenditures, it's looking
Speaker 5: like a better business than most investors.
Speaker 2: And those expenditures were people Lucas, an awful lot of
Speaker 2: people that went more broadly, where then, do we think
Speaker 2: that the area of focus is at the moments for
Speaker 2: Spotify because they pull back on podcasting, but then they
Speaker 2: well more than two hundred millions going for Joe Rogan
Speaker 2: to remain. How are you seeing the company continuing to innovate?
Speaker 5: Well, when I brought up expenditures, you're right, you know,
Speaker 5: I probably should have been a little more caring when
Speaker 5: it comes to how many people they cut. I was
Speaker 5: actually thinking more about the kind of the shift in
Speaker 5: the programming strategy.
Speaker 3: You know, you brought up Rogan.
Speaker 5: It's important to note that that podcast will no longer
Speaker 5: be exclusive to Spotify, and that's part of a real
Speaker 5: shift and strategy where they've taken shows. You know, they
Speaker 5: went in first with podcasting and got a lot of
Speaker 5: exclusive rights to shows by a lot of companies. Did
Speaker 5: that sort of amass the audience and bring podcast listeners
Speaker 5: onto the platform. Now that they have people there, they're
Speaker 5: more than happy to take those shows wide. And so
Speaker 5: Alex Cooper's show, Colored Daddy and Joe Rogan they can
Speaker 5: be anywhere.
Speaker 3: Spotify just wants the.
Speaker 5: Ability to sell ads, distribute the shows. And then to
Speaker 5: your point about you know, kind of what is next
Speaker 5: and big, they're making a big push into audiobooks.
Speaker 3: Well that's what caught my eye.
Speaker 4: It's a bright spot for the company, and they kind
Speaker 4: of trialed the giveaway right so in some markets they
Speaker 4: would say have a few audiobooks on us, and now
Speaker 4: they're kind of solidifying that that strategy. But it's also
Speaker 4: like a cultural moment like audiobooks are in now.
Speaker 3: This is great for Spotify. Yeah.
Speaker 5: Look, Audible has been the dominant player in audiobooks for
Speaker 5: basically as long as audiobooks have existed, but Spotify sees
Speaker 5: an opportunity there, much like they did in podcasting, where
Speaker 5: Apple was the dominant player, hadn't really innovated all that much,
Speaker 5: and because there are already hundreds of millions of people
Speaker 5: who use Spotify to listen to music, they figured it
Speaker 5: would be pretty easy to convert them into doing some
Speaker 5: other type of audio behavior, that being podcasting. That has worked,
Speaker 5: at least from an audience perspective. You know, Spotify's probably
Speaker 5: the number one podcast platform in the world, maybe number two,
Speaker 5: depends how you want to classify YouTube and Apple in audiobooks,
Speaker 5: it's a tougher slog.
Speaker 3: Audible is not quite as lazy, I would.
Speaker 5: Say, as Apple has been in podcasting, but Spotify does
Speaker 5: have a much larger customer base that's just coming in
Speaker 5: every day to listen to stuff.
Speaker 2: Nucas was great to catch up and check out your
Speaker 2: wallup as is some of the best Luka show. We
Speaker 2: appreciate him on All Things Spotify. I meanwhile, let's turn
Speaker 2: to another phenomenal mover, as Ed was just pointing out
Speaker 2: Palenteer absolutely thriving on the day up almost twenty one percent.
Speaker 2: They gave higher than expect a profit outlook for twenty
Speaker 2: twenty four. AI demand drive sales is off the charts.
Speaker 2: Man Deep Sing is here from Bluemeg Intelligence. Dan Ive's
Speaker 2: making us laugh saying it's the messy of the reports
Speaker 2: when it comes to AI, and he means leo MESSI
Speaker 2: when it comes to the absolute studter of a soccer player.
Speaker 2: How are they not able to keep up with demand?
Speaker 2: Who is coming with the demand?
Speaker 6: I mean clearly the lam wave that we have seen
Speaker 6: over the last twelve months is a nice tail wind
Speaker 6: for them. And what Talenteer has is a visualization software
Speaker 6: that helps you leverage AI and also use it. So
Speaker 6: what companies are struggling with right now is you know,
Speaker 6: they are looking to train their lambs and.
Speaker 3: Then deployed on the field.
Speaker 6: He quipped about you know how chatbot is not such
Speaker 6: a great interface, you know to interact with an LLM,
Speaker 6: and they do have, you know, visualization software that is
Speaker 6: being used for defense purposes, healthcare customers. So I think
Speaker 6: from a vertical AI strategy. They do have something unique
Speaker 6: and think of it as a copilot. Everyone right now
Speaker 6: is trying to deploy a copilot. I think Palenteer solution
Speaker 6: will resonate for certain verticals. And that's what they called
Speaker 6: out yesterday with the US commercial customers because traditionally they
Speaker 6: have been heavy on the government side, but actually they
Speaker 6: are now adding new customers on the commercial side, which
Speaker 6: is what I think the market is excited about.
Speaker 4: And this is what doctor Alex Karp told us in
Speaker 4: an interview last night that the focus essentially is building
Speaker 4: out that commercial business. Our commercial business is exploding in
Speaker 4: a way we don't know how to handle.
Speaker 3: We don't know what to do with you onslaught of demand.
Speaker 4: But Mandeep and Caro, I'm just just human me on
Speaker 4: this one. I'm just going to go back a few
Speaker 4: year is pre IPO, where talented didn't care about salespeople.
