Speaker 1: From Mahard where Innovation, Money and Power Collie in Silicon
Speaker 1: Valley NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 1: And Ed Ludlow here in San Francisco. Caroline Hyde is
Speaker 1: off today. This is Bloomberg Technology coming up. Lordstown files
Speaker 1: for bankruptcy, shares plunge as the evmakers deal with fox
Speaker 1: Con unravels. We'll bring you the details on that developing story. Plus,
Speaker 1: we'll talk AI and regulation with an MIT researcher who
Speaker 1: recently sat down with President Biden on his trip to
Speaker 1: San Francisco. Will get her takeaways on how the government
Speaker 1: plans to tackle the booming technology. Plus, we sit down
Speaker 1: with famed venture capitalist Gary Town of y Combinator for
Speaker 1: an exclusive interview talking investing the generative AI and how
Speaker 1: his firm is investing in building back the Bay Area.
Speaker 1: When it comes to names in the technology sector, we
Speaker 1: are thinking about lord Town, the news a Chapter eleven filing.
Speaker 1: We're down thirty seven percent right now, we are trading.
Speaker 1: The stock had been halted. The relationship with fox Con,
Speaker 1: which was the contract manufacturer right that was going to
Speaker 1: build Lordstown's electric vehicles. That relationship is disintegrating. Let's get
Speaker 1: the details with Bloomberg Shaun o'caine. He covers everything Evy
Speaker 1: and auto start up for us at Bloomberg News. Sean,
Speaker 1: what is the latest when it comes to Lord's Town.
Speaker 3: Well, we've known this fight was coming for a while
Speaker 3: and now it's here. We have Lordstown Motors basically saying
Speaker 3: that from a minute that they started inking these contracts
Speaker 3: and Fox Hunt to build the vehicles that Lordstown has
Speaker 3: spent the last couple of years trying to build. There,
Speaker 3: it went south that Fox COHNN started renegging on some
Speaker 3: of its promises, that it wasn't living up to its
Speaker 3: funding milestones, that they were basically not showing up to meeting,
Speaker 3: that the Lordstown CEO went to Taiwan to try to
Speaker 3: get some information on the vehicles that they wanted to
Speaker 3: build together and was just basically ghosted at a meeting there.
Speaker 3: So this is a relationship that's been deteriorating pretty quickly
Speaker 3: over the last half year or so, and we've started
Speaker 3: to see signs of that in May when Lordstown really
Speaker 3: started making some noise about this in regulatory filings. But
Speaker 3: now it's really out there in full view, you.
Speaker 1: Know, The next question is is this the end for
Speaker 1: Lord's Town. You know, they've kind of relied on fox
Speaker 1: Con to build their endurance on their behalf. Do they
Speaker 1: have other options to move forward?
Speaker 3: They've been saying for months that they need another outside partner,
Speaker 3: which I always looked at as a pretty big claim,
Speaker 3: considering that Foxcom was supposed to contract manufacturer these vehicles
Speaker 3: for them, and for Lordstown to come out a couple
Speaker 3: months ago and say, hey, we actually still need more
Speaker 3: help from somebody else, another OEM that it was a
Speaker 3: pretty big sign that Foxcom was probably not up to snuff.
Speaker 3: So Bardstown still thinks that it can find a way through.
Speaker 3: It's still going to try to operate, you know, sort
Speaker 3: of the core aspects of the business is going to
Speaker 3: try to keep the lights on while it goes through
Speaker 3: this Chapter eleven proceeding and uses that restructuring process to
Speaker 3: give it a bit more of a solid footing to
Speaker 3: fight fox Con in this lawsuit that it filed.
Speaker 1: Today as well.
Speaker 2: But we'll see.
Speaker 3: I mean, I think the question is have they actually
Speaker 3: developed anything over the last three four years of value
Speaker 3: that would either attract a buyer or attract a partner
Speaker 3: that they've like they've been looking for over the last
Speaker 3: couple of months. Obviously they haven't found anybody.
Speaker 1: So it's a great point. I mean I started this
Speaker 1: year at CES in Las Vegas. As you know, I
Speaker 1: borrowed one of the Endurance pickups. I drove the CEO
Speaker 1: around for about an hour. There was a truck at least,
Speaker 1: you know, an early prototype. What's the widest story here.
