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Speaker 1: Hi everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 1: This week, Cooper Tino Apple has an AI problem. Plus
Speaker 1: the world is actually a wash in those not so
Speaker 1: rare earth minerals, especially China. But don't count the US out.
Speaker 1: As you will hear from the CEO of MP Materials.
Speaker 3: And the language app due Lingo is talking up its
Speaker 3: growth and investors are noticing. The CFO featured in the
Speaker 3: latest episode of The Chief Future Officer stops by.
Speaker 1: Also, Elon Musk speaks a lot on Tesla sales, being CEO,
Speaker 1: plans for future political contributions, and his massive pay package
Speaker 1: gets tense at sometimes that's coming up in our next hour.
Speaker 3: All that to come. We begin, though with one of
Speaker 3: the week's most read stories. It features exclusive interviews with
Speaker 3: Apple insiders about how Apple has been falling short when
Speaker 3: it comes to cracking AI.
Speaker 1: This is a crisis. That's how one senior member of
Speaker 1: Apple's AI team put it to our team. For all
Speaker 1: the details, we caught up with our in house Apple expert,
Speaker 1: Mark German. He's the Bloomberg News Managing editor for Global
Speaker 1: Consumer Tech.
Speaker 4: Mark.
Speaker 3: I was struck by this. You know, just at the
Speaker 3: beginning of your piece, there's a picture of Phil Schiller
Speaker 3: introducing Siri back in twenty eleven, and there are these
Speaker 3: thought bubbles and it says will it rain? And Cooper Tino,
Speaker 3: what's the weather like today? Do I need an umbrella today?
Speaker 3: I was shocked to look at the small print and
Speaker 3: see that was from twenty eleven, because in my view,
Speaker 3: that's kind of what Siri still does.
Speaker 5: Uh yeah, that's the problem.
Speaker 6: That is a problem. Serie was revolutionary fifteen years ago.
Speaker 6: It was amazing for its first couple of years because
Speaker 6: we let's.
Speaker 5: See, how do I want to say this.
Speaker 6: It wasn't great, but it was still amazing and futuristic
Speaker 6: and sci fi and better than everything else. Then Amazon
Speaker 6: came around, Google came around, Microsoft came around, and they
Speaker 6: just blew Apple out of the water. The technology is
Speaker 6: just all legacy technology that they've been using for a
Speaker 6: long while now for all intents and purposes, we're not
Speaker 6: talking about a serie that's based on the same large
Speaker 6: language models and foundation model technology that you're seeing from
Speaker 6: open AI and Gemini from Google and you know, in
Speaker 6: thropic you name it, and so yeah, they have fallen
Speaker 6: way to the way south.
Speaker 3: Well, speaking of Google, there was a big hire there
Speaker 3: from twenty eighteen who was supposed to be the guy
Speaker 3: who did AI at Apple.
Speaker 6: He was supposed to be the guy who did AI
Speaker 6: at Apple, and he's still the guy who does AI
Speaker 6: at Apple. That's John gen Andrea. Biggest miss was generative AI.
Speaker 6: They seem to have not seen this coming, and if
Speaker 6: they did see it coming, they did little to nothing
Speaker 6: about it. They really, i'm told, started on the generative
Speaker 6: aipath after Craig Fedderigi, the head of software engineering, used
Speaker 6: chat GPT to finish some code for a personal project
Speaker 6: he was working on over the holiday break. Did they
Speaker 6: take this little one week break at the end of December.
Speaker 6: He was working on some personal software, as one does,
Speaker 6: and he figured out the power, Yeah, figured out figured
Speaker 6: out the power of chat GPT and then immediately they
Speaker 6: set iOS eighteen for twenty twenty four. This is gonna
Speaker 6: be the big AI release for Apple. From a marketing standpoint,
Speaker 6: it was. They marketed it really well, AI for the
Speaker 6: rest of us, just like the computer for the rest
Speaker 6: of us forty years ago. And you know, okay, we're
Speaker 6: good that. Yes, other than the other than the marketing,
Speaker 6: you know what.
Speaker 5: Let's take a step back in the robotics world.
Speaker 6: In the humanoid robotics world, the fundamental thing that a
Speaker 6: humanoid robot has to do is go to your kitchen,
Speaker 6: pick up a glass of water, and bring it to
Speaker 6: you without dropping it. Okay, Tim almost dropped his water
Speaker 6: all over him. So that's where I got the idea
Speaker 6: to mention this. The problem isn't so much the iPhone
Speaker 6: and the AI capabilities on today's devices. The problem is
Speaker 6: is can Apple make AI that's good enough to power
Speaker 6: a robot that's not going to spill their water like
Speaker 6: Tim right there? It is, And so the worry is
Speaker 6: not necessarily about the technology today, but it's the technology
Speaker 6: of tomorrow in a decade from now, and so the iPhone,
Speaker 6: you know, its rain is going to be over at
Speaker 6: some point but that's not really what matters here. I
Speaker 6: think that's that's not big picture enough. The big picture
Speaker 6: is the next set of stuff. We've seen AI already
Speaker 6: lead to the car cancelation in part. There were many
Speaker 6: other factors. But if Apple was able to get an
Speaker 6: L five car with tiptop AI and great safety features
Speaker 6: level five, yep, they would have brought it to market.
Speaker 6: So you know, we've already seen AI cost them one
Speaker 6: big category. They were supposed to have a big smart
Speaker 6: home push this year. It's been delayed. It was supposed
Speaker 6: to happen in March. Now it probably won't happen till
Speaker 6: the end of this year or next year. The AI
Speaker 6: not working cost that. Now they're already having trouble coming
Speaker 6: up with use cases for AirPods and watches with camera
Speaker 6: and smart glasses with cameras because you need real good
Speaker 6: AI to use that. So the iPhone doesn't matter, it's
Speaker 6: everything that comes after it.
Speaker 1: So why can't they get this right? Is it personnel?
Speaker 1: Is it culture?
Speaker 5: Is it?
Speaker 1: What is it both?
Speaker 6: It's personnel mismanagement, it's culture. Apple's wired in a very
Speaker 6: specific way. I get into it in the story. They're
Speaker 6: wired to they sit down, they map out what they
Speaker 6: want to do, and then they make the investment to
Speaker 6: get there. AI sort of works the opposite. You don't
Speaker 6: know exactly where you're going to land. It's a little
Speaker 6: bit messier, you have to run a little bit faster,
Speaker 6: it's a little bit you know, more expensive to pull off.
Speaker 6: And so it's just a philosophical product development question, right,
Speaker 6: And so Apple has to change.
Speaker 2: AI moves so fast.
Speaker 6: You know, there's a new AI provider or a major
Speaker 6: new AI technology on a weekly basis at this point,
Speaker 6: even more frequently. But Apple's wired to release one major
Speaker 6: software upgrade every year and a smaller software upgrade in
Speaker 6: the spring. So they're going to need to move away
Speaker 6: from that idea as well if they really want to
Speaker 6: stay at pace with the rest of the technology industry.
Speaker 6: So AI and Apple, it's just so interesting. It's like
Speaker 6: putting two magnets next to each other. They're just going
Speaker 6: to push away, right, And so Apple's going to have
Speaker 6: to change at a very core level to really be
Speaker 6: able to make meaningful change and to have a meaningful
Speaker 6: improvement in their GENAI world.
Speaker 3: You know, I'm thinking about this and they're mark when
Speaker 3: when you talk about Apple and you know this better
Speaker 3: than anyone else. People a common refrain, and I don't
Speaker 3: think this is true, but it's that Apple stopped innovating
Speaker 3: after Steve Jobs. And you can go and kind of
Speaker 3: look at Apple's share price in what has happened with
Speaker 3: investors in the way that Tim Cook has led the company.
Speaker 3: The concern that I potentially would have in a situation
Speaker 3: like this as an observer, is, is this Tim Cook's
Speaker 3: legacy here missing?
Speaker 4: AI?
Speaker 6: First of all, I don't agree with the idea that
Speaker 6: Apple stopped innovating since Steve Jobs.
Speaker 5: I agree with that. I agree with you.
Speaker 6: No, no, I know you agree.
Speaker 5: If you think about it.
Speaker 6: They basically haven't innovated or done something wholly new since
Speaker 6: the iPhone. Right now, are we really expecting that? I
Speaker 6: think yes to some extent, But like you look at it,
Speaker 6: and like the iPad to the iPhone was like the
Speaker 6: vision pro to the iPhone, right, they're both different reincarnations
Speaker 6: of that same operating system. You put the Apple Watch
Speaker 6: in that category as well, So you have sort of
Speaker 6: the central product of the iPhone and you just kept
Speaker 6: building and building around it and building it up into
Speaker 6: new form factors. And they haven't really done an entirely
Speaker 6: new product experience from the ground up, and so you know,
Speaker 6: at some point they'll get there, but right now it's
Speaker 6: about new form factors. And honestly, I'm not sure Tim Cook,
Speaker 6: sure anyone would have done a better job than Tinkcook
Speaker 6: over the last fifteen years or so since.
Speaker 5: Steve Jaw has passed away.
Speaker 6: So certainly could have they done a lot better, yes,
Speaker 6: but they've also could have done much, much, much worse.
Speaker 1: You I want to ask you, does any of this
Speaker 1: matter because you write in the story being late to
Speaker 1: a potentially world changing advance isn't necessarily catastrophic for Apple,
Speaker 1: but there are risks of being late too.
Speaker 6: Well, it's not catastrophic for Apple because being late implies
Speaker 6: that they're going to get there, and so you know,
Speaker 6: as long as they're late, it's not catastrophic. But they're
Speaker 6: going to need to get there because, like I said,
Speaker 6: they're going to miss so many upcoming technological waves if
Speaker 6: they don't master this. I said this to someone I
Speaker 6: was on the radio with earlier, and they were a
Speaker 6: little surprised. But think about it for a minute. You're
Speaker 6: going to agree with me. AI is as core of
Speaker 6: a technology as the touch screen, right, that's a big
Speaker 6: bowl claim, right. So Apple is known for taking core
Speaker 6: technologies and pushing them to new form factors. And so
Speaker 6: multi touch touch screen, that's the type of touch being
Speaker 6: that to do multiple gestures at once. Let's you do
Speaker 6: the pinch and the swipe.
Speaker 4: That's called multi touch.
Speaker 6: That was a core technology that allowed them to build
Speaker 6: the iPhone and the iPad, all their macs and iPads
Speaker 6: and whatever they're releasing these days. The core technology at
Speaker 6: the heart of that are their chips, their in house
Speaker 6: process or design AI is the core technology that's going
Speaker 6: to enable robots the glasses to maybe'll look at cars
Speaker 6: again in the future. Who knows, It's not something they're
Speaker 6: looking at right now, to be clear. And so they
Speaker 6: need to master that court technology to get to the next.