Speaker 4: They weren't really worried about onboarding customers any of that stuff.
Speaker 4: In fact, they ridiculed the idea of salespeople. They just
Speaker 4: wanted to do their own thing. Now, dotor cops basically saying, uh,
Speaker 4: we need some sales reps and some sales engineers and
Speaker 4: we need to be able to give this to customers.
Speaker 4: You convince many they can actually do that make a
Speaker 4: business of it.
Speaker 6: Yeah, Look, they have a very different selling motion, So
Speaker 6: compare them to hyperscalers. What Microsoft is doing with open
Speaker 6: ai really setting infrastructure and then open Ai providing the
Speaker 6: LM and making it easy to train your own model.
Speaker 6: Palaneer solution is more out of the box. If you
Speaker 6: have geospatial data, you can use their platform and it
Speaker 6: offers something unique. But I don't think it applies to
Speaker 6: all sources of enterprises, and that's where you know, having
Speaker 6: a salesforce could help. But we also know the customer
Speaker 6: position costs go up when you have a direct salesforce model.
Speaker 6: So to me, the competitive dynamics are between you know,
Speaker 6: the likes of Palenteer and Snowflake or data breaks that
Speaker 6: also compete in the same space, but they leverage the
Speaker 6: public cloud more than Palenteer does, which is more on prem.
Speaker 6: So it's really about enterprises doing on prem versus leveraging
Speaker 6: the public cloud.
Speaker 2: Here, what's interesting is is pulling employees out of Europe
Speaker 2: at the moment Germany, France. He just thinks that in
Speaker 2: the moment the demand isn't there. He thinks Europe sort
Speaker 2: of not taking part in this AI wave. Are you
Speaker 2: seeing that regionally speaking?
Speaker 6: Well, so, I think it makes intuitive sense because Europe
Speaker 6: is probably behind when it comes to leveraging lllms or
Speaker 6: customizing lllms. So from that perspective, even though there are
Speaker 6: startups like Mistrol over there, you don't see companies being
Speaker 6: at the cutting edge of deploying these lms. So one
Speaker 6: could argue that right now the market is not ripe
Speaker 6: for deployment.
Speaker 2: They just don't want to use a US company.
Speaker 6: That's that's also I mean, Talenteer is controversial. We know that,
Speaker 6: and you know the fact that they've been so vocal
Speaker 6: about you know, everything they do with regards to the
Speaker 6: Middle East conflict, and that has actually helped their international business.
Speaker 6: But not every commercial company wants to engage with, you know,
Speaker 6: a company like Valenteer that clearly has very vocal views,
Speaker 6: and that could go against you, you know sometimes when
Speaker 6: you're trying to sell software.
Speaker 4: Man deep seeing of Bloomberg Intelligence, great to have your analysis.
Speaker 2: Let's just talk about technology's impact on the broader market
Speaker 2: right now, because City out with a really interesting note
Speaker 2: warning about positioning in tech stocks in particular right now,
Speaker 2: saying it is so bullish that any sell off could
Speaker 2: actually trigger a wider route with the anas, noting the
Speaker 2: NASDAC shortbets, they've basically been completely cleared. Let's dig into
Speaker 2: what is a concern for the broader market after Tangler
Speaker 2: Investment CIO Nancy Tangler, who we love having on because
Speaker 2: you're micro detail about individual companies they're leaders, but also
Speaker 2: the macro impact of tech right now, are you worried
Speaker 2: about any jitters and what that might mean from the
Speaker 2: smp A broader benchmarks.
Speaker 7: Rilyan, I don't think I'm a permable.
Speaker 8: You know, I've been doing this for forty years, and
Speaker 8: there are plenty of times when you want to head
Speaker 8: your portfolios or get out, but I.
Speaker 7: Don't think this is one of them.
Speaker 8: And I think you use weakness in some of these names.
Speaker 8: If there is a selloff and there we'll get a
Speaker 8: correction and that will be healthy for the market. And
Speaker 8: I think then you want to add to names that
Speaker 8: you either don't own or you don't think you own,
Speaker 8: a not enough of you heard the Palenteer, I mean
Speaker 8: you just had a great interview on Palenteer that was
Speaker 8: an extraordinarily bullish report for the monetization of generative AI.
Speaker 7: So the naysayers.
Speaker 8: Have have been fleeing the tech trade for the last
Speaker 8: four years that I can remember.
Speaker 7: It might be actually even longer.
Speaker 8: And every time technology comes back, and we've talked about
Speaker 8: how they're the new defensive names because they generate reliable
Speaker 8: earnings growth, and we've seen that again this earning season.
Speaker 2: What's been interesting is perhaps some of the companies that
Speaker 2: have outperformed that we finally get to understand where AI
Speaker 2: fits into the business model, and one that you haven't
Speaker 2: liked has been marks like a Berg's Meta remind us
Speaker 2: of why and why perhaps you know, are you changing
Speaker 2: your tune since the Mega rally come Friday?
Speaker 8: No, I mean, we've owned it in the past, and
Speaker 8: we've made a lot of money on the stock, and
Speaker 8: we got out in the high three hundreds a couple
Speaker 8: of years back, and you know, I've.
Speaker 7: Been wrong on that.
Speaker 8: But there are other places where we've put our client's
Speaker 8: money and those have been maybe maybe not quite as
Speaker 8: good or in some cases better.