Speaker 1: You know, we've always kind of viewed Lord's Town as
Speaker 1: one of the pile of eb startups that we're kind
Speaker 1: of not really sure about, like the viability of their
Speaker 1: business and their technology.
Speaker 3: I mean, the history of the company and the story
Speaker 3: that they were trying to tell was always just very tangled.
Speaker 3: I mean you think back to twenty nineteen and the
Speaker 3: fact that they bought the company from General Motors, or
Speaker 3: the factory from General Motors that they were supposed to
Speaker 3: be operating in. It was announced by President Trump in
Speaker 3: a tweet, and he sort of got it wrong. Without
Speaker 3: the gate. He said that Workhorse, which is another startup
Speaker 3: that was going to be buying the factory, and this
Speaker 3: company was really spun out of Workhorse. There was always
Speaker 3: this weird relationship between it and Workhorse. It was licensing
Speaker 3: ip from Workhorse to build this vehicle. It was always
Speaker 3: this sort of tortured product. And yeah, they were able
Speaker 3: to get to the point where they were making a
Speaker 3: few of them with fox gone, but they were never
Speaker 3: able to get to the point where they were able
Speaker 3: to get that cost under the MSRP that they were
Speaker 3: trying to promise, and even the MSRP had gone up
Speaker 3: over time. They were originally targeting a lower MSRP, and
Speaker 3: they just got to the point where, yeah, they had
Speaker 3: a vehicle, but it was really not one that was
Speaker 3: ever going to scale by their own admission. So that's
Speaker 3: why they started looking for out i'd help, and they
Speaker 3: clearly needed that outside help because Foxcom wasn't able or
Speaker 3: willing to live up to its end of the bargain.
Speaker 3: So I think now looking forward, aside from what's going
Speaker 3: to happen with Lordstown, this just really raises a lot
Speaker 3: of questions about what fox Conn is going to try
Speaker 3: to do for EVS in the US. It's got big
Speaker 3: ambitions for that factory in Ohio, but right now we
Speaker 3: see Lordstown filing for Chapter eleven bankruptcy. One of the
Speaker 3: other tenants that's supposed to be in there working. Fox
Speaker 3: Cohn had its back merger dissolved earlier this month, and
Speaker 3: Fisker has already delayed its second vehicle with fox con
Speaker 3: in that building. So that's three out of four partners
Speaker 3: already that are seeing trouble with foxtun in that building.
Speaker 1: All right, Bloomberg Sean o'caine on the ev beat. One
Speaker 1: of the top stories on Bloomberg technology this Tuesday. Thank you.
Speaker 1: The other top story and kind of activity we're seeing
Speaker 1: is in the crypto space. US based payments and crypto
Speaker 1: firm Circle closely watching regulatory developments in Hong Kong after
Speaker 1: the territories new crypto rules went into effect. We sat
Speaker 1: down with its chairman and CEO to discuss.
Speaker 4: All around the world, every major market, stable coin laws
Speaker 4: are coming into place, and I think what that signifies
Speaker 4: is that this kind of digital currency, these fiat linked
Speaker 4: digital currencies, are about to become a part of the
Speaker 4: mainstream global financial system.
Speaker 1: Elsewhere, we're seeing activity in bitcoin and bitcoin cash. And
Speaker 1: guess who's here Bloomberg Shnali Bassk with the crypto beat.
Speaker 1: Let's start with Bitcoin gap cash, right, it's basically doubled
Speaker 1: in value over a seven day period. It's the kind
Speaker 1: of spin off. Why what's happening?
Speaker 5: There are a few things. One, remember bitcoin cash is
Speaker 5: in fixed supply and it is now being traded on
Speaker 5: the new exchange that was started by the backing of
Speaker 5: Citadel Securities and also a fidelity in large players on
Speaker 5: Wall Street, And so you do seem some activity here
Speaker 5: and they are trading only really four assets here, it's bitcoin,
Speaker 5: either lightcoin, and bitcoin cash.
Speaker 6: So oere Bitcoin in.
Speaker 5: The last seven days ed has risen less than thirteen percent.
Speaker 5: Bitcoin cash has risen almost one hundred and thirteen percent,
Speaker 5: so a very meaningful rise there. But remember it is
Speaker 5: not traded as widely as Bitcoin is in particular, so
Speaker 5: you would see a bigger jump there.
Speaker 1: Then you would see a bitcoin.