Speaker 5: Era of hardware. Apple's a hardware.
Speaker 6: Company, right, and if they want to continue making the
Speaker 6: money they're making, they're going to need to do new hardware.
Speaker 6: And the way to do new hardware is to come
Speaker 6: up with new core technologies.
Speaker 1: But they hired this guy.
Speaker 7: You even printed it out.
Speaker 4: I love it, Are you kidding?
Speaker 1: But they hired this guy back in twenty eighteen. Yes,
Speaker 1: it's almost a decade, but getting close.
Speaker 6: You're right, and that's that's unbelievable. But yeah, yeah, we're
Speaker 6: close to a decade since he's been there.
Speaker 5: You're right, all right.
Speaker 1: So from someone who knows this company so well, I mean,
Speaker 1: how are you thinking about or who are you watching
Speaker 1: or what are you watching? Internally? I mean the company?
Speaker 5: Yeah, obviously listen to you.
Speaker 1: They listen to others, have conversations saying where are you Apple?
Speaker 1: When it comes to AI John.
Speaker 6: G Andrea Jgs, he goes by, I don't think he's
Speaker 6: long for Apple.
Speaker 8: I is that good.
Speaker 6: I'm not going to opine on whether it's good enough
Speaker 6: for a person to no longer be at a company,
Speaker 6: but I'll put it this way. They've already stripped him
Speaker 6: of all products related responsibility. They removed Siri from him, right,
Speaker 6: they remove robotics from him. They're going to probably remove
Speaker 6: some more things from him. They want to squish him
Speaker 6: down to a role that's entirely focused on large language
Speaker 6: model and courts AI technology research, which he's really good at.
Speaker 6: And so I mean, if they're taking away seventy five
Speaker 6: percent of your remit, you know you may decide that
Speaker 6: the writing's on the wall. It's time to get out
Speaker 6: of here. I don't think it's going to happen imminently.
Speaker 6: I don't think he wants it to happen. But I
Speaker 6: think at some point a change will be made, whether
Speaker 6: it's because he decided or Apple forces hand. But I
Speaker 6: don't expect them to fire him. Apple doesn't do that
Speaker 6: for senior executives of that level unless you really do
Speaker 6: something bad and for all intentsive purposes. JG's a great guy.
Speaker 6: He's very well liked, he's very respected in the machine
Speaker 6: learning and AI can can.
Speaker 1: He get them to where they need to be?
Speaker 2: He can be a piece of that puzzle.
Speaker 6: Don't forget Apple is constructed by a functional model. So
Speaker 6: you have design teams, you have hardwer engineering teams, you
Speaker 6: have software engineering teams that bring together the product at
Speaker 6: the end of the day. If you dilute JG to
Speaker 6: only focus on AI research, but you have other people
Speaker 6: in charge of like AI product development, I think it's
Speaker 6: possible that that's a winning formula, but clearly him running
Speaker 6: all of AI was not a good formula.
Speaker 3: We only have thirty seconds left. Could Apple acquire its
Speaker 3: way out of this? They've partnered with chat GPT Opening Eye.
Speaker 6: Well, first of all, yes, they need to acquire as
Speaker 6: much AI talent as possible, but that's also another culture
Speaker 6: issue where they have this cultural allergy to integrate large
Speaker 6: scale companies. The Beats acquisition internally disaster, the Intel Modem
Speaker 6: acquisition for a billion and twenty nineteen disaster. They just
Speaker 6: have a terrible track record of taking these humongous companies
Speaker 6: and pulling them into Apple. So you know, it's a
Speaker 6: cultural thing through and through that they need to make
Speaker 6: some shifts on.
Speaker 3: That was Mark German, Bloomberg News, Managing editor for Global
Speaker 3: Consumer Tech.
Speaker 1: You're listening to Bloomberg Business Week. Coming up the races
Speaker 1: on for rare earth minerals.
Speaker 3: We'll hear about what's already happening in the US with
Speaker 3: the CEO of MP Materials. This is Bloomberg.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 1: Well on Wednesday this past week, Russia's largest oil producer
Speaker 1: bought a giant Siberian rare earth deposit, which may become
Speaker 1: an area of cooperation with the United States.
Speaker 3: Russia, encouraged by President Trump's talk of economic deals that
Speaker 3: could follow a peace agreement with Ukraine, has been working
Speaker 3: on a list of projects and assets that officials hope
Speaker 3: might interest the US.
Speaker 6: Now.
Speaker 1: This comes as appetite grows in the US for new
Speaker 1: sources of critical minerals following China's decision to curb exports
Speaker 1: of rare earth materials.
Speaker 3: For more, we went to the experts. This next company
Speaker 3: knows all about extraction, refining, manufacturing when it comes to
Speaker 3: rare earth minerals from A to Z, and it's happening
Speaker 3: right here in the US.
Speaker 1: Jim Latinski is co founder, chairman, and CEO of the
Speaker 1: three point three billion dollar rare earth mining company MP Materials.
Speaker 1: He joined us along with Bloomberg News Metal Mining Heavy
Speaker 1: machinery reporter Jode.
Speaker 3: We started by asking about the boom in the rare
Speaker 3: earth mineral industry.
Speaker 9: It's certainly a very exciting time for us as you
Speaker 9: as you mentioned, you know, we're the only company in
Speaker 9: the world, and that includes Chinese industry, that has the
Speaker 9: expertise from the resource all the way through to the magnet.
Speaker 9: And what I stress again and again when we think
Speaker 9: about rare earths, because it's very topical. A lot of
Speaker 9: times people talk about extraction. You know, you hear Ukraine,
Speaker 9: Greenland deep sea mining, or even with the President of
Speaker 9: South Africa getting you know, a stern dress down in
Speaker 9: the Oval Office talking about how he has rare oaths too.
Speaker 9: We could have all the rarests in the world, but
Speaker 9: if you can't refine them and turn them into magnets,
Speaker 9: you don't have a solution for the issue.
Speaker 3: So, Jim, do you have that solution right now? Because
Speaker 3: we spoke with Joe a little earlier this year, he
Speaker 3: reminded us that it kind of doesn't matter if you
Speaker 3: can extract it here in the US. You got to
Speaker 3: be able to refine it. And in some cases, with
Speaker 3: some of these elements, ninety percent of that is happening
Speaker 3: in China. What exactly can you do on the refining
Speaker 3: level here in the US, so great question.
Speaker 9: There are two places in the world that you can
Speaker 9: refine at scale, the Chinese of influence predominantly China, a
Speaker 9: little bit Malaysia, and then in California in Mount Pass, California,
Speaker 9: which is our site. We actually I think some people
Speaker 9: would be surprised by this, but we refine today more
Speaker 9: than half of the concentrate that we produce. So we
Speaker 9: are refining at scale as we speak, and expanding that rapidly.
Speaker 9: So we have brought this capability back to the United
Speaker 9: States of America, and we're the second largest producer of
Speaker 9: rare materials in the world today.
Speaker 1: So one thing I just want to follow, because I
Speaker 1: think you guys know this world so well, Jim Into,
Speaker 1: But I mean when you say refine at scale, what
Speaker 1: exactly are you talking about. I'm just saying that people
Speaker 1: are listening like, okay, what does that mean?
Speaker 5: You know?
Speaker 9: A simple analogy, Carol would be think of oil and gasoline. Right,
Speaker 9: You could get oil out of the ground, but you
Speaker 9: can't put it in your car until it's in the
Speaker 9: form of gasoline.
Speaker 5: Right, you refine it.
Speaker 9: In this case, you basically take an ore out of
Speaker 9: the ground, you concentrate it so it's a highly concentrated
Speaker 9: ore with the rareth in it. But then to get
Speaker 9: the separated rare earth that you would then turn into
Speaker 9: a magnet, refine that concentrated or into an oxide, and
Speaker 9: then not to lose the audience. But you take that
Speaker 9: ox side, you turn it into a metal and alloy
Speaker 9: and then a magnet and so and just last point
Speaker 9: on that that I think is really critical. At Mountain
Speaker 9: Pass today we not only mine and refine, but we
Speaker 9: now send that or to a magnet factory that we
Speaker 9: built from scratch at Greenfield in Fort Worth, Texas.
Speaker 5: I'm actually talking.
Speaker 9: To you from our factory and it's on a street
Speaker 9: called Independence, So we called Independence, but we are making
Speaker 9: auto grade magnets here at our factory in Independence in Texas,
Speaker 9: with material that we mine and refine in California. And
Speaker 9: we're in the process of scaling up this facility. We
Speaker 9: have a foundational contract with General Motors, and so we
Speaker 9: will be providing General Motors with magnets at scale at
Speaker 9: the end of the year, with material that is mined
Speaker 9: and refined in California.
Speaker 7: Jim, I want to kind of get away from the
Speaker 7: nerdy science. I know you and I can talk about
Speaker 7: that all day, but I do want to talk about
Speaker 7: what does matter to the average person here in the USA,
Speaker 7: which is you can't do all of this on your own.
Speaker 7: You cannot. While you might have the full supply chain,
Speaker 7: you cannot be the sole supplier of critical materials, specifically
Speaker 7: rare earths and the magnets. You've said that to me
Speaker 7: for years. One of the things you said to me
Speaker 7: years ago was listen, the point is not overnight being
Speaker 7: the sole provider to yourself domestically. It is slowly pulling
Speaker 7: market share away from China. What are the kind of
Speaker 7: conversations you're having right now on this front, on the
Speaker 7: staatecraft front, and maybe you could tell us a little
Speaker 7: bit about THEMU You signed with Madden, the Saudi Aribbian
Speaker 7: mining company just last week on this front.
Speaker 5: Yeah, sure, thanks, Joe. Well, it's a great question.
Speaker 9: We've said all along our mission is to restore the
Speaker 9: full supply chain to the United States. We've obviously done
Speaker 9: that in small scale and we're scaling that up, but
Speaker 9: we really want to be part of a broader solution
Speaker 9: to eliminate the single point of failure. As you mentioned,
Speaker 9: I was in Riad last week as part of the
Speaker 9: delegation of business leaders from the United States with the
Speaker 9: President and in the presence of the President and Crown
Speaker 9: Prince MBS, we signed an MoU with Modern, which is
Speaker 9: the Saudi mining company, to explore the process of essentially
Speaker 9: building a vertically integrated rare earth magnetics business in Saudi Arabia.