Speaker 7: But I just don't like the two share structure. I
Speaker 7: don't like the business model, and you know, and I've
Speaker 7: been wrong. So it's an advertising company for sure.
Speaker 8: They are going to adapt and adopt AI and that
Speaker 8: will probably continue to drive margins. But we just there's
Speaker 8: better places in our view. So that's where we've been
Speaker 8: hiding out.
Speaker 4: Okay, so what would Meta and Zuckerberg have to do
Speaker 4: to change your mind?
Speaker 8: Well, I think for now we've missed it ed and
Speaker 8: so I love the dividend and whether or not it
Speaker 8: was self serving, I think he keeps about seven hundred
Speaker 8: million dollars a year from the dividend. I love the
Speaker 8: notion of it, and I think Google should be paying
Speaker 8: attention Amazon, which is a free cash flow course or tank,
Speaker 8: whereever you want to characterize it.
Speaker 7: But in terms of Meta, I just I think we've
Speaker 7: missed it.
Speaker 8: So it would have to come down from evaluation standpoint,
Speaker 8: and we would need to see continued monetization across their platforms.
Speaker 8: But you know, listen, he's done a great job and
Speaker 8: there's no disputing it.
Speaker 3: Nancie.
Speaker 4: There are a few things as romantic and poetic as
Speaker 4: the Bloomberg Markets wrap headline, which reads Wall Street on
Speaker 4: hold as trade is a wait more fed speak inspiration
Speaker 4: and energy in the market. But it reminds us we
Speaker 4: forget all of the AI stuff. We're still waiting on
Speaker 4: the FED, right.
Speaker 8: I think the market is beginning to not listen to
Speaker 8: the FED. And the reason I say that, ed is
Speaker 8: if you go back and look at Chairman Pal's comments. Historically,
Speaker 8: he has been adamant about we're not even thinking about
Speaker 8: thinking about raising rates. We won't raise seventy five basis points.
Speaker 8: We're going to stay higher for longer. And each time
Speaker 8: he made those statements, he reversed himself a short time later.
Speaker 8: So I think what the market is seeing is a
Speaker 8: we may or may not get a cut in March,
Speaker 8: but we will get cuts this year. I think that
Speaker 8: the market is willing to coexist as we did in
Speaker 8: the nineties, and I've talked about that on your show,
Speaker 8: with higher interest rates because they're.
Speaker 7: Not debilitating and we've seen that.
Speaker 8: I mean, for the large tech companies, higher interest rates
Speaker 8: have actually been augured well to their balance sheet. They've
Speaker 8: grown cash because of the higher interest are receiving on cash.
Speaker 7: So I think that the market is.
Speaker 8: Saying, Okay, productivity is improving, there is a tight labor market,
Speaker 8: and again that's going to continue to benefit technology companies.
Speaker 8: The FED matters less and less each day that goes.
Speaker 7: By my view.
Speaker 4: Nancy Tangler of Laffa Tengler Investments. Great to catch up,
Speaker 4: Great to have you on the program, Thank you very much.
Speaker 4: Coming up here on Bloomberg Technology, we Work co founder
Speaker 4: Adam Newman and capital providers including Dan Lobe's Third Point,
Speaker 4: are working together to explore an offer to buy the
Speaker 4: coworking firm out of bankruptcy. According to a letter sent
Speaker 4: to wee Work's lawyers, I did just say that and
Speaker 4: we will discuss it.
Speaker 2: Next caroc ah deja vu Adam Newman again. Meanwhile, let's
Speaker 2: have a little look at what's happening with Hertz because
Speaker 2: actually we're now trading higher on the course Juggernaut for
Speaker 2: car Rental, we're up some nine percent. We had dipped
Speaker 2: into the read earlier because they massively lot missed in
Speaker 2: terms of their overall earnings share loss adjusted. One dollar
Speaker 2: thirty six per share is what they got. Why, Because
Speaker 2: they're selling down. They're offloading those twenty thousand Tesla evs,
Speaker 2: about one third of its overall electric fleet. But for now,
Speaker 2: investors starting to see some opportunity as to how they
Speaker 2: cut costs going forward. This is bruly meg technology.
Speaker 3: Okay, time for talking tech and first up.
Speaker 4: Potential investors in Elon Musk's artificial intelligence startup XAI are
Speaker 4: focusing in on two key selling points, access to Musk's
Speaker 4: array of companies, also known as the Musconomy, and the
Speaker 4: early success of a titan in the space open Ai.
Speaker 4: A slide deck that circulated among potential xi investors in
Speaker 4: December and January prominently features both Musk Strap Record and
Speaker 4: open Ai, including a slide showcasing the key attributes that
Speaker 4: drove open AI's six more coming. Plus, the newly released
Speaker 4: Apple and vision Pro headset is presenting some customer service
Speaker 4: snags for users. If a Vision Pro owner forgets their
Speaker 4: pass code, the only way to get the device working
Speaker 4: again is by bringing it to an Apple store or
Speaker 4: mailing it to Apple Care custos. Smart Apple would then
Speaker 4: raise and reset it. And we Work co founder Adam
Speaker 4: Newman is teaming up with capital providers, including dan Load's
Speaker 4: Third Point, to explore an offer to buy the coworking
Speaker 4: firm out of bankruptcy that according to a letter sent
Speaker 4: to Weework's lawyers, Newman and Third Point I mean trying
Speaker 4: to get the information necessary to formulate a bid which
Speaker 4: would be for the entire company or its assets back
Speaker 4: since September December.