Speaker 5: For example, that is a largest cryptocurrency and is trading
Speaker 5: at more than thirty thousand dollars. And remember that thirty
Speaker 5: thousand level. We have been there for about a week
Speaker 5: or so now pretty much since we have seen that
Speaker 5: kind of black Rock filing for a spot ETF giving
Speaker 5: a lot more institutional support to some of these crypto assets.
Speaker 1: Well, speaking of the headline, which caught my eye and
Speaker 1: moved the needle in terms of the energy we saw
Speaker 1: in bitcoin in Tuesday's US morning session was the block
Speaker 1: reporting that Fidelity is preparing to submit a spot big
Speaker 1: Bitcoin ETF filing. What do we know about that?
Speaker 5: Something that's interesting if you take a look at the
Speaker 5: movement here. You saw a pretty significant rise in Bitcoin
Speaker 5: after the black Rock ETF filing, which coin basically the
Speaker 5: custodian of the bitcoin assets as well. But now the
Speaker 5: block reporting Fidelity gives you another big investing giant behind
Speaker 5: the weight of crypto and this idea here that there
Speaker 5: could be support even from US regulators to get this
Speaker 5: done in fuller form. We have plenty of ETFs when
Speaker 5: it comes to the future markets of futures markets in
Speaker 5: the crypto world, but to have this much institutional support
Speaker 5: behind a spot ETF shows you that perhaps the biggest
Speaker 5: of Wall Street giants are getting on the bandwagon here
Speaker 5: when it comes to crypto and the idea of getting
Speaker 5: regulatory support behind it. We know that there are many
Speaker 5: many applications in the sidelines here, and the question is
Speaker 5: at what point do those become reality and how much
Speaker 5: more money can that really draw.
Speaker 6: Into the system.
Speaker 1: Bloomberg Shnali Basek on the crypto beat here on Bloomberg Technology,
Speaker 1: Thank you so much. Now coming up, the Biden administration
Speaker 1: is taking steps to better understand and regulate artificial intelligence.
Speaker 1: We're going to talk to AI researcher doctor joy Bola
Speaker 1: Weeni about the panel and get her view on the
Speaker 1: risks and rewards of using AI. Just really interesting reaction
Speaker 1: to her conversation with President Briden. As we had to break.
Speaker 1: We're also watching shares of Snowflake, the software company announcing
Speaker 1: an AI related partnership with in Nvidia that will enable
Speaker 1: businesses to create customized generatorve AI apps using their own
Speaker 1: proprietary data. Having a positive effect to the upside up
Speaker 1: three percent is we had to break. Here's what RBC's
Speaker 1: laur Calvacina had to say about the NASDAK earlier today, thinkingvaluations,
Speaker 1: this is Bloomberg, I would still stick with tech names.
Speaker 7: I do think that NASDAK is getting a little bit overbought.
Speaker 7: If you look at the CFTC data, we're hitting new
Speaker 7: highs on NASDAK mini positioning that Beings said, I don't
Speaker 7: think you have to sort of throw all the growth
Speaker 7: stocks out at this point. A sector like communication services
Speaker 7: where a lot of the Internet names are those earnings
Speaker 7: revisions are starting to weaken. They're actually staying stronger in
Speaker 7: tech property.
Speaker 1: Oars official intelligence startups stability AI has lost at least
Speaker 1: two top executives in recent weeks. That includes its head
Speaker 1: of research and chief operating officer. The departure has come
Speaker 1: the same month that an article Informs criticize the startups.
Speaker 1: Stability joined us to discuss more is the person that
Speaker 1: broke that story, Bloomberg's Rachel met Rachel.
Speaker 2: What do we know?
Speaker 8: Well, we know that David ha who is stability AI's
Speaker 8: head of research, left recently, and we also know that
Speaker 8: Reren Itto, who had been the company's chief operating officer,
Speaker 8: also left.
Speaker 1: Stability told me that David had left. Sources had told me.
Speaker 8: That David had left on his own, as he had resigned.
Speaker 8: Stability CEO Emad Mustak told me that Wren actually had been,
Speaker 8: in his words, leg.
Speaker 1: Interesting. You very recently spoke with an ad at the
Speaker 1: Bloomberg Technology Summit. I give our audience a sense of
Speaker 1: what's going on with this company. They're kind of seen
Speaker 1: as a leader in the field. But you know, despite
Speaker 1: the name stability AI, there are some issues that investors
Speaker 1: as well are concerned about. Yeah, that's true.