Speaker 9: And so what that would mean is we would mine, refine,
Speaker 9: and make magnets in the Kingdom. And I think from
Speaker 9: from their standpoint, it's a really exciting opportunity to be
Speaker 9: to create a mid East hub that could receive feedstock
Speaker 9: from from there certainly, but also Africa and some other
Speaker 9: places and really position them well geopolitically. But more importantly,
Speaker 9: I would also say that, you know, it really solidifies
Speaker 9: what we've been saying we are and I think, you know,
Speaker 9: each step of the way are showing is that we
Speaker 9: are America's national champion. We're the only company in the
Speaker 9: world that can provide a solution in house to mine, refine,
Speaker 9: and make magnets. And so I think the vertically integrated
Speaker 9: approach that we've had is starting to be recognized by
Speaker 9: the world as you know, something pretty extraordinary that we've
Speaker 9: built inside MP And so it was nice that the
Speaker 9: President and the Crown Prince recognized that.
Speaker 5: So, yeah, you know, we'll run that.
Speaker 7: I mean, I mean it's interesting you're very much saying
Speaker 7: it's partners, we don't go it alone. It's not just
Speaker 7: the United States figuring it out. We'll work with the
Speaker 7: trade partners to figure it out. I think another question
Speaker 7: I have as you came out of the gates guns
Speaker 7: a blazing on your earnings call recently with investors, and
Speaker 7: you pointed out, listen, it is very important that we
Speaker 7: work at the administration to figure out the solutions to
Speaker 7: basically getting a hold of these rarers and these permanent
Speaker 7: magnets that are domestically or friendshored produced.
Speaker 5: Can you tell us a little.
Speaker 7: Bit about the kind of conversations you're having with the
Speaker 7: administration or even the Defense Department.
Speaker 9: Sure, so, a really important just background context, if we
Speaker 9: go back about a month ago to Switzerland with the
Speaker 9: trade talks with China.
Speaker 5: At that point, we were and a lot.
Speaker 9: Of people don't know this or maybe don't appreciate this
Speaker 9: because you know, we're they're not in necessarily the rare
Speaker 9: with magnetics niche, but we were weeks away, in my opinion,
Speaker 9: from a shutdowns across our economy in aerospace and in
Speaker 9: auto because the Chinese had essentially stopped shipping rare with
Speaker 9: magnets and our supply chains were really starting to break down,
Speaker 9: and so Obviously, Fortunately we came away with a deal
Speaker 9: there and we're not gonna see those kinds of shutdowns.
Speaker 9: But we were really close, and that is a leverage
Speaker 9: point that the Chinese have in any negotiation. And again,
Speaker 9: whatever your view is on the relationship with China, whether
Speaker 9: it's you know, sort of going to be a collaborative
Speaker 9: relationship moving forward that gets reset or something much worse,
Speaker 9: we need to take this leverage point off the table,
Speaker 9: you know. That's that's our view at MP. That's what
Speaker 9: our mission has been. We've been at this for years.
Speaker 9: Is let's make sure that the United States of America
Speaker 9: can produce our own rare with magnetics. And the reason Joe,
Speaker 9: that that is so important and you mentioned DD is
Speaker 9: because as we've seen around the world, physical AI is
Speaker 9: the future of warfare. We're talking robotics and drones, and
Speaker 9: I think we see that from whether it's Elon Musk
Speaker 9: or Jensen Wong talking about the scale of robotics and
Speaker 9: how large that industry is going to be. It is
Speaker 9: not acceptable for American companies downstream. We're talking about trillions
Speaker 9: of dollars of enterprise value. Our great leading companies as
Speaker 9: well as our Department of Defense to be relying on
Speaker 9: a single point of failure in the Chinese supply chain,
Speaker 9: and so we serve a critical role in alleviating that risk.
Speaker 1: All right, So it sounds like you're making the argument
Speaker 1: for why the US government should be involved, But is
Speaker 1: the government US government? Is there appetite for the US
Speaker 1: government to be a partner in rare earth projects and
Speaker 1: doing it from A to Z, from mining to processing
Speaker 1: to permanent magnet production.
Speaker 9: There is no question that the United States government recognizes this.
Speaker 9: And I think that these things take time, but there's
Speaker 9: no question that they recognize. And Joe was referencing our
Speaker 9: perspective on the earnings call, which is this is actually
Speaker 9: very doable. We are, you know, in a very short
Speaker 9: period of time away from solving this challenge in a
Speaker 9: large scale, and frankly, MP can lead that effort. And
Speaker 9: what we said is that MP, you know, we've been
Speaker 9: at this for a number of years. We've invested over
Speaker 9: a billion dollars of private capital, and you know, since
Speaker 9: we went public and then prior to that, we we
Speaker 9: had the good fortune, I guess of taking control of
Speaker 9: several billion dollars of previously invested capital. So we have
Speaker 9: billions of dollars of invested capital, and what we've said
Speaker 9: is we'll lead this solution, but it's not fair on
Speaker 9: our shareholders to expect them to take the risk. We're
Speaker 9: going to need to do this in a capital light
Speaker 9: way for MP it should be very rewarding for our
Speaker 9: shareholders for being in this position. So, so the to
Speaker 9: answer your question, you know there will be movement forward.
Speaker 9: In my opinion, I think it's a question of getting
Speaker 9: these solutions don't happen overnight, but there's no question that
Speaker 9: there are a lot of conversations happening with government and
Speaker 9: industry and we're leading those.
Speaker 1: Okay, so it sounds like government's involved, they're listening and
Speaker 1: we should maybe stay tuned for news. What kind of
Speaker 1: money is needed to be committed to do the proper
Speaker 1: buildout in your view, whether it's public private partnership, and
Speaker 1: just about thirty seconds on that.
Speaker 9: Yeah, the really simple answer is we're talking single digit billions.
Speaker 9: This is a really simple problem to solve. Actually, I
Speaker 9: jokingly say for the coffee budget on the F thirty five,
Speaker 9: we probably could have solved the rarer issue.
Speaker 5: This is really small.
Speaker 9: Wow, And so I do think that the United States
Speaker 9: government is going to step up. I think you're going
Speaker 9: to see industry players step up as well, because this
Speaker 9: is just it's an issue that affects our national security
Speaker 9: and trillions of dollars of enterprise value, and it's actually
Speaker 9: a small problem.
Speaker 3: You mentioned that we could do this in a short
Speaker 3: period of time, give us years or some sort of
Speaker 3: timeline that we could actually move away from a single
Speaker 3: point of failure when it comes to this problem.
Speaker 9: Well, we're bringing that online now in Texas. So where
Speaker 9: I'm sitting is a factory. You all are welcome to
Speaker 9: come see it, and so we'll be making magnets at
Speaker 9: scale here at the end of the year. And then
Speaker 9: the question is what percentage of the industry do we
Speaker 9: need to satisfy to remove this single point of failure risk,
Speaker 9: Because we don't need to solve one hundred percent, but
Speaker 9: we need to do a material percentage. And so I
Speaker 9: think the next step would be for us to lead
Speaker 9: a solution where we're building something significantly larger and then rinse,
Speaker 9: repeat to add a number of facilities both here and
Speaker 9: as we announced with the MoU, potentially in the Saudi
Speaker 9: Arabia and other places. So it really is not a
Speaker 9: huge issue. It's just an issue that requires capital and execution.
Speaker 7: Right, And I think on that point, like it's not
Speaker 7: just going to be you, it does still require a
Speaker 7: lot of other actors to come into the space. And
Speaker 7: I guess the quick follow up again is what are
Speaker 7: we going to see from the government this year in
Speaker 7: terms of commitments to help this space, your company and
Speaker 7: others build out the supply chain on rare earths and
Speaker 7: permanent magnets.
Speaker 9: Well, just to be crystal clear, as we all know,
Speaker 9: the capital markets can satisfy this problem if the existential
Speaker 9: issue of the industry is off the table, and the
Speaker 9: existential issue is Chinese mercantilism, right, is pricing. We've got
Speaker 9: to get proper functioning economics, proper functioning market economics for
Speaker 9: the price of these materials and the price of the
Speaker 9: downstream products. And so those are a variety of ways
Speaker 9: that the government can can force that solution. You've heard
Speaker 9: a lot of them in the news, and certainly we're
Speaker 9: working on them. I think you'll see a variety of
Speaker 9: things across investments, tariffs, tax credits, and so there isn't
Speaker 9: you know, sort of one fits all solution it's really
Speaker 9: going to be a question of, you know, the preferences
Speaker 9: of government, and certainly you'd have to get some of
Speaker 9: them on here to ask them directly or stay tuned
Speaker 9: for you know, a solution that you see us present
Speaker 9: one day. But I do think we're going to see
Speaker 9: something you know, sooner than later, because we've got to
Speaker 9: solve this problem.
Speaker 3: That was Jim Litinski, co founder, chairman, and CEO of
Speaker 3: the three point three billion dollar market cap rareth mining company.
Speaker 3: It's called MP Materials. He joined us along with a
Speaker 3: Bloomberg News metal mining heavy machinery reporter Jo Dell and just.
Speaker 1: To say I'll go to when it comes to rare
Speaker 1: earth minerals and so much more. All right, Still head
Speaker 1: on Bloomberg Business Week, how learning a new language translates
Speaker 1: into a growing business big time over a dual lingo.
Speaker 3: We hear from CFO Matthew Scarupa, the subject of the
Speaker 3: latest episode of Bloomberg's Chief Future Officer. This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on Applecarplay and
Speaker 2: the Android Auto With the Bloomberg Business app. You can
Speaker 2: also listen live on Amazon Alexa from our flagship New
Speaker 2: York station, Just Say Alexa Play.
Speaker 1: Bloomberg eleven thirty Dual Lingo plans to use artificial intelligence
Speaker 1: to significantly expand its course offerings beyond languages and reach
Speaker 1: more learners globally. All according to its Chief financial Officer,
Speaker 1: Matt Scarupa. He's featured on the current episode of Chief
Speaker 1: Future Officers on Bloomberg Television, which you can get on
Speaker 1: the Bloomberg Terminal and on Bloomberg dot com as well.
Speaker 1: And Tim you hosted the episode You like you will
Speaker 1: get into this company and the CFO, Yeah, we did.
Speaker 3: We talked to AI. We also talked how Dulingo is
Speaker 3: betting heavily on global markets. They've got this particular focus
Speaker 3: on China, all about the opportunity of teaching people English
Speaker 3: as a second language. We also had Matt on Business
Speaker 3: Week Daily this week. We started by asking him about
Speaker 3: the growth of the language learning company.
Speaker 10: You know, we've done a great job of growing this year.