Speaker 2: Sorry, Cara, and we are going to dig into this
Speaker 2: more because it's not the first time that Anna Newman's
Speaker 2: wanted to ride to the rescue on there. Mart Million
Speaker 2: joins us now for more on the story, and actually,
Speaker 2: like leak twenty twenty two, who is trying to make
Speaker 2: bids to basically resuscitate this company he was so associated with.
Speaker 9: Yes, so apparently there's been a lot happening behind the
Speaker 9: scenes that hasn't been too deeply reported on. But Newman
Speaker 9: just like can't let go of this old company that
Speaker 9: he started. So it's like we're maybe going to get
Speaker 9: we crash season two, Adam Newman coming back. It'll be fun.
Speaker 9: So yeah, as you mentioned, he apparently made a bid
Speaker 9: in twenty twenty two. According to his letter, he most
Speaker 9: recently offer another sort of like bankruptcy financing offer, and
Speaker 9: now he's teaming up with other financiers to make a
Speaker 9: big bid, maybe to buy the whole company.
Speaker 3: He hasn't been too.
Speaker 9: Specific, but he says he's frustrated because the company is
Speaker 9: not taking him seriously, not giving him the information that
Speaker 9: he wants.
Speaker 4: Mark Millian sharing his idea of fun with the millions
Speaker 4: of yous.
Speaker 3: What is We Work?
Speaker 4: What it is now and what they if they save it,
Speaker 4: hope to make it into.
Speaker 9: We Work is in bankruptcy. It's deep in debt. They
Speaker 9: can't pay their bills. They're renegotiating with their landlords. We
Speaker 9: Work is in deep, deep trouble. And for a lot
Speaker 9: of people, We Work is Adam Newman, which is why
Speaker 9: in some ways this does make sense. I mean, he
Speaker 9: deserves much of the credit for driving the company into
Speaker 9: the ground, which is why he was kind of pushed
Speaker 9: to step down in twenty nineteen. But the last few
Speaker 9: years it's been a tough It's been a tough economy
Speaker 9: for a real estate business, for a commercial real estate
Speaker 9: business in particular. So I don't know that Adam Newman
Speaker 9: would have been able to lead We Work out of
Speaker 9: the crisis that it went through in the pandemic. But
Speaker 9: what is we Work without Adam Newman? Can can most
Speaker 9: people even like name the last couple CEOs of the company,
Speaker 9: And so maybe maybe this doesn't make sense.
Speaker 3: Maybe this is We.
Speaker 9: Works last shot, and maybe they should take him seriously
Speaker 9: at least that's what he's arguing.
Speaker 3: To the company.
Speaker 4: All right, but invegs Monk Millian on the what next
Speaker 4: for we We'll keep tracking it. Another top story in
Speaker 4: Vidia and Cisco. It's teaming up to help companies build
Speaker 4: in house AI computing, an attempt to push the tech
Speaker 4: beyond the big data center provide a Cisco is going
Speaker 4: to offering Vidio based equipment popular for developing AI models,
Speaker 4: along with its own networking gear. And herein lies the
Speaker 4: story forget h one hundred. There are other things Ethernet cables,
Speaker 4: other server design components that go into all of this,
Speaker 4: and Cisco has been saying for a little while we
Speaker 4: will get some of this.
Speaker 10: Yeah, that's absolutely true. What Cisco is really offering here,
Speaker 10: more than anything else, for Invidia is a sales force.
Speaker 10: Invidia doesn't have a channel into this world of companies,
Speaker 10: of corporate data centers, of all of these small to
Speaker 10: medium all the way up to large companies that want
Speaker 10: to perhaps get in on the AI game, want to
Speaker 10: perhaps put their own hardware in place, but just to
Speaker 10: have no real way of doing that. And that's what
Speaker 10: Cisco can offer for in Vidia here, or at least.
Speaker 4: That's the plan the Nvidia processes go into them seven.
Speaker 4: But if you look at where Nvidia sells to the
Speaker 4: cloud providers, it's kind of shifting some spend.
Speaker 10: Basically, well, they're trying to right, I mean, not a
Speaker 10: done deal. Yeah, tremendous success with the cloud providers, and
Speaker 10: that's absolutely wonderful. You know, it's driven their sales to
Speaker 10: you unprecedented levels and it's great, but it's already forty
Speaker 10: percent of their revenue. There's a risk there. I mean,
Speaker 10: what are Microsoft, what are Amazon? What are Google doing?
Speaker 10: They're making their own chips. Clearly they know the importance
Speaker 10: of these things and want to do it themselves.
Speaker 3: They don't want to be beholding all.
Speaker 4: Right, Bloomberzi and King, thank you well the election. With
Speaker 4: Nevada holding its state run Democratic and Republican primaries today,
Speaker 4: the US election is on everyone's mind, including metas. The
Speaker 4: tech giant will begin labeling more posts that were created
Speaker 4: using AI tools as part of a broader effort to
Speaker 4: prevent misinformation and deception from spreading on the platform's Facebook,
Speaker 4: Instagram and threads during what is a critical election year.
Speaker 4: Let's bring in Bloombergs, Kirt Wagner and Kurt this morning,
Speaker 4: you did an interview with Nick Clegg at Meta, and.
Speaker 3: I guess the question.
Speaker 4: Around Meta is always whether that one definitive policy or
Speaker 4: point of technology is going to fix all of this,
Speaker 4: which we know the issue is the spread of misinformation.