Speaker 8: The name has inspired unfortunately a few jokes on Twitter
Speaker 8: in the last twenty four hours. Is it stable or
Speaker 8: it's not so stable as some people are saying. I mean,
Speaker 8: the fact is that some people have had really short
Speaker 8: tenures at the company, and you could see how that
Speaker 8: might concern people on the outside. I'm aren't sure what's happening.
Speaker 8: On the other hand, it is true that I'm often
Speaker 8: with a fast growing, early stage company, which this is.
Speaker 8: You might have some executive turnover for a bunch of
Speaker 8: different reasons, right Perhaps you want to bring in more
Speaker 8: experienced leadership or different leadership, and sometimes things just work out.
Speaker 8: So right now, you know, we're looking into, well, what
Speaker 8: really happened here and what's going.
Speaker 6: To happen going forward?
Speaker 1: All right, Bloomberg's Rachel Met the latest reporting there from
Speaker 1: Bloomberg Technology and what's happening in the AI space. Let's
Speaker 1: stick with AI and talk about regulation. Doctor Joy boll
Speaker 1: And Weeny is the founder of the Algorithmic Justice League
Speaker 1: and an AI researcher at MIT. Just last week, she
Speaker 1: sat with President Biden to discuss artificial intelligence and joins
Speaker 1: US now from New York. We'll get to that conversation
Speaker 1: with President Biden in a moment. You listen there to
Speaker 1: what Rachel had to say. How do you see the
Speaker 1: pace of innovation right now in AI startups? And does
Speaker 1: it trouble you how quickly some of these companies are
Speaker 1: moving and then changing direction.
Speaker 9: Yes, I am extremely troubled with how quickly we are
Speaker 9: releasing generative AI systems without the transparency to know where
Speaker 9: the data is coming from. And also we continue to
Speaker 9: see data being taking without consent, without compensation, and you're
Speaker 9: going to continue to see increasing lawsuits against companies that
Speaker 9: are built on what some would say is stolen data.
Speaker 9: You had Meta Facebook settle six hundred and fifty million
Speaker 9: dollars when it came to violating the bip UP Biometric
Speaker 9: Information Privacy Act of Illinois. So I think it's extremely
Speaker 9: risky for companies to be building on unstable foundations.
Speaker 1: Doctor Joy, What were the specifics of your discussion with
Speaker 1: President Biden? Yes, artificial intelligence, but what did he want
Speaker 1: to know?
Speaker 8: So?
Speaker 9: I was very encouraged by how engaged President Biden was
Speaker 9: at the roundtable, and we started off discussing the possibilities
Speaker 9: of AI for healthcare for education, but quickly focused on
Speaker 9: real world harms of AI, and so I focused on
Speaker 9: racial bias, gender bias, and known false matches that have
Speaker 9: led to false arrests, such as the case of Robert Williams,
Speaker 9: who was arrested in front of his two young daughters
Speaker 9: and his wife due to faulty AI system. So that
Speaker 9: was certainly a top of mine. I also think there's
Speaker 9: an opportunity for the US to lead on biometric rights,
Speaker 9: but right now we're going in the opposite direction. Last
Speaker 9: week we had EU lawmakers push forward the EUAI Act,
Speaker 9: which has a provision that bans the use of live
Speaker 9: facial recognition in public places. While this is happening here
Speaker 9: in the US, we have the TSA rolling out domestic
Speaker 9: facial recognition, and most people don't even know that they
Speaker 9: can opt out. So that's why we're doing the TSA
Speaker 9: scorecard fly dot AJL dot org to actually hear from travelers.
Speaker 9: Was their notice, was their consent, was their signage? Happened
Speaker 9: if you try to opt out? Could you actually opt
Speaker 9: out without consequences? So we certainly discussed where the US
Speaker 9: could lead when it comes to biometrics rights.
Speaker 1: Dr Joy It's interesting the comparison between the European Union
Speaker 1: and what we see in the United States. Did President
Speaker 1: Biden give you any sort of indicational pledge that the
Speaker 1: US will kind of be more active in regulating or
Speaker 1: at least acting on a framework in terms of god
Speaker 1: rails for artificial intelligence technology.
Speaker 9: Well, something that I was encouraged to see last year
Speaker 9: from the Biden Harris administration was the release of a
Speaker 9: blueprint from an AI Bill of Rights. And I think
Speaker 9: that's exactly the way the US should approach regulating AI right,
Speaker 9: which is a rights based framework, and so here you
Speaker 9: would have protection. You would have specific protections against algorithmic discrimination.