Speaker 10: Our Q one performance was strong top to bottom. We
Speaker 10: saw a really strong user growth. That user growth translated
Speaker 10: into a really strong top line and bookings and revenue,
Speaker 10: and we were able to keep control of costs like
Speaker 10: we historically have been able to to expand margins, and
Speaker 10: it wasn't just a Q one story. As we guided
Speaker 10: on our last earnings call. We believe we're in a
Speaker 10: really strong position for the rest of the year. We
Speaker 10: feel good about Q two and the rest of the year,
Speaker 10: and it's going to continue to come from the same sources.
Speaker 10: We're a company that grows primarily organically by word of mouth,
Speaker 10: and we expect that to continue.
Speaker 3: Hey, Matt, good to have you join us. Thanks for
Speaker 3: doing this today, and thanks again for participating with us
Speaker 3: for the CFO Show. Ten point three million paid subscribers
Speaker 3: as of the end of the first quarter of twenty
Speaker 3: twenty five, it's growth of forty percent year over year.
Speaker 3: How much can how long can you continue that growth?
Speaker 3: I mean, when we're talking the growth at that percentage,
Speaker 3: like that's pretty substantial.
Speaker 10: No, I appreciate it was great to do the show
Speaker 10: with you, and I look forward to seeing that. In
Speaker 10: terms of growth, we've done it for several years. I mean,
Speaker 10: we went public in twenty twenty one, and if you
Speaker 10: look back from then to now, we've grown the top
Speaker 10: line really nicely. So i'd say that you know, you
Speaker 10: look back and you think that we have a strong
Speaker 10: path going forward as well. I'd also just call out
Speaker 10: that the ten point three million sub ubs is great.
Speaker 10: We're excited about that. We feel really good about that growth.
Speaker 10: But we're also seeing really nice diversification of subscribers. So
Speaker 10: we have continued strength in our Family Plan, which is
Speaker 10: a subscription where multiple friends and family can join, and
Speaker 10: as of the last quarter, seven percent of our subs
Speaker 10: we're on our Max tier, which is our highest tier service,
Speaker 10: which has features like video call with Lily, and it's
Speaker 10: doing really well. So it's a great story not just
Speaker 10: on the overall top line numbers, but on how we're
Speaker 10: growing the subscribers.
Speaker 1: I mean, that's wild, almost fifty percent year every year growth. Matt,
Speaker 1: I am curious, who are these people that are signing up?
Speaker 1: How long do they stay with you? And what's the
Speaker 1: cost to acquire an individual user?
Speaker 10: Yeah, So one of our core business model advantages is
Speaker 10: that when we acquire a user, we acquire them mainly
Speaker 10: for free. We do spend on performance marketing and some
Speaker 10: brand spend, but it's relatively small as a percentage of revenue,
Speaker 10: and so most of our growth comes from people telling
Speaker 10: their friends and family that they've had a great and
Speaker 10: engaging experience with our app. That's why Luis is so
Speaker 10: focused on engagement as a core driver of growth for us,
Speaker 10: is that if you have this wonderful, joyful experience, you're
Speaker 10: going to tell people about it and they're going to
Speaker 10: try it. And then the other way is we have
Speaker 10: a really amazing social first marketing strategy where we you know,
Speaker 10: insert ourselves into viral moments on online TikTok, Instagram, other platforms,
Speaker 10: and users create their own content which goes viral, and
Speaker 10: so on any given day, a.
Speaker 4: Lot of what people are talking.
Speaker 10: About on dual Engo isn't generated by us, It's generated
Speaker 10: by our you know, beloved fan base.
Speaker 1: You know.
Speaker 10: When you have that type of viser acquisition and it
Speaker 10: is global, we're seeing strong user growth around the world.
Speaker 10: We get a lot of opportunities to then convert folks
Speaker 10: from free subscribe to paid or from free user to
Speaker 10: paid subscriber, and they stick around on the platform and
Speaker 10: they come back frequently, and so we get multiple chances
Speaker 10: to convert them. And while we're doing, while time is progressing,
Speaker 10: we're making the subscription product even better and better so
Speaker 10: that's how we grow the subscriber base.
Speaker 3: Well, we'll talk a little bit in a minute about
Speaker 3: the social first marketing, because something kind of wacky seems
Speaker 3: to be happening right now if you look at the
Speaker 3: social channels for dou a Lingo. But I'm wondering specifically
Speaker 3: mad about growth and about you know, at the end
Speaker 3: of the day, the efficacy of the product. And I'm
Speaker 3: wondering how you measure to what extent the product actually
Speaker 3: resonates and works for people who are trying to learn
Speaker 3: English as a second language, for example, to be able
Speaker 3: to do business in the US, or to be able
Speaker 3: to do business in English. How do you measure that?
Speaker 4: Yeah, well it is core to our mission.
Speaker 10: So our mission is to you know, build the best
Speaker 10: education in the world and make it universally available. And
Speaker 10: so to do that, we need to prove to our
Speaker 10: users and to ourselves that we're teaching really well. We've
Speaker 10: had some studies done that show just how efficacious we are.
Speaker 10: So you know, if you compare us to learning a
Speaker 10: language in a university, we are on par with that.
Speaker 4: You can probably do it faster on dual lingo.
Speaker 10: And you know, there's plenty of evidence we've put on
Speaker 10: our website that shows those studies in detail. I think
Speaker 10: the bigger evidence is that we're continuing to add features
Speaker 10: that just really address some of the core desires of
Speaker 10: particularly English learners like you reference they want to practice conversation,
Speaker 10: and so what we've done over the past you know
Speaker 10: several quarters, is add this feature called video Call with Lily,
Speaker 10: where you can practice your conversation with one of our.
Speaker 4: Characters, Lily. She's a bit passive aggressive, she's not impressed.
Speaker 10: I've yet to impress her with my Spanish, and I
Speaker 10: don't think I'm going to, but I'm going to keep trying.
Speaker 4: Well, she's the.
Speaker 3: Thing, and yeah, I just want to say, she's over
Speaker 3: your right Well, we're looking at pictures of her on
Speaker 3: the screen right now. There's also a next she's next
Speaker 3: to duo over your right shoulder. So that's the Carol.
Speaker 3: That's Lily, who's not impressed you. By the way, in
Speaker 3: the last couple of months, has unfortunately become a member
Speaker 3: of my family.
Speaker 5: It seems like with doing this with that.
Speaker 1: Acual love, it's passive aggressive.
Speaker 10: Yeah, Lily is not impressed with me, and so that
Speaker 10: kind of practice, though, is really helpful for folks.
Speaker 4: Who are trying to learn English. They're trying to.
Speaker 10: Learn how to speak it, and that's what we've been
Speaker 10: able to do over the past little bit.
Speaker 3: So you use AI in a few different ways. Lily
Speaker 3: is certainly one of them. When you think about the
Speaker 3: cost associated with this. You're not using AI that a
Speaker 3: platform that you developed actually at dual Lingo, you're outsourcing
Speaker 3: the technology. How do you keep those costs in control
Speaker 3: because that's pretty expensive tech, Matt, and you know you're
Speaker 3: watching the bottom line and you're watching margins here.
Speaker 4: Yeah.
Speaker 10: Absolutely, And you know it comes down to the fact
Speaker 10: that we have been using forms of AI, machine learning
Speaker 10: and what not for a long time.
Speaker 4: In our company. The lesson you get served up, you.
Speaker 10: Know, has for many many years been based on a
Speaker 10: machine learning algorithm. And now with generative AI, with video
Speaker 10: call with Lily and in some of our content creation,
Speaker 10: we are seeing that there's an amazing advancement in this
Speaker 10: technology that helps us do these things much quicker and
Speaker 10: more even producing more content that we thought was possible.
Speaker 5: You know.
Speaker 10: For example, you know, it took us about ten years
Speaker 10: to create the first hundred courses and then in less
Speaker 10: than a year with this new technology, we created more
Speaker 10: than one hundred more and so this technology is really powerful.
Speaker 10: The good news about it is that the costs are
Speaker 10: coming down naturally. You know, we don't have to do
Speaker 10: much internally, although we are still doing things to optimize
Speaker 10: the costs. But just by the nature of this technology,
Speaker 10: we're seeing rapid declines in the cost and we don't
Speaker 10: know for sure that that's going to continue. But if
Speaker 10: it does, you know, I think that you know, the
Speaker 10: use of this will go up and margins will be
Speaker 10: will be good.
Speaker 1: I just want to know. I'm one hundred percent Slovak,
Speaker 1: and I just want to know how long would it
Speaker 1: take me to learn a language with you guys? I
Speaker 1: know a few keywords, you know, your parents, your grandparents
Speaker 1: teach it, the squear words and all that good stuff. But
Speaker 1: how long does it take for someone to learn certain languages?
Speaker 10: Sure, well, you know, I don't know that I've ever
Speaker 10: met anyone else or talked to them live on air.
Speaker 10: But I am also Slovakian, which is which is quite
Speaker 10: the coincidence, But I think, yeah, that's that's a very
Speaker 10: nice coincidence. It turns out more will depend on your
Speaker 10: ability to put in the time. You're learning a language
Speaker 10: takes practice, and that's why we're so focused on engagement.
Speaker 10: We want you to enjoy our app and come back
Speaker 10: every day because it's going to take time to learn.
Speaker 10: So if you're really committed and you want to learn
Speaker 10: any language on du or Lingo, and you put in
Speaker 10: a bunch of time, you're going to learn it much faster.
Speaker 10: And that what the research shows, and so it's really
Speaker 10: motivation dependent. What we find is that the hardest thing
Speaker 10: about learning a language isn't verb conjugation or grammar or speaking.
Speaker 4: It's your motivation to keep practicing and keep learning.
Speaker 10: And that's why most of our company is geared around
Speaker 10: bringing you back every day and making sure you're engaged
Speaker 10: in the product, because if you're engaged in the product,
Speaker 10: you have a chance to continue to learn.
Speaker 3: Yeah, the gamification, the alerts, the emails like the friends Streak,
Speaker 3: all the stuff that brings you back into the program. Matt,
Speaker 3: I promise that we would go to this unhinged marketing
Speaker 3: and social media strategy because you got to shed some
Speaker 3: light on what exactly is happening across duelingos social channels
Speaker 3: right now. I checked in on it yesterday and this morning,
Speaker 3: and it looks like Duo has been taken hostage. There's
Speaker 3: like some sort of hostage video. Everything else has been wiped.
Speaker 10: What can you tell us, Well, I can only tell
Speaker 10: you that our owl is truly unhinged.