Speaker 11: Yeah, and I think the easy answer is that no, Right,
Speaker 11: there's never going to be a single solution to a problem,
Speaker 11: especially when it's complicated as AI generated content. And while
Speaker 11: META is trying to you know, push forward into digital
Speaker 11: water marking and metadata. Right, So, if you create an
Speaker 11: AI generated photo or video using metas tools or even
Speaker 11: some others in the industry, Google Open AI others like that,
Speaker 11: there's going to be these sort of invisible markers on
Speaker 11: that content that then META can use to sort of
Speaker 11: label it. But you know, bad actors aren't going to
Speaker 11: follow those rules, right, They're going to figure out ways
Speaker 11: to try and get around these watermarks, to try and
Speaker 11: get around miss metadata because they're out to cause chaos.
Speaker 11: And so I think Nick Clegg, to his credit, acknowledged
Speaker 11: that this is not a one size fits all solution,
Speaker 11: but it is better than nothing for them.
Speaker 2: Of Course, Nick Clegg so integral to these sorts of conversations,
Speaker 2: having had his own role in politics in the UK
Speaker 2: for so long before coming on to Meta. I'm interested
Speaker 2: in what he had to say, particularly around the recent
Speaker 2: audio doctrin of Biden ahead of the primaries that seems
Speaker 2: to have been a real catalyst for worrying about AI
Speaker 2: around elections. He seemed almost relatively optimistic, right.
Speaker 11: Yeah, I was surprised. One of the questions I was
Speaker 11: most eager to ask him was, you know, how big
Speaker 11: of a deal is this going to be for the
Speaker 11: twenty twenty four US election?
Speaker 7: Right?
Speaker 11: We're all sort of bracing for this inevitable moment where
Speaker 11: one of the candidates has a deep fake of them
Speaker 11: that goes viral online and it harms their campaign. And
Speaker 11: Clegg was not nearly as concerned as I thought he
Speaker 11: would be. And most of that is because he's like,
Speaker 11: everyone is already looking for this stuff. Right the minute
Speaker 11: that this happens, the minute that you know Joe Biden
Speaker 11: is seen in a deep fake, his campaign is going
Speaker 11: to raise the alarm. They're going to call Meta, they're
Speaker 11: going to call the press. And so his sort of
Speaker 11: feeling was like, there's so many people paying attention right
Speaker 11: now compared to years past that he doesn't actually anticipate
Speaker 11: this is going to be as big of an issue
Speaker 11: as I think a lot of other people worry about.
Speaker 2: How refreshing is some optimism, Kurt, weapmon, We thank you
Speaker 2: so much, coming to us from Denver. Meanwhile, let's talk
Speaker 2: more about potential threats and indeed some of the benefits
Speaker 2: the way in which AI technologies might be a solve
Speaker 2: and play a role across the year of global election cycles.
Speaker 2: Christopher Olberg's with us. You see a threat intelligence cloud
Speaker 2: platform recorded future. Christopher, your expertise here. Let's just just
Speaker 2: dwell on what we were hearing from Kurt, the fact
Speaker 2: that there's some optimism that everyone's focused on it, so
Speaker 2: we won't be able to have this sort of level
Speaker 2: of misinformation and deep fakes that we're worried about. Do
Speaker 2: you agree?
Speaker 12: Yeah, I know, first of all, I love optimism, just
Speaker 12: to be clear, So that's good. In the second, you know,
Speaker 12: the amazing thing is that we're actually sort of able
Speaker 12: to collect all this data and we can organize it,
Speaker 12: we can analyze it. Then we can sort of look
Speaker 12: for what's anomalists the stuff that does stand out, And
Speaker 12: I think it's fair fair to say that the sort
Speaker 12: of the big things. You know, if somebody does that
Speaker 12: deep fake, whether it's Joe Biden or Trump, and you
Speaker 12: know we're going to be able to find that. You
Speaker 12: may not even need an algorithm. I think it's the
Speaker 12: real point. I actually worry more about the subtle stuff.
Speaker 12: When somebody in a subdistrict in Ohio somewhere, that is
Speaker 12: the place which is actually going to make the difference
Speaker 12: whether an election goes left or right, where somebody may
Speaker 12: not even have to introduce fake stuff, but they just
Speaker 12: need to manipulate the actual news stream of actual events happening.
Speaker 12: There's much more subtle manipulation that I think we need
Speaker 12: to watch for, and these big deep fakes that will
Speaker 12: be sort of I don't worry too much about that.
Speaker 7: So let's hypothesize.
Speaker 12: Seemed to be tefla on wise anyway, So I.
Speaker 2: Mean, Christopher hypothesize. You know, there's a manipulated photo of
Speaker 2: the local polling station where you might go and cast
Speaker 2: your vote. These sort of more intricate, smaller scale issues
Speaker 2: that really impact certain moves within certain states and geographies.
Speaker 2: Then how do we as a nation give the average
Speaker 2: consumer confidence that they're not being manipulated so.
Speaker 12: I think that's going to take a long time. This
Speaker 12: is not going to happen overnight. This is that you know,
Speaker 12: we heard Paul no Cassona from NSA that we just
Speaker 12: step down from NSA say the end of the day.
Speaker 12: That look, the sort of his view was that our
Speaker 12: election as we come into twenty twenty four is going
Speaker 12: to be the safest on record. So that's good to hear. Now,
Speaker 12: it's an interesting year. The US has a big election.