Speaker 9: There would be notice and explanation, there would be privacy
Speaker 9: when it comes today, and consent, and these systems would
Speaker 9: have to be shown to be safe and effective. In
Speaker 9: the case of Robert Williams being falsely arrested, the system
Speaker 9: wasn't even effective. But even if we had more effective
Speaker 9: biometric systems, this then can lead to mass state surveillance,
Speaker 9: which is not the society we want to have here
Speaker 9: in the United States.
Speaker 1: At MIT, tell me about your research. What are you
Speaker 1: focused on. So my research.
Speaker 9: Looks into bias in various types of AI systems, So
Speaker 9: probably most known for the gender Shades paper, which showed
Speaker 9: racial bias and gender bias in commercially sold projects products
Speaker 9: from IBM, Microsoft. Later on we also did Amazon as well.
Speaker 9: Right now, with the Algorithmic Justice League, we're focused on
Speaker 9: real world harms. How are people experiencing AI systems being
Speaker 9: used for access to government services? So, for example, we
Speaker 9: know that the IRS put on board id ME as
Speaker 9: a way of accessing basic tax information. But we launched
Speaker 9: a campaign and we heard from many people saying that
Speaker 9: they were having so many different issues, not just from
Speaker 9: the technical side, but also from a privacy side. And
Speaker 9: when you have a company that says to use our system,
Speaker 9: you waive your right to sue, but there's no other
Speaker 9: way to access that government service. We are moving in
Speaker 9: the wrong direction, but it's not too late to course.
Speaker 1: Correct, doctor Joy. The core of your research and your
Speaker 1: role is looking at the societal risks of AI. But
Speaker 1: how do you yourself use artificial intelligence tools? Would you say
Speaker 1: that you are pro AI is as a tool to
Speaker 1: advance mankind?
Speaker 9: I am optimistic about using ethnical AI systems, and what
Speaker 9: I try to do is say are the AI systems
Speaker 9: that I would like to see use built on an
Speaker 9: ethical pipeline, and if not, are there ways we can
Speaker 9: shift that. I'm very excited. For example, with what we're
Speaker 9: seeing with AI and healthcare. There's a startup called bloomer
Speaker 9: Tech where they've identified a major health gap which is
Speaker 9: about one in three women die of cardiovascular disease, but
Speaker 9: less than a quarter of research participants are women when
Speaker 9: it comes to actually studying the disease, so we have
Speaker 9: a very male centric model of heart disease, and this
Speaker 9: does mean that women have worse outcomes. So they've developed
Speaker 9: this innovation of smart fabrics that can give you digital biomarkers,
Speaker 9: and they are also addressing this data gap because there's
Speaker 9: such a lack of data when it comes to women's
Speaker 9: heart health. So those sorts of areas, I'm very excited
Speaker 9: about the possibilities where AI isn't taking away livelihoods but
Speaker 9: improving a life outcomes.
Speaker 1: Doctor Joy BOLLAMWENI reflect on that meeting with President Biden
Speaker 1: here in San Francisco last week. Thank you so much
Speaker 1: for your time that in New York. All right, time
Speaker 1: for talking tech. First up, India's buy dju is talking
Speaker 1: with prospective new shareholders for a one billion dollar fundraising round,
Speaker 1: seeking delay investors who want to clip its founder's control.
Speaker 1: The education tech firm is offering sweeteners to win over newbackers,
Speaker 1: including preferential treatment in the case of liquidation. Plus. Baidu's
Speaker 1: chat GBT style service called Ernie has outperformed open ai
Speaker 1: seminal product on several measures in China. That's according to
Speaker 1: a statement from China's search leader, who implies the latest
Speaker 1: dis seration of Baidu's foundation model won't have to compete
Speaker 1: with open Ai directly in China. A Meta has quadrupled
Speaker 1: the number of companies using it's WhatsApp business tool in
Speaker 1: the past three years. The app now has more than
Speaker 1: two hundred million customers, up from fifty million in the
Speaker 1: middle of twenty twenty, making headway in a push to
Speaker 1: generate more money from the popular messaging service. Right coming up,
Speaker 1: we're going to continue our conversation and all things artificial
Speaker 1: intelligence and speak to one entrepreneur in the space, Joseph Miller.