Speaker 4: You can never predict what that guy is going to do.
Speaker 1: I was like my co host, I'm just gonna tell you, Matt,
Speaker 1: never know what he's gonna do. Anyway, go ahead.
Speaker 10: I've only spent a little bit of time with him,
Speaker 10: but you know, I kind of can see it. Love
Speaker 10: O our AWL mascot earlier this year, right after the
Speaker 10: Super Bowl, decided that he was going to fake his
Speaker 10: own death and then you know, return and so like,
Speaker 10: you just never can predict it. I would just encourage
Speaker 10: everyone who's watching and listening to check in again tomorrow.
Speaker 4: You'll you'll get some interesting insight.
Speaker 3: That's Matt Scarupa, the chief financial officer of Dua Lingo Carol.
Speaker 3: What's interesting about this company? It's a tech company. Yeah, Hi,
Speaker 3: margins Ai first not based in Silicon Valley. They are
Speaker 3: in Pittsburgh. They've got this DNA with Carnegie Mellon University,
Speaker 3: Luis van On. That's where he came from. He's been
Speaker 3: working with AI for decades. He won a Genius Award
Speaker 3: the MacArthur Foundation.
Speaker 1: Genius Aqua with those low achiever types, right.
Speaker 3: Yeah, back in like the early two thousands and two
Speaker 3: thousands for his work on AI.
Speaker 1: What struck you about this company? Because you've been talking
Speaker 1: about it a lot since you talked to them, the CFO,
Speaker 1: the CEO, and did the profile for chief Future Officer,
Speaker 1: and you even played around with it big time.
Speaker 3: Oh yeah, I mean I'm now actually hooked. I mean
Speaker 3: yeah totally. We language are learning well, learning Spanish with
Speaker 3: my son. We do it together every night. And then
Speaker 3: we also are using doing chess on the program too.
Speaker 3: So they do chess, they do music, they do math.
Speaker 1: All right, everybody. That wraps up our first hour of
Speaker 1: the weekend edition of Bloomberg Business Week from Bloomberg radio Head.
Speaker 1: In our next hour, he's easily one of the most
Speaker 1: talked about individuals of our time, whether he is sending
Speaker 1: rockets into space are bringing stranded astronauts home.
Speaker 3: He also drills tunnels, he sends satellites into space. He
Speaker 3: disrupted the auto industry. He's even implanted computer interfaces into
Speaker 3: a couple brains and yes, he was once known as
Speaker 3: President Trump's first buddy.
Speaker 1: Yes, indeed, folks, we are talking about the one and
Speaker 1: only the world's richest individual, Elon Musk, who spoke with
Speaker 1: our own Michelle Hussein at the Qatar Economic Forum in
Speaker 1: Doha this past week. That forum program by Bloomberg News.
Speaker 3: That full conversation up next.
Speaker 2: You're listening to the Bloomberg Business Weekdaily podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 1: Plenty ahead in our second hour of the weekend edition
Speaker 1: at Bloomberg Business Week, a holiday weekend edition. I should
Speaker 1: say so this is something special, and by that when
Speaker 1: we say plenty, we really do mean plenty and plenty
Speaker 1: from Elon Musk. This past week, he gave a wide
Speaker 1: ranging interview to Bloomberg's Michelle Husain at the Qatar Economic Forum,
Speaker 1: which was programmed by Bloomberg News.
Speaker 3: They spoke for about forty minutes and really touched on
Speaker 3: everything from his political spending, the Department of Government efficiency,
Speaker 3: and his relationship with President Trump.
Speaker 1: And of course Michelle started the interview where else, but
Speaker 1: on Tesla.
Speaker 8: The company is offered in recent months what you've called blowback.
Speaker 8: So what is your plan for turning that around? The
Speaker 8: declining sales picture? And by what stage do you think
Speaker 8: you're going to be able to turn it around?
Speaker 5: Oh, it's already turned around.
Speaker 8: Give me some evidence for that. I've just been looking
Speaker 8: at the sales figures for Europe in April, which show
Speaker 8: very significant declines in the big markets.
Speaker 5: Europe is our weakness market. We're stronger everywhere else. So
Speaker 5: now our sales are doing well at this point, we
Speaker 5: anticipate any any meaningful sales shortfall and the you know
Speaker 5: the obviously the stock market recognizes that since we're now
Speaker 5: back over a trillion dollars in market cap, so really
Speaker 5: the market is aware of the situation. So it's already
Speaker 5: turned around.
Speaker 8: But sales still down compared to this time last year
Speaker 8: in Europe.
Speaker 5: In Europe, okay, and yes, that's that's true of all manufacturers,
Speaker 5: there's no exceptions.
Speaker 8: Does that mean that you're not going to be able?
Speaker 5: Does that mean you're quite weak?
Speaker 8: Okay? But you would acknowledg wouldn't you that what you
Speaker 8: are facing? Okay, let's just take it as your What
Speaker 8: you are facing is a significant problem. This Tesla is
Speaker 8: an incredibly aspirational brand. People identified with it, it saw it,
Speaker 8: They saw it as being at the forefront of the
Speaker 8: climate crisis. And now people are driving around with stickers
Speaker 8: in their cars saying I bought this before we knew
Speaker 8: Elon was crazy.
Speaker 5: And there are also people who are by buying it
Speaker 5: because Elon's crazy, or however they may view it. So, yes,
Speaker 5: we've lost some sales perths on the left, but we've
Speaker 5: gained them on the right. The sales numbers at this
Speaker 5: point are strong and we've seen no problem with them
Speaker 5: had So what I mean? You can just look at
Speaker 5: the stock price if you want the best inside information.
Speaker 5: The stock market analysts have that and us it wouldn't
Speaker 5: be trading near all time highest if it was not,
Speaker 5: if things weren't in good Jake, They're fine, don't worry
Speaker 5: about it.
Speaker 8: Okay, I was citing sales figures rather than share price. Well,
Speaker 8: tell me then, how committed you are to Tesla. Do
Speaker 8: you see yourself and are you committed to still being
Speaker 8: the chief executive of Tesla in five years time? Yes,
Speaker 8: no doubt about that at all.
Speaker 5: Well, no, I might die.
Speaker 8: Okay, sure to that.
Speaker 5: Let me see you if I'm dead. So slight mode.
Speaker 8: Does that mean that the value of your pay doesn't
Speaker 8: have any bearing on your decision?
Speaker 5: Well, that's not really sort discussion in this forum. The
Speaker 5: I think, obviously there should be a conversation for if
Speaker 5: there's something incredible is done, that compensations should match that
Speaker 5: something incredible was done. But I'm confident that whatever the
Speaker 5: whatever some activist posing as a judge in Delaware happens
Speaker 5: to do will not affect the future compensation.
Speaker 8: This is the judge who twice struck down the fifty
Speaker 8: six billion dollar pay package that was awarded to you.
Speaker 8: I think the value on the basis on the current
Speaker 8: value of stock options.
Speaker 5: Yeah, not a judge, Not a judge, the activist who
Speaker 5: is cars playing a judge in a Halloween costume.
Speaker 8: Okay, that's your characterization. I think the on the current
Speaker 8: value of stock options. I think the.
Speaker 5: Actual justice according to the law, on the current.
Speaker 8: Value of stock options. I think the value of that
Speaker 8: pay package stands at about one hundred billion dollars. Are
Speaker 8: you saying you are relaxed about the value of your
Speaker 8: future pay package? Your decision to be committed to Tesla
Speaker 8: for the next five years as long as you are
Speaker 8: still with us on this planet is completely independent of pay. No,
Speaker 8: it's not independent, So pay is a relevant factor then
Speaker 8: to your commitment to Tesla.
Speaker 5: A sufficient voting control such that I cannot be ousted
Speaker 5: by activists investors is what matters to me. And I've
Speaker 5: said this publicly many times, but let's not have this
Speaker 5: whole thing be a discussion of my list pay. It's
Speaker 5: not a money thing. It's a reasonable control thing over
Speaker 5: the future of the company, especially for building millions, potentially
Speaker 5: billions of humanoid robots. I can't be sitting there and
Speaker 5: one're going to get tossed out by for political reasons
Speaker 5: by activists. That would be unacceptable. That's all that matters. Now,
Speaker 5: let's move on.
Speaker 8: Okay, Well just one question, well one question before we
Speaker 8: move on to other companies, which is that I wonder
Speaker 8: if some of what you've has happened to Tesla in
Speaker 8: the last few months, did you take it personally?
Speaker 5: Yes?
Speaker 8: And did it make you regret any of you all
Speaker 8: think twice about your political endeavors.
Speaker 5: It is I did what needed to be done.
Speaker 8: Uh.
Speaker 5: The violent antibody reaction and I'm not someone who's ever
Speaker 5: committed violence, and yet massive violence was committed against my companies,
Speaker 5: massive violence was threatened against me. Who are these people?
Speaker 5: Why would they do that? How wrong can they be?
Speaker 5: They're on the wrong on the wrong side of history,
Speaker 5: and that's an evil thing to do, to go and
Speaker 5: damage some pointocent person's car, to threaten to kill me.
Speaker 5: What's wrong with these people? I have not harmed anyone,
Speaker 5: so something needs to be done about them. And a
Speaker 5: number of them are going to prison and they deserve it.
Speaker 8: You're well, you're referring to the attacks on Tesla showrooms,
Speaker 8: but I.
Speaker 5: Think, well, it's into showrooms and burning down cars unacceptable.
Speaker 5: Those people will go to prison, and the people that
Speaker 5: funded them and organized them will also go to prison.
Speaker 11: Don't worry, wouldn't you coming from you, wouldn't you, hm,
Speaker 11: wouldn't wouldn't you acknowledge that some of the people who
Speaker 11: turned against Tesla in Europe were were upset.
Speaker 8: At your politics, and very few of them would have
Speaker 8: been violent in any way. They just objected to what
Speaker 8: they saw you say or do politically.
Speaker 5: Well, it's certainly fine to object to political things, but
Speaker 5: it's not it's not fine to resort to violence and
Speaker 5: hanging someone in effigy and death threats, that's obviously not
Speaker 5: okayh you know, that's absurd. That is in no way
Speaker 5: justifiable at all in any way, shape or form. And
Speaker 5: some of the the legacy media and nonetheless have sort
Speaker 5: of justified which is unconscionable. Shame on them.
Speaker 8: Let's talk about your other companies then, in other business
Speaker 8: areas SpaceX. I saw that you said in a speech
Speaker 8: at the West Point Military Academy recently that the future
Speaker 8: of warfare is AI and drones, And obviously defense is
Speaker 8: an increasingly booming sector with the state of the world
Speaker 8: at the moment, do you see SpaceX moving into weaponized drones?