Speaker 12: There's you can count twenty you can actually count forty
Speaker 12: major elections in the world around, you know, sort of here.
Speaker 12: You know, in the full year, UK, Singapore or Indonesia, India,
Speaker 12: wherever you want to go, there's big elections. So I
Speaker 12: don't think we're going to get confidence on this in
Speaker 12: the short order. There's ways we can deal with these problems,
Speaker 12: but it's gonna the cat is out of the bag,
Speaker 12: and I think it's going to take some time before
Speaker 12: we can get back to a place of confidence. It's
Speaker 12: not going to happen overnight.
Speaker 4: The challenge here is the same as we see in
Speaker 4: the cybersecurity context, that there is access to artificial intelligence
Speaker 4: technology for defense and the threat actors have access to
Speaker 4: the same artificial intelligence technology in the context of this election,
Speaker 4: how do you feel about who has the balance of
Speaker 4: competence of how to use it? The threat actors or
Speaker 4: companies like yours who aim to help fight back and
Speaker 4: prevent things spreading like AI generated content.
Speaker 12: So, first of all, the good news is to the
Speaker 12: United States have the best AI technology in the world.
Speaker 12: I think we've actually done work in our own analysis
Speaker 12: here at the Record of Future where we've gotten our
Speaker 12: hands on the sort of tiptop best Russian and Chinese
Speaker 12: AI and using whatever methods we'll leave it at that,
Speaker 12: to get our hands on it and playing with it
Speaker 12: and you know, doing all kinds of interesting stuff with it.
Speaker 12: It's not as good as what we have here. So
Speaker 12: the good news is the US is ahead, and it's
Speaker 12: important that we keep being ahead. And I think there's
Speaker 12: incredible there are incredible ways that we can apply this
Speaker 12: sort of intelligence to be able to discern malicious information,
Speaker 12: among other things. So there's great ways that we can
Speaker 12: help with that. And to your point, it's no different
Speaker 12: with sort of general cybersecurity, general intelligence and we're talking
Speaker 12: about here in this information. But we're going to have
Speaker 12: to keep investing We're going to have to be aggressive.
Speaker 12: We have to be careful so that we don't put
Speaker 12: big regulatory stamps or stops in the way of staying ahead. Again,
Speaker 12: the US has ad of Europe because of regulatory sort
Speaker 12: of being a little bit more permissive over here. So
Speaker 12: we have a lot of good notes for us.
Speaker 7: We've got to keep that.
Speaker 4: Chris Fauberg, CEO of Recorded Future, we appreciate the optimism
Speaker 4: on this show.
Speaker 3: Thank you. Now coming out, we're going to discuss all.
Speaker 4: Things European venture capital with Hector Mason from episode one
Speaker 4: ventures Tune in for that conversation.
Speaker 3: Caroen, what are you looking at?
Speaker 2: Actually looking across the Japan and Nintendo's raised it's forecast
Speaker 2: for the Switch console ed sales. They think they're going
Speaker 2: to have fifteen and a half million in fact for
Speaker 2: this particular year, the fiscal year. The profit actually is
Speaker 2: therefore going to be on the higher end of expectations.
Speaker 2: It looks as though the holiday quarter was pretty good
Speaker 2: customized editions. In fact, of the Switch featuring Super Mario
Speaker 2: and animal crossing themes, it really helped lift the sales
Speaker 2: of the Japanese market above expectations. More broadly, let's take
Speaker 2: a look at the latest in the venture capital world
Speaker 2: over in Europe. Episode one Ventures one of Europe's leading
Speaker 2: early stage funds. It's launching a seventy six million pound fund.
Speaker 2: They're third to invest in B to B software. Let's
Speaker 2: chat through all of it with Hector Mason, general partner
Speaker 2: over at Episode one Ventures. And we're interested Hector in
Speaker 2: particularly some of your cornerstone investors. Not only do you
Speaker 2: take money from seasoned fowlers in and of themselves and
Speaker 2: some great companies that were well known, but also the
Speaker 2: UK government backed money and think of British patient capital
Speaker 2: in particular National Security Strategic Investment Fund. What is it
Speaker 2: that they want to see grown in Europe and in
Speaker 2: the UK more broadly.
Speaker 13: Yeah, absolutely, thanks for having me on. So we have
Speaker 13: been around for a while and we've built a really
Speaker 13: loyal following.
Speaker 3: In our investor base.
Speaker 13: And so for a fund like ours, we're at B
Speaker 13: to B Software fund investing in you see seed stage
Speaker 13: companies largely based over here in the UK with checks
Speaker 13: between three hundred thousand pounds and about three million pounds.
Speaker 13: It's really important to build that diversity among your LP
Speaker 13: based So yes, we have institutional investors who backed US
Speaker 13: fund after fund, But as you mentioned, we also have
Speaker 13: this fantastic group of highly successful entrepreneurs, including the founders
Speaker 13: of many unicorn businesses, who have chosen to trust us
Speaker 13: with some of their money in this latest fund, and
Speaker 13: they come in and alongside those larger investors who are
Speaker 13: investing in US really to ensure that the UK continues
Speaker 13: to deliver outstanding technology on a global stage.
Speaker 4: How would you summarize then the kind of early stage
Speaker 4: environment right now in the UK particularly interesting that you
Speaker 4: are talking pre seed, right that you seem to specialize
Speaker 4: in this area where you can write a small check,
Speaker 4: but many of those portfolio companies do actually go on
Speaker 4: to raise at high levels.