Speaker 1: He's a former Bridgewater hedge Fund employee. He joins us
Speaker 1: next to discuss the launch of his new app, Quiver,
Speaker 1: which uses AI and the blockchain for digital identity loads.
Speaker 1: More to come here on Bloomberg Technology. From here in
Speaker 1: San Francisco, focus NAI and don't forget Gary Tan's coming up.
Speaker 1: Why Combinator That is one you don't want to miss.
Speaker 1: A gloomy day in San Francisco, but a beautiful show.
Speaker 1: This is Bloomberg Technology. Welcome back to Bloomberg Technology. I'm
Speaker 1: Ed Ludlow in San Francisco. Let's check in on the markets,
Speaker 1: and it is the technology sector that is powering this rebound.
Speaker 1: We're seeing inequities and as that one hundred up by
Speaker 1: more than a percentage point follows Friday and Monday session
Speaker 1: that gave us the biggest two day drop on the
Speaker 1: NAS that one hundred going back to March, even as
Speaker 1: Bonyield's kind of pushing higher up three basis points on
Speaker 1: the US tenure yield three point seventy five percent. In crypto,
Speaker 1: the story has been about bitcoin cash, this spin off
Speaker 1: from twenty seventeen. It was at a time where you know,
Speaker 1: software engineers were banking on anything with bitcoin in the
Speaker 1: name being a success. But it has become an old
Speaker 1: coin that's become popular. A one hundred percent gain in
Speaker 1: a sort of seven to nine day span, and we
Speaker 1: continue to push higher one point eight percent, trading at
Speaker 1: the highest level since May of twenty twenty two. More
Speaker 1: headlines this morning giving energy to the crypto space as
Speaker 1: well in terms of single name movers, that there's no
Speaker 1: huge focus on any one theme. We are looking at
Speaker 1: palabalto Networks hit a fresh record high three point five percent,
Speaker 1: gain two hundred and fifty two dollars a share in
Speaker 1: the AI space and now to the downside, but we've
Speaker 1: kind of clawed black some of the declines as Alphabet
Speaker 1: parent of Google Burnstein out with a note saying this
Speaker 1: was a stock that was like a warm hug, but
Speaker 1: it's time to sit on the sidelines because there are
Speaker 1: some risks about the shift from generator to generative AI
Speaker 1: that could impact its ad streams in the near term.
Speaker 1: Sit on the sidelines, but hoping to come back to it.
Speaker 1: I thought that was an interesting note, but it has
Speaker 1: impacted the shares had been much lower, now off by
Speaker 1: two tenths of one percent. Now sticking with generative AI.
Speaker 1: Zoo is rolling out access to Microsoft's Azure Open AI
Speaker 1: service this week, allowing forty five thousand employees to test
Speaker 1: out the product in its core lending unis. The firm
Speaker 1: is seeking ideas from workers in Japan on how to
Speaker 1: best use the technology. All right, let's stick with the
Speaker 1: conversation in AI. Joining us now is Joseph Miller, the
Speaker 1: co founder and chief data science scientist for Quiver, venture
Speaker 1: backed consumer app for validating and monetizing digital identity prior
Speaker 1: to Quiver. Joseph, you're a manager. You're at Bridgewater Associates,
Speaker 1: who focused on building AI decision making systems for senior management,
Speaker 1: and you also co founded viven, the world's first aipower
Speaker 1: platform for aligning sales and products in tech companies. You know,
Speaker 1: Bridgewater just a giant hedge fund, right, Ray Dalio is
Speaker 1: where my mind goes. But when you hear that story
Speaker 1: about Mazoo, another sort of financial institution on a global scale,
Speaker 1: rolling out a generative AI tool to its employees, what
Speaker 1: do you think you've been in this domain? You know
Speaker 1: how difficult it is?
Speaker 2: Yeah?
Speaker 10: I think that it's a good question. So I think
Speaker 10: that generative AI does a lot of.
Speaker 2: Things for startups.
Speaker 10: Like you know, I'm a serial entrepreneur doing these things
Speaker 10: building products. I think that it does has enabled us
Speaker 10: to do things that we otherwise weren't able to do
Speaker 10: at scale, but also brand new technologies. So like we're
Speaker 10: you know, Quivers, a series seed company, Like we're a
Speaker 10: small group who are just starting up, and you know,
Speaker 10: to be able to do the sort of generative AI,
Speaker 10: the natural language processing at scale that you're able to
Speaker 10: do now with a simple API key is pretty unbelievable,
Speaker 10: and it's allowing us to do things that are was
Speaker 10: otherwise prohibited before.