Speaker 5: You certainly ask interesting questions that are impossible to answer.
Speaker 5: So SpaceX is is the space launch leader. So SpaceX
Speaker 5: doesn't do drones. SpaceX builds rockets, satellites, and Internet terminals.
Speaker 5: So SpaceX has a a very dominant position in space launch.
Speaker 5: So of the mass launch to orbit the year, SpaceX
Speaker 5: will probably do ninety percent, China will do the half
Speaker 5: of the remaining amounts, so of five percent, and the
Speaker 5: rest of the world, including the rest of the US,
Speaker 5: will do about five percent, so SpaceX will do about
Speaker 5: ten times as much as the rest of the world combined,
Speaker 5: or twenty times as much as China, which is in
Speaker 5: China is doing actually a very impressive job. The reason
Speaker 5: for this is that we're putting it into orbit. The
Speaker 5: largest satellite constellation the walls I've seen by far, so
Speaker 5: I think at this point about maybe approaching eighty percent
Speaker 5: of all active satellites in orbit are SpaceX and they're
Speaker 5: providing high vand with global connectivity throughout the world. In fact,
Speaker 5: this connection is on a SpaceX connection. So I think
Speaker 5: this is a very good thing because it means that
Speaker 5: we can provide low cost my bandwidth Internet to pots
Speaker 5: the world that don't have it or it's very expensive.
Speaker 5: And I think the single biggest thing you can do
Speaker 5: to lift people out of poverty and help them is
Speaker 5: giving them an Internet connection, because once you have the
Speaker 5: Internet connection, you can learn anything for free on the Internet,
Speaker 5: and you can also sell your goods and services to
Speaker 5: the global market. And once you have knowledge by the
Speaker 5: Internet and the ability to engage in commerce, that this
Speaker 5: is going to greatly improve quality of life from people
Speaker 5: throughout the world. And it has, and i'd just like
Speaker 5: to think anyone in the audience who may have been
Speaker 5: helpful and you know, with starlink and getting it to
Speaker 5: approved in their country. And I think it's doing a
Speaker 5: lot of good in the countries that have approved it,
Speaker 5: which is I think this point one hundred and thirty
Speaker 5: countries are very happy with it. I don't currently into
Speaker 5: spaceally getting into the weapons business. That's certainly that's not
Speaker 5: an aspiration. Were frequent, we're frequently asked to do weapons programs,
Speaker 5: but we have does a lot of client.
Speaker 8: Do you envisage SpaceX or indeed, starlink is a separate
Speaker 8: end city publicly listing in the near future or at all.
Speaker 5: It's possible that starlink may go public at some point
Speaker 5: in the future.
Speaker 8: And what would be the what would be the time frame,
Speaker 8: what kind of time frame you consider?
Speaker 5: I mean no rush, I mean no rush to your public.
Speaker 5: The public is I guess a way to you know,
Speaker 5: potentially make more money, but at the expense of a
Speaker 5: lot of public company overhead and inevitably a whole bunch
Speaker 5: of lawsuits which are very annoying. So there's really something
Speaker 5: needs to be done about the share shareholder shareholder derovative
Speaker 5: lawsuits in the US because it allows plaintiffs law firms
Speaker 5: who don't represent the shareholders to pretend that they represent
Speaker 5: the shareholders by getting a puppet plaintiff for a few
Speaker 5: shares to initiate a massive lawsuit against the company, and
Speaker 5: the irony being that extreme irony that even if the
Speaker 5: class they purport to represent were to vote that they
Speaker 5: don't want the lawsuit, the lawsuit will still continue. So
Speaker 5: how can it be a class action representing a class
Speaker 5: if the class what against it? And that's the bizarre
Speaker 5: situation we've got in the US that needs into a
Speaker 5: dire need for form. As anyone's running public company, you've
Speaker 5: experienced this, it's an absurd situation that needs to change,
Speaker 5: will be really helped with frivolous lawsuits.
Speaker 3: That was Elon Musk with Bloomberg's Michelle Hussain at the
Speaker 3: Katar Economic Forum.
Speaker 1: You're listening to Bloomberg business Week. Coming up more from
Speaker 1: our Elon Musk interview, focusing on things like artificial intelligence
Speaker 1: and yes, his battle with open AI.
Speaker 3: That's next. This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Daily podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on Apple car
Speaker 2: Play and the Android Auto with the Bloomberg Business app.
Speaker 2: You can also listen live on Amazon Alexa from our
Speaker 2: flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 1: We bring you more now from our interview with the
Speaker 1: world's richest man, Elon Musk. This past week, Elon spoke
Speaker 1: remotely at the Qatar Economic Forum, which was programmed by
Speaker 1: Bloomberg News.
Speaker 3: We pick up with Elon addressing his lawsuit against open
Speaker 3: Ai after the company announced plans to restructure as a
Speaker 3: for profit business. He was part of the conversation with
Speaker 3: Bloomberg's Michelle Is saying.
Speaker 5: Look, I came up with the name open ai as
Speaker 5: an open source and as a nonprofit, and I funded
Speaker 5: AI OPENINGI for the first roughly fifty million dollars. And
Speaker 5: it was intended to be a nonprofit, open source company,
Speaker 5: and now is they're trying to change that for their
Speaker 5: own financial benefit into a for profit company that is
Speaker 5: closed source. So this would be like, let's say you
Speaker 5: funded a nonprofit to help preserve the Amazon rainforest, but
Speaker 5: instead of doing that, they became a lumber company, chopped
Speaker 5: down the forest and sold the word. He'd be like
Speaker 5: wait a second, that's not what I funded. That's open AI.
Speaker 8: They've made some to their corporate instructure, though, haven't they
Speaker 8: since in recognition of of what you've said?
Speaker 5: And now that's just what they told the media.
Speaker 8: Okay, part they have part they have partly walked back
Speaker 8: their plan to restructure the business. I guess that's made
Speaker 8: no difference to how you feel about it. So you
Speaker 8: determined to see them in court of course. Okay, Well
Speaker 8: that's certainly going to be one to watch. I also
Speaker 8: wanted to ask you about AI and regulation because when
Speaker 8: you were here last talking to John Micklethwaite, you had
Speaker 8: some pretty strong words about the risk that AI poses
Speaker 8: and you said that you really felt what the US
Speaker 8: was missing was a federal AI regulator, that you know,
Speaker 8: something along lines of the Food and Drug Administration or
Speaker 8: the Federal Aviation Administration. Now you're clearly now in a
Speaker 8: zone where you're more on the cutting regulation side than
Speaker 8: wanting new regulators. So has your view changed on the
Speaker 8: need for an AI regulator?
Speaker 5: Well, something, I don't think there should be regulators. You
Speaker 5: think of regulators like referees on the on the field
Speaker 5: in sports. There should be some number of referees, but
Speaker 5: that you shouldn't have so many referees that you can't
Speaker 5: kick the ball without hitting one. In many in most
Speaker 5: fields in the US, the regulatory burden has grown over
Speaker 5: time to the point where it's like having more referees
Speaker 5: than players on the field. And this is a natural
Speaker 5: consequence of an extended period of prosperity. It's very important
Speaker 5: to appropriate appreciate this. This has happened throughout history. When
Speaker 5: you have an extended period of prosperity with no existential war,
Speaker 5: there's no there's no cleansing function for the for unnecessary
Speaker 5: laws and regulations. So what happens is that every year
Speaker 5: more laws and more regulations are pasted, because you know,
Speaker 5: legislators are going to legislate, regulators are going to regulate,
Speaker 5: and you will get the steady pile of more and
Speaker 5: more laws and regulations over time until everything is illegal.
Speaker 5: And let me give you an example of a truly
Speaker 5: absurd situation. Under the Biden administration, SpaceX was sued for
Speaker 5: not hiring asylum seekers in the US. Now, the problem
Speaker 5: is it's actually illegal for SpaceX under itard in National
Speaker 5: Traffic and Arms regulations to hire anyone who is not
Speaker 5: a permanent resident of the United States, because the premise
Speaker 5: being that they will take advanced rocket technology and return
Speaker 5: to their home country if they're not a permanent resident.
Speaker 5: So we're simultaneously in a situation where it's illegal to
Speaker 5: hire slum SEUs and is also illegal to hire asylum seekers,
Speaker 5: and the Biden's partner of justice chose to prosecute us
Speaker 5: despite both paths being illegal. Down if you do, down
Speaker 5: if you don't.
Speaker 8: Well, my question was specifically about a regulator for AI,
Speaker 8: which you said three years ago was needed, and you
Speaker 8: said we need to be proactive on the regulation of
Speaker 8: AI rather than reactive. Have you changed your mind on.
Speaker 5: That, No, of course not. What I'm saying is that
Speaker 5: there should be some referees on the field, a few referees,
Speaker 5: but you shouldn't have a field jam packed with referees
Speaker 5: such that you could not kick a ball in any
Speaker 5: direction without hitting one. So the fields that have been
Speaker 5: around for a long time, such as automotive aerospace, if
Speaker 5: the sort of food and drug industries are overregulated, but
Speaker 5: the new fields like artificial intelligence are underregulated. In fact,
Speaker 5: there is no regulator at all, so they should be
Speaker 5: Do you still think that yes, I'm simply saying, which
Speaker 5: I think is just basic common sense, that you want
Speaker 5: to have at least you want to have a few
Speaker 5: referees in the field. You don't want to have an
Speaker 5: army of referees, but you want to have a few
Speaker 5: referees on any given field, in any given sport or
Speaker 5: any given arena, industrial arena, to ensure help that public
Speaker 5: safety is taken care of. But your already have, so
Speaker 5: there's there's a proper number of referees. Like I said,
Speaker 5: it's actually very easy to visualize this when compared to sports.
Speaker 5: If the whole field is packed with referees, that would
Speaker 5: look absurd. But if there were no referees at all,
Speaker 5: your game is not going to be as good.
Speaker 8: Okay, So let's then talk about your new world, your
Speaker 8: your role advising government. You are in this unique and
Speaker 8: unprecedented position of having billions of dollars worth of contracts
Speaker 8: with the federal government yourself, mostly through SpaceX, and also
Speaker 8: now an insider's knowledge of it because of Dot. Can
Speaker 8: you see that there is a conflict of interest or
Speaker 8: a potential conflict of interest in broad terms, just through
Speaker 8: that very fact, I don't think so.