Speaker 7: Yeah.
Speaker 13: Absolutely, we're a specialists at pre seed and seed, and
Speaker 13: so we're investing at the very earliest stages into what
Speaker 13: are initially fledgling startups and we hope and we've seen
Speaker 13: that many of those go on to become large companies
Speaker 13: with many hundreds or even thousands of employees. And so
Speaker 13: the reason that we invest in at this stage is
Speaker 13: that there are fantastic returns available and you get in
Speaker 13: at the ground floor of these companies and you can
Speaker 13: see them progress and go on their journeys to successful outcomes.
Speaker 13: And actually we've seen a seventy five percent graduation rate
Speaker 13: in our portfolio where companies go on to raise successful
Speaker 13: Series A rounds of funding, which is about almost four
Speaker 13: times as high as the market average.
Speaker 2: What's interesting is this comes at a time where the
Speaker 2: UK has very much been trying to put itself front
Speaker 2: the center when it comes to AI. We think of
Speaker 2: the AI Summit late last year. I'm looking at Robin
Speaker 2: Ai among your portfolio companies, a company we've spoken to
Speaker 2: the leader of that business and clearly applying artificial intelligence
Speaker 2: in the legal frame of applications. There is some interesting
Speaker 2: views out there in the UK at the moment that
Speaker 2: there should be more of an impetus to regulate and
Speaker 2: the UK government isn't getting ahead of this. What have
Speaker 2: you made of the UK government saying look, we're just
Speaker 2: waiting and we're watching and we're talking to civil society
Speaker 2: and entrepreneurship in the country more broadly.
Speaker 13: Yeah, Look, it's a great question, and there's a lot
Speaker 13: happening in that space around AI regulation. And we actually
Speaker 13: have a couple of aiphds on our team here at
Speaker 13: episode one, and so we have a natural interest in
Speaker 13: the space and it's really important that people are developing
Speaker 13: these technologies with an ie on being responsible and so
Speaker 13: we love companies like robin Ai, and we have many
Speaker 13: other AI companies in the portfolio who are able to
Speaker 13: build real defensibility around their businesses, and whether that's through
Speaker 13: proprietary data that other people would find it very hard
Speaker 13: to access so they can train models that highly affect
Speaker 13: and can outcompete other players in the market, or actually
Speaker 13: just more generally companies using AI as part of their
Speaker 13: existing SaaS tool to make their products better for their customers.
Speaker 13: We also really like companies that are using AI to
Speaker 13: help enterprise adoption and speed up that process. But you're
Speaker 13: absolutely right, a lot of focus needs to be placed
Speaker 13: on how we can do this responsibly, and we're pleased
Speaker 13: to see that the portfolio is taking responsibility there and
Speaker 13: being cautious around and rolling out the technologies.
Speaker 4: Hector Mason, General Partner, Episode one. Venture is great to
Speaker 4: have some of your time from the UK. We don't
Speaker 4: often talk about that UK market just in isolation. Really
Speaker 4: interesting conversation. A new AI company wants to tackle a
Speaker 4: niche problem in retail finding a home for returned inventory
Speaker 4: that would otherwise be gathering dust. The company called vended
Speaker 4: It is billionaire John Paul de Juria's latest venture and
Speaker 4: delighted to say he joins us right now on Bloomberg Technology.
Speaker 4: This is interesting. If I return any good, it'll end
Speaker 4: up in a warehouse somewhere JP and there is a
Speaker 4: market for that. There are discounters, There are retailers that
Speaker 4: are looking for that big volume of used or returned
Speaker 4: infantry that takes a long time to get hold of it.
Speaker 4: Just explain the point behind venditte.
Speaker 1: Oh you would love to. Okay, By the way, it's
Speaker 1: bigger than people know. One in six of most retail
Speaker 1: products are returned one and six. It's a trillion dollar business.
Speaker 1: About three years ago it was around three hundred I
Speaker 1: think fifty eighty million dollars. This year it will be
Speaker 1: a trillion dollar business. And what happens is this, people
Speaker 1: buy things, manufacturers overload things, okay, and then what do
Speaker 1: they do with it? City and warehouses which cost money,
Speaker 1: Trucks go back and forth. So what we've put together
Speaker 1: here is a special platform that cost the manufacture or
Speaker 1: of course our clients nothing to implement as well as
Speaker 1: you But what it does is it connects the seller
Speaker 1: and the buyer or manufacturer instantaneously right there instead of
Speaker 1: sitting around in the warehouse for weeks and being shuffled around.
Speaker 1: Now it also eliminates landfills because we have to renew
Speaker 1: logic one of our offshoots of our company where we
Speaker 1: redo everything, so it eliminates the landfills or sitting awhered.
Speaker 1: But also this it eliminates tens of thousands of trucks
Speaker 1: hauling stuff back and forth, back and forth, back and forth.
Speaker 1: And then what's there on the shelf. It gives the
Speaker 1: person that has it, whether it's a manufacturer that we
Speaker 1: deal with or the retailer we deal with the highest
Speaker 1: value and highest return instantly where they go directly to
Speaker 1: the second person who buys it. So what we do
Speaker 1: is our software or AI takes on our platform, it
Speaker 1: takes it from the person that has it, whether it
Speaker 1: be the manufacturer or the wholesaler, and sends it out
Speaker 1: to through our implementation, all these various people, thousands of
Speaker 1: them everywhere that are the actual buyers. It puts them
Speaker 1: in touch. So you take something that's worthless and you
Speaker 1: make it valuable. And so that's pretty good. Yeah, that's
Speaker 1: pretty good. You did instantly instead of in weeks.