Speaker 1: We will get into Quiver in just a moment and
Speaker 1: talk about the specific use case that you're trying to crack.
Speaker 1: But when you left Bridgewater, did you consider developing an
Speaker 1: AI product or platform that could be used in the
Speaker 1: world of financial markets and financial institutions.
Speaker 10: Yes, actually so when I left, I also started working
Speaker 10: on trading algorithms of my own, mostly based in causal inference.
Speaker 2: And the biggest use case.
Speaker 10: For generative AI or really LLLM models is actually the
Speaker 10: synthesis of the amount of data that you have to
Speaker 10: crunch in order to try to understand the market right
Speaker 10: and being able to do that again, like I said,
Speaker 10: being able to do that at scale is a thing
Speaker 10: that has really only become available and possible and say
Speaker 10: the last few years.
Speaker 1: So Quiver, let's get into it. The primary artificial intelligence
Speaker 1: use case is to protect the badging process. Well, what
Speaker 1: is the badging process?
Speaker 10: That's right, so Quivers, we're trying to do something a
Speaker 10: little different with digital identity. I think that people tend
Speaker 10: to think about digital identity as like a KYC know
Speaker 10: your customer, you know, what's social security number, what's your
Speaker 10: driver's license, where do you live? This kind of stuff,
Speaker 10: And instead, what we wanted to do is focus on
Speaker 10: the more human aspects of our identity and create a
Speaker 10: platform where people can aggregate all of these different facets
Speaker 10: they have on different platforms. Right now, you know, your
Speaker 10: music preferences might sit on Spotify, maybe your lifestyle preferences
Speaker 10: are sitting in somewhere in some collection of Instagram photos
Speaker 10: and Twitter tweets and things like this, and we wanted
Speaker 10: to create a space where you could bring all of
Speaker 10: that together and represent yourself more holistically. And of course
Speaker 10: not you know, the things that make us most interesting
Speaker 10: are often not online at all, and so the question
Speaker 10: is how do you bring that online and how do you.
Speaker 2: Get that validated?
Speaker 10: And so we have this social protocol that allows people
Speaker 10: to create video and sumbod evidence that gets voted on
Speaker 10: by the community and you get validated for that way too.
Speaker 10: So for example, if you're a dog lover, like there's
Speaker 10: probably not you know, that's a silly thing, but it's
Speaker 10: a big aspect of our humanity, right, So when you
Speaker 10: put that next to say your accolades, and you know
Speaker 10: you worked at Bridgewater, but you're also a dog lover,
Speaker 10: it makes you more human.
Speaker 2: And I think a big part that.
Speaker 10: Is missing in the Internet is that aspect of our humanity.
Speaker 10: And so that's what we're trying to do. And then
Speaker 10: of course our AI use case there is this is
Speaker 10: obviously very delicate, right, we need we need a lot
Speaker 10: of trust in this space. And so again going back
Speaker 10: to like things like agent models in AI, it allows
Speaker 10: us to do to protect that authenticity and that validation
Speaker 10: process at scale in a way that was completely impossible
Speaker 10: even six months ago.
Speaker 1: Jersey, if I'm almost certain that a big portion of
Speaker 1: the Bunomberg technology audience dog glovers, It's okay, it's not silly.
Speaker 1: It's built on graph AI algorithms explain the underlying technology
Speaker 1: to me, what is the point of difference there on
Speaker 1: a graph AI algorithm.
Speaker 10: Yeah, So what we have is a sort of graph
Speaker 10: that connects all of the users and their interests and
Speaker 10: their likes, and then what we can do in that
Speaker 10: is do community detection.
Speaker 2: We can look at fraud detection.
Speaker 10: We can look at if there are bad actors in
Speaker 10: the community, if there's a group of people that are
Speaker 10: sort of taking over some sort of some some you
Speaker 10: know niche of the of.
Speaker 2: The of the badge like library, if you will.
Speaker 10: If there's things like prejudice, if there's things like you know,
Speaker 10: people trying to you know, discriminate in systematic ways. The
Speaker 10: graph allows us to suss that out and see and
Speaker 10: detect these bad actors.