Speaker 5: Actually, there have been many advisors throughout history and the
Speaker 5: US government and others who have had economic interests, And
Speaker 5: I absolutely an advisor. I don't have a formal power,
Speaker 5: and that's a president can choose to accept my advice
Speaker 5: or not, and that's that's how it goes. If there's
Speaker 5: a single contract that any of my companies that have
Speaker 5: received that people think is somehow not was awarded improperly,
Speaker 5: it would immediately be front page news, to say the least.
Speaker 5: And if if I hadn't mentioned it, certainly my competitors would.
Speaker 5: So if you're not seeing that, then the clearly is
Speaker 5: not a conflict to interest.
Speaker 8: The Yeah, there's another way though to look at it.
Speaker 8: That For example, you have many competitors, whether it's companies
Speaker 8: like Boeing or companies who would like to do more
Speaker 8: of the kind of work you do for NASA Blue
Speaker 8: Origin Rocket Lab. And because DOGE is in every federal
Speaker 8: government department, you or people who work for DOGE and
Speaker 8: you are the driving force behind it, have an insight
Speaker 8: into those companies' affairs and those companies' relationships with the
Speaker 8: federal government.
Speaker 5: Now, all we do is we review the organization to
Speaker 5: see if the organization has departments that are no longer relevant.
Speaker 5: And then are the contracts that are being awarded good
Speaker 5: value for money? In fact, frankly, the bar is not
Speaker 5: particularly high. Is there any value money in a contract?
Speaker 5: And if there's if there isn't, then we make recommendations
Speaker 5: to the secretary. The secretary can choose to take those
Speaker 5: actions or not take those actions, and that's it. And
Speaker 5: then any action that that is as a function of
Speaker 5: DOGE is posted to the DOGE website and to the
Speaker 5: DOGE dog govt at dog handle on the x platform.
Speaker 5: So it's it's complete transparency. And I have not seen
Speaker 5: any case where the best min not has even been
Speaker 5: an accusation of conflict because it is completely and utterly transparent.
Speaker 5: That's it.
Speaker 8: And what about the international dimension. Now, let's think about Starlink.
Speaker 8: Starlink is obviously a very very good internet service. It's
Speaker 8: sought after all over the world. It's critical to the
Speaker 8: frontline in Ukraine. It has also had more contracts coming
Speaker 8: its way, and there is some evidence that companies are
Speaker 8: allowing access to it because they want to be close
Speaker 8: to the Trump administration and send the right signal. So
Speaker 8: Bloomberg broke news today that the South African government is
Speaker 8: working around the rules on black ownership in order to
Speaker 8: allow starlinkin and that is being done on the eve
Speaker 8: of the visit the President Ramaposa is going to make
Speaker 8: to the White House. Do you recognize that as a
Speaker 8: conflict of interest?
Speaker 5: Now? Of course, first of all, you should be questioning
Speaker 5: why is there why the racist laws in South Africa.
Speaker 5: That's the first problem. That's what you should be attacking.
Speaker 5: It's improper for the racist laws in South Africa. The
Speaker 5: whole idea with what Nelson Madella, who was a great man,
Speaker 5: proposed was that all races should be on an equal
Speaker 5: footing in South Africa. That's the right thing to do,
Speaker 5: not to replace one set of racist laws with another
Speaker 5: set of racist laws, which is utterly wrong and improver.
Speaker 5: So that's that's the deal, that all races should be
Speaker 5: tweet equally and there should be no preference given to
Speaker 5: one or the other, whereas there are now one hundred
Speaker 5: and forty laws in South Africa that give that basically
Speaker 5: give strong preference to you if you're black South African
Speaker 5: and not otherwise. And so now I'm in the subsided
Speaker 5: situation where I was born in South Africa but cannot
Speaker 5: get a license to operates in starlink because I'm not black.
Speaker 8: Well, it looks like that's about It looks looks like
Speaker 8: that right, It looks like that's about to change.
Speaker 5: I just asked you a question. Please answer. Does that
Speaker 5: seem right to you? Well?
Speaker 8: Those rules were designed to bring Those rules were designed
Speaker 8: to bring about an era of more economic equality in
Speaker 8: South Africa, and it looks like the government has found
Speaker 8: a way around those rules for you.
Speaker 5: Ask your question?
Speaker 8: Is this is your interview?
Speaker 5: Everyone wants to hear from your question, yes or no?
Speaker 8: Not for me to answer. I have got a question
Speaker 8: for you about about your government works and the amount
Speaker 8: of savings.
Speaker 5: Do you like raceless loves?
Speaker 8: This is not for me to answer. Come on now,
Speaker 8: you wouldn't be trying to dodge a question.
Speaker 5: Do you have to answer this question? Answer you answer mine?
Speaker 8: I say, I think if you I'm sure you can
Speaker 8: have that conversation directly with the South African government if
Speaker 8: you want to. I want to ask you about the
Speaker 8: total believe. I want to ask you about the total allound.
Speaker 8: I want to ask you about the total amount that
Speaker 8: you're planning to save through Doge's work before the election,
Speaker 8: you said it was going to be at least two trillion.
Speaker 8: The number currently on doze dog gov is one hundred
Speaker 8: and seventy billion dollars. That's a big change. What happened
Speaker 8: to the two.
Speaker 5: Trillion or do you expect it to happen immediately?
Speaker 8: Well? Is it going to happen because those is supposed
Speaker 8: to run till next July.
Speaker 5: I mean your question is episode in this fundamental premise?
Speaker 5: Are you assuming that on day you know, within a
Speaker 5: few months this an instant two trillion saved?
Speaker 8: No, I'm not sure. I'm just asking you, is that
Speaker 8: still your aim?
Speaker 4: Then?
Speaker 8: Is it still your aim to get the amount of time?
Speaker 5: Have we not made good progress given the amount of time?
Speaker 8: That's exactly what I'm asking. So, is it's still your
Speaker 8: aim to go from one hundred and seventy billion to
Speaker 8: two trillion?
Speaker 5: The ability of those to operate is this function of
Speaker 5: whether the government and this includes the Congress, is willing
Speaker 5: to take our advice. We're not the dictators of the government.
Speaker 5: We are the advisors, and so we can advise. And
Speaker 5: the progress who made thus far I think is incredible.
Speaker 5: Those team has done incredible work. But the magnitude of
Speaker 5: the savings is proportionate to the support we get from
Speaker 5: Congress and from the executive branch of the government in general.
Speaker 5: So we're not the dictators. We are the advisors. But
Speaker 5: thus far for advisors with the George team, to their credit,
Speaker 5: has made incredible progress.
Speaker 3: That was Elon Musk with Bloomberg's Michelle Lusain at the
Speaker 3: Guitar Economic Forum. The full conversation is on the Bloomberg
Speaker 3: podcast page on YouTube. Also check out the annotated transcript. Yeah,
Speaker 3: it's really really cool. It has really good contexts. You
Speaker 3: can get it at Bloomberg dot com and also on
Speaker 3: the Bloomberg terminal.
Speaker 1: You're listening to Bloomberg Business Week coming up even more
Speaker 1: from our Elon Musk interview, focusing on Elon's plans to
Speaker 1: listen up everyone pull back on his political spending.
Speaker 3: Okay, we'll see TV with the Brain of Salt.
Speaker 4: That's next.
Speaker 3: This is Bloomberg.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and the Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on YouTube.
Speaker 1: Let's get back to our interview with the world's richest man,
Speaker 1: Elon Musk this past week. As we've been noting, he
Speaker 1: spoke remotely at the Guitar Economic Form, which was programmed
Speaker 1: by Bloomberg News.
Speaker 3: We pick up with Elon addressing his recent time in
Speaker 3: Washington and putting together the Department of Government Efficiency. Here's
Speaker 3: part of the conversation with Bloomberg's Mishalie Saint Dosh.
Speaker 5: Is an advisory group. We are doing the best we
Speaker 5: can as an advisory group. The progress made thus far
Speaker 5: as an advisory group is excellent. I don't think any
Speaker 5: advisory group has done better in the history of advisory
Speaker 5: groups of the government. But we do not make the laws,
Speaker 5: nor do we control the judiciary, nor do we control
Speaker 5: the executive branch. We are simply advisors. In that context,
Speaker 5: we are doing very well. Beyond that, we cannot we
Speaker 5: cannot take action beyond that because we are not some
Speaker 5: sort of imperial dictator of the government. There are three
Speaker 5: branches of government that art some degree opposed to that
Speaker 5: level of cost savings. Unless let's not criticize whether there's
Speaker 5: four trillion. Instead look at the fact that that our
Speaker 5: sixty billion has been saved and more we save two.
Speaker 8: And as I said, I think everyone can agree that
Speaker 8: cutting waste and indeed fraud in any government and being
Speaker 8: responsible with taxpayers money is a very good thing. Finally, political,
Speaker 8: your political influence. I wondered whether you have decided yet
Speaker 8: how much you're going to spend on the upcoming mid terms.
Speaker 8: You spent a lot more money on the last US
Speaker 8: election than you envisaged when you were speaking here three
Speaker 8: years ago. Are you going to continue to spend at
Speaker 8: that kind of level on future elections?
Speaker 5: I think in terms of political spending, I'm going to
Speaker 5: do a lot less in the future.
Speaker 8: And why is that?
Speaker 5: I think I've done enough?
Speaker 8: Is it? Is it because of blowback?
Speaker 5: Well, if I see a reason to do political spending
Speaker 5: in the future, I will do it. I don't currently
Speaker 5: see reason.
Speaker 8: What about political influence beyond the US? How often do
Speaker 8: you speak to President Putin?
Speaker 5: I don't speak to President Putin.
Speaker 8: You've never spoken to President Putin.
Speaker 5: I was on a video caller with him once about
Speaker 5: five years ago. That's the only that's the only speak
Speaker 5: president President Putin. Oh, you must I get it.
Speaker 8: Speak. Actually, I've heard you. I've heard you speak about it,
Speaker 8: for example, in your West Point speech. You said, oh,
Speaker 8: I challenged President Putin to uh to was it an
Speaker 8: arm wrestle? And I know the Wall Street Journal has
Speaker 8: reported your reported conversations. If you're if you're saying they
Speaker 8: haven't happened other than once, I'll take that as red.
Speaker 5: Is there a worse publication on the face of the
Speaker 5: earth than the Wall Street Journal. I wouldn't use that
Speaker 5: tolign up my cage for character things that that newspaper
Speaker 5: is the worst newspaper in the world. You know, if
Speaker 5: there's one newspaper that should be pro capitalist, it's the
Speaker 5: one with Wall Street in the name. But it isn't.
Speaker 5: So I have the very lowest opinion of the Wall
Speaker 5: Street Journal. Absolute answers, and you clearly have believed the
Speaker 5: tripe that you've written. That you've written in those papers.