Speaker 3: Here's what I want to understand.
Speaker 4: We know you as the founder of Paul Mitchell and later,
Speaker 4: if you don't mind me saying, you built a lot
Speaker 4: of your wealth on the sale of Patron to the US.
Speaker 1: Patron excellent Patron to Kuil.
Speaker 3: How how did you end up in an AI company.
Speaker 1: Well being into the environment and helping out what's best
Speaker 1: I can industry with it. I got involved many years ago,
Speaker 1: seven eight years ago with Renewed Logic. It was a
Speaker 1: company that part of my family and dear friends put
Speaker 1: together and I got involved with. And what it did
Speaker 1: was it took things out of closets, out of warehouses,
Speaker 1: things that were electronic things that for example, to start
Speaker 1: with their telephones that had to be disassembled, the important
Speaker 1: parts that could be reusable taken out and the rest
Speaker 1: destroyed ecologically instead of hiding in a landfill or destroying
Speaker 1: the earth. So I was already into it. The next
Speaker 1: step would be, now, how do we take that to
Speaker 1: the next step? How do we make it more shall
Speaker 1: we say, valuable to some of our customers to actually
Speaker 1: move their goods instantly.
Speaker 3: And that's what we worked on.
Speaker 1: I spent millions of dollars putting this together in the
Speaker 1: AI with some of the greatest people. Gary for example,
Speaker 1: is one of the best in the world. He's one
Speaker 1: of the main guys that are there and one of
Speaker 1: our partners. And Gary Stevens just a genius of what
Speaker 1: he does. But anyway, so we took that in great
Speaker 1: people and put it together and I thought, it's the
Speaker 1: world needs us. The world needs to clean up the oceans,
Speaker 1: we need to clean up the landfills. We need to
Speaker 1: save using trucks where you don't have to, and using
Speaker 1: people we don't have to repetitiously. So it makes a
Speaker 1: business shorter, quicker, and much more valuable. And I'm all
Speaker 1: about fewer moving parts.
Speaker 2: Why do you think this hasn't been solved already? It's
Speaker 2: not niche, It's just articulated the trillion of dollars of value.
Speaker 2: Why hasn't someone done this?
Speaker 1: Well, people have done it before, but in various segments.
Speaker 1: What we do with our AI is we put it
Speaker 1: all together. So instead of going to from the manufacturer
Speaker 1: or the wholesaler to a middleman into a warehouse and
Speaker 1: then to try and get it out to various customers
Speaker 1: they can get out to. We go directly to the customer,
Speaker 1: so we have that. No one's ever put that together before.
Speaker 1: We do have that, and it affects many many industries,
Speaker 1: and we're here even our competitors. It helps our competitors
Speaker 1: out because it helps them move out things also a
Speaker 1: lot quicker, and we're all working with them also, so
Speaker 1: everybody wins. That's how America works, and America still works
Speaker 1: by the way, America still works, and it's still the
Speaker 1: land of opportunity.
Speaker 2: We are an optimistic show today and we're loving it.
Speaker 2: Jp From your perspective, who do you sign on? How
Speaker 2: many kinds you already got in already on the platform,
Speaker 2: because you're coming out of stealth.
Speaker 1: I think the best way to do it is this.
Speaker 1: We went from one person getting involved in taking orders
Speaker 1: now and we're going to be at the big show
Speaker 1: that's going on in Las Vegas as you know, this week,
Speaker 1: I'm the keynote speaker there to seventeen people from one
Speaker 1: to seventeen just to implement it. We have people standing
Speaker 1: by for this right now. We have a few we've
Speaker 1: already implemented, but there's quite a few I want to
Speaker 1: say it'll end up once we're done with this show
Speaker 1: of probably thousands, because nobody has this and it's an
Speaker 1: answer to a big question and a big challenge that
Speaker 1: manufacturers and retailers have had. Move it out and also
Speaker 1: they get top value for their dollar. So instead of
Speaker 1: having to discount it all the way down and maybe
Speaker 1: they dn't make no money, just move it out right,
Speaker 1: they actually get the top value out of it. The
Speaker 1: way we do it, we eliminate the middleman.
Speaker 2: Champaul dea Juria, it's been great having some time with you,
Speaker 2: co founder men did it go, Got it, Love and
Speaker 2: Happiness and to you, thank you. Meanwhile, got peace, Love
Speaker 2: and happiness and the end of the edition of this
Speaker 2: Bloomberg Technology. And it's been a broad ranging conversation. And
Speaker 2: we're still looking at the companies that are set to
Speaker 2: have earnings after the bell today.
Speaker 4: Yeah, and there's some optimism going to some of those earnings,
Speaker 4: and there is some lesson not optivism on others. Don't
Speaker 4: forget recap the show on the podcast wherever you're getting
Speaker 4: your podcast. We're posting on the Bloomberg platforms, but also Apple,
Speaker 4: Spotify and iHeart, and we really appreciate everyone give us
Speaker 4: a lot of feet back about the podcast carry, because
Speaker 4: they might watch the show in that form, listening in
Speaker 4: on their way to work from New York City and
Speaker 4: San Francisco. This is me leaving you with a smile
Speaker 4: and some optimism, and this is Bloomberg Technology.