Speaker 1: Joseph Miller of Quiver formerly Bridgewater, thank you so much
Speaker 1: for your time.
Speaker 2: Thank you very much.
Speaker 1: It's time for VC Spotlight, and today we're going to
Speaker 1: talk about why Combinator YC hosts two three month programs
Speaker 1: a year to help a select group of startups and
Speaker 1: founders in an accelerated program. One program runs from January
Speaker 1: through March and the other from June through August. The
Speaker 1: summer twenty twenty three batch has officially started, and for
Speaker 1: the first time since the pandemic YC is hosting the
Speaker 1: group in person and all in the Bay Area. Of
Speaker 1: the four thousand startups yc's funded since two thousand and five,
Speaker 1: many have become household names, including Airbnb and Stripe. Joining
Speaker 1: us to discuss Gary Tan, the CEO of y Combinator,
Speaker 1: Welcome to Bloomberg Technology. It's great to have you here
Speaker 1: in person. Thank you so much for having me in
Speaker 1: San Francisco, indeed in the epicenter of tech. And we
Speaker 1: will get to that. And that is your message to
Speaker 1: this class of Summer twenty three. Why so insistent that
Speaker 1: this group be here in person?
Speaker 6: Absolutely so.
Speaker 11: As you know, hy Combinator funds people at the earliest
Speaker 11: possible stage, sometimes when it's literally just an idea and
Speaker 11: a couple co founders, and so really in order to
Speaker 11: go from zero to one, to create something that has
Speaker 11: never existed before. There's nothing like having the energy of
Speaker 11: people in person, not just right next to each other,
Speaker 11: writing the code and shipping it to users. You know
Speaker 11: that you could do from any living room or any
Speaker 11: bedroom in the world. There's something special about hundreds of
Speaker 11: founders coming together and actually helping each other. And that's
Speaker 11: really why YC has been so successful over the number
Speaker 11: of years.
Speaker 1: Really we're the same Bay area, but really the message
Speaker 1: from you is San Francisco.
Speaker 11: Yeah, I think San Francisco in particular, what the AI
Speaker 11: boom is really about Cerebral Valley, which we call Hayes Valley,
Speaker 11: right down the street. There's something very special happening here
Speaker 11: where literally the foundational models, the open source, the smartest
Speaker 11: people in the world are sitting in those cafes. You're
Speaker 11: having discussions not just about starting their companies, but also
Speaker 11: what is the cutting edge of what these AI models
Speaker 11: can do.
Speaker 1: Let's go through the mechanics of it. You know, the
Speaker 1: initial investment pledge is five hundred thousand US dollars to
Speaker 1: each of the startups and then a three month program,
Speaker 1: you know, going through the operational side of things. But
Speaker 1: what happens in that time.
Speaker 11: Absolutely, I think the most important thing that's crazy to
Speaker 11: me is the people who start these companies. They are
Speaker 11: the most eminent of all of the people who could
Speaker 11: be starting companies at that moment. So we had more
Speaker 11: than twenty four thousand applications for about two hundred and
Speaker 11: forty spots.
Speaker 1: Twenty four thousand was a record, that's right.
Speaker 11: So our acceptance rate was just under one percent, which
Speaker 11: it's never been as selective as today.
Speaker 6: But that means that those.
Speaker 11: People in that room, they actually go on to become
Speaker 11: the most eminent people in startup them.
Speaker 1: Sorry to interrupt, but what does that day to represent
Speaker 1: If you had the most applications on record and you're
Speaker 1: accepting the fewest on record, what does that tell you
Speaker 1: about the big picture of this economy?
Speaker 11: Well, I think at the end of the day, we're
Speaker 11: trying to set these founders up for success, and so
Speaker 11: you know, if there is ongoing high interest rates, one
Speaker 11: of the things that we're really trying to focus on
Speaker 11: is how do we make sure the founders we do
Speaker 11: fund are the people who are most likely to go
Speaker 11: on and succeed. And so in a time of cheap capital,
Speaker 11: that means that maybe we can fund more people. In
Speaker 11: a time of more distress like right now, we have
Speaker 11: to be much more mindful of what are those businesses
Speaker 11: and can we see really great revenue, great gross margin.
Speaker 11: And that's one of the big reasons why today we
Speaker 11: launched our Top Companies list that's on our website.
Speaker 1: Today we can discuss the Top Companies list. I think
Speaker 1: I want to go back to the mechanics