Speaker 8: I read, I read very widely, and I'm putting these
Speaker 8: questions to you so that you have an opportunity to
Speaker 8: respond to them, which you are and for which we're
Speaker 8: all grateful to hear your responses.
Speaker 5: You mentioned to be challenging. I did so on the
Speaker 5: X platform. I challenged Vladimir Putin to single, but I
Speaker 5: didn't talk to him. That was a post on the
Speaker 5: X platform. That's why.
Speaker 8: That's why I asked you, and you've and you've clarified
Speaker 8: and explained, thank you. That's that's why I was asking
Speaker 8: whether you have had reported conversations, and you've said you have.
Speaker 5: Ad okay, legacy media lize.
Speaker 8: Okay, listen. I actually thought I might give Grock the
Speaker 8: last word, because when I ask Rock what your hardest
Speaker 8: challenge is, it said the strain of managing multiple high
Speaker 8: stake ventures made financial, regulatory and public relations crises. And
Speaker 8: I wondered whether you recognize that characterization and whether you
Speaker 8: do think that this is a pivotal year in your life.
Speaker 5: Well, every has been somewhat pivotal, and this one's no different.
Speaker 5: I mean in terms of interesting things that hopefully our
Speaker 5: coverers this year, the getting Starship to be fully reusable,
Speaker 5: so that we catch both the booster and the ship,
Speaker 5: which will be the first fully reusable orbital rocket ever
Speaker 5: in history, which is the essential breakthrough necessarily to make
Speaker 5: life multiplanetary and ultimately become a space faring civilization. We've
Speaker 5: got neural link which is now helped by patients restore
Speaker 5: capability using the telefty implant, where they're able to control
Speaker 5: the computers by thinking, we'll be doing our first patient
Speaker 5: to restore bland resource site with our blind site implant,
Speaker 5: which is the at the end of the show early
Speaker 5: next In fact, that that first patient might be in UEE,
Speaker 5: since we have a relationship with YOUE and the Cleveland
Speaker 5: CMIC there. I think what's running on the AI front,
Speaker 5: we are close to what you might call AGI or
Speaker 5: digital superintelligence. We are seeing an explosion of digital super intelligence.
Speaker 3: Here was Elon Musk talking about pulling back on political
Speaker 3: spending with Bloomberg's Michelle Assan at the Qatar Economic Forum.
Speaker 3: We've got Max Chafkin with us. He's the co host
Speaker 3: of the new Bloomberg podcast, Everybody's Business. He's also the
Speaker 3: co host of the not so new podcast but still
Speaker 3: pretty great podcast. It's called Elon Egg. I'm glad that's
Speaker 3: what we played because that's getting a lot of attention
Speaker 3: right now. And I heard that, and I went back
Speaker 3: to Elon's Twitter from March of twenty twenty four, and
Speaker 3: that's when he posted on X this is overgo. I
Speaker 3: will not contribute to either political candidate. And we all
Speaker 3: saw what happened. A few months later, My point is
Speaker 3: he says stuff and doesn't necessarily commit to it.
Speaker 12: Yeah, and even here he's building himself an out Right,
Speaker 12: he's saying less money, which you'd kind of expect anyway, Right,
Speaker 12: midterms are not as expensive as presidential years, So like,
Speaker 12: it would be very surprising if he dropped another three
Speaker 12: hundred million dollars, which is roughly what he spent in
Speaker 12: twenty twenty four, on twenty twenty six. And he's also saying,
Speaker 12: you know, I would It's I don't see a reason now,
Speaker 12: but if I did see a reason in the future,
Speaker 12: I could I see this as a public negotiation. Right,
Speaker 12: this is the audience here, well, aren't There are several
Speaker 12: different audiences. One of course is Tesla shareholders trying to say, like, look,
Speaker 12: I'm I'm focused on the company. I'm not getting sucked
Speaker 12: into Washington, going to try to deal with some of
Speaker 12: the brand damage that my political presidence has caused. But
Speaker 12: of course the other audience is Republicans. Right, He's putting
Speaker 12: it out there that if they want money from him,
Speaker 12: they're going to have to do stuff. And you know,
Speaker 12: there's lots of stuff that has happened in Washington since
Speaker 12: Donald Trump took office. That I think has made Elon
Speaker 12: Musk really happy. But Elon Musk is a very long
Speaker 12: list and not all those things have happened. There are
Speaker 12: lots of opportunities for him to get contracts. You know,
Speaker 12: the Golden Dome as you're discussing like that's a potential
Speaker 12: revenue source for SpaceX. There are lots of areas that
Speaker 12: Elon Musk stands to benefit. You also have this in
Speaker 12: the bill right now, like they're plan cutting these EV subsidies. Now,
Speaker 12: we will see where that ends up. But if those
Speaker 12: EV subsidies are cut completely, that could really hurt Tesla.
Speaker 12: So I think I think it's to his advantage to say, hey,
Speaker 12: I'm you know, I'm not a gimme for twenty twenty six.
Speaker 4: You have to win my support.
Speaker 1: Talk to us about robotaxis. Elon told CNBC that Tesla
Speaker 1: plans to begin operating a fleet of about ten self
Speaker 1: driving robotaxis in Austin next month, before growing to one
Speaker 1: thousand VA within a few months. His words, sending the
Speaker 1: company stock story.
Speaker 12: So the robotaxi thing, I think part of the challenge.
Speaker 12: One of the challenges for Tesla is there's so much
Speaker 12: sort of assumed in the stock. The Tesla bulls basically
Speaker 12: believe that almost overnight they're going to be able to
Speaker 12: turn this thing into a massive, massive business. And I
Speaker 12: think everything we know from the history of other companies
Speaker 12: trying to launch these robotaxi things, and I'm thinking particularly
Speaker 12: of Waimo, Google's driverless car division, which has been doing
Speaker 12: this for like ten years and has really struggled to commercialize,
Speaker 12: is that it's going to take a long time. And
Speaker 12: when you look closely at what Musk is saying is
Speaker 12: going to happen in Austin, if you are not paying
Speaker 12: that close attention, if you're just sort of buying this,
Speaker 12: like on robin Hood, you hear Elon must say, you know,
Speaker 12: robotax going to heal over the world. You think they're
Speaker 12: going to turn this on they're going to be huge fleets.
Speaker 12: It's going to be very small.
Speaker 5: You know.
Speaker 12: On the during the earnings call, we learned something like
Speaker 12: ten to twenty robotaxis with tel operation. So that's people,
Speaker 12: you know, sitting in command centers making sure the cars
Speaker 12: don't hit anybody.
Speaker 3: That's going to be curely. What Weimo does by any
Speaker 3: means no, it's it's.
Speaker 12: Closer to it's maybe what weimo did you know years ago,
Speaker 12: and it's just it's a realization.
Speaker 5: I think that this is going to take a long time.
Speaker 12: So I don't know. Elon Musk has this kind of
Speaker 12: amazing ability to spin stories about the future to get
Speaker 12: people excited about the future.
Speaker 7: And he may be able to do that.
Speaker 12: But like Tesla stock has gone up a lot in
Speaker 12: recent weeks, you know, I know some of that has
Speaker 12: to do with you know, terriff expectations and so on,
Speaker 12: but this is a very valuable company relative to the
Speaker 12: number of cars it sales.
Speaker 3: Max in the interview that he gave to our team
Speaker 3: at the Guitar Economic Form, he was asked about protesters
Speaker 3: or the Tesla brand damage, and what he answered was
Speaker 3: he said, quote, they're on the wrong side of history
Speaker 3: and that's an evil thing to do. That's referring to
Speaker 3: people damaging Tesla cars and showrooms. Something needs to be
Speaker 3: done about them, and a number of them are going
Speaker 3: to prison and they deserve it. It seems like he's
Speaker 3: certainly there were reports of damage to Tesla vehicles and
Speaker 3: damage to test Tesla' shrooms, but there have also been
Speaker 3: these protests that have been happening at Tesla showrooms all
Speaker 3: over the country, especially during his work with Doge, that
Speaker 3: we're not violent. Yeah, it seems like he's He's also
Speaker 3: in the past talked about these people being part of
Speaker 3: some bigger movement. He's referred to them online as being paid.
Speaker 3: Have we seen any evidence of that.
Speaker 12: No, there's no evidence, no good evidence that the people
Speaker 12: who are showing up at these Tesla protests are paid.
Speaker 12: You know, I would say that there's a he's conflating
Speaker 12: a couple of different things. But you know, and having talked,
Speaker 12: we did a podcast episode on Eline a week and
Speaker 12: a half ago with a former Tesla sales manager, and
Speaker 12: who he's talking about is like, the real danger is
Speaker 12: not these protesters, not somebody's showing up to a protest.
Speaker 12: It's just somebody not buying. And and like that is
Speaker 12: a thing that even if you remove the protests, the
Speaker 12: protests are of course not good for the brand. They're
Speaker 12: an expression of unhappiness and so on. It doesn't lead
Speaker 12: to good headlines. Obviously protests can sometimes get out of hand.
Speaker 12: But also it's just a lot of people, I think
Speaker 12: do not want to be associated associate their car with
Speaker 12: something this controversial. And what he was saying is that
Speaker 12: when Musk started, what this Tesla manager was saying is
Speaker 12: that when must started getting involved in politics a couple
Speaker 12: of years ago, they had people come into the Tesla
Speaker 12: stores and argue and say, you know, I like the car,
Speaker 12: but I don't like this. You know, still very engaged.
Speaker 12: And what he said what changed as Musk became more
Speaker 12: and more engaged is they just stopped coming. They just decided,
Speaker 12: you know, screw this, Like I don't want to be
Speaker 12: associated with something this controversial. And when you look at
Speaker 12: what's happening in the sales, like that's what's showing up.
Speaker 12: It's not the protesters, it's just the people not buying.
Speaker 12: And that's the thing that's going to be hard to
Speaker 12: turn around, I think.
Speaker 3: Our thanks to Max Chafkin, co host of the new
Speaker 3: Bloomberg podcast Everybody's Business of corresponding for Bloomberg Business we Can,
Speaker 3: co host of the Elon Inc.
Speaker 5: Podcast.
Speaker 1: He's a busy dude, but he is definitely a go
Speaker 1: to when it comes to Elon Musk. And that wraps
Speaker 1: up the weekend. A Bloomberg Business Week from Bloomberg Radio.
Speaker 1: Thank you so much everyone for joining us.
Speaker 3: I'm Tim Stenerbeck and I'm Carol Masser.
Speaker 1: Have a good and safe weekend.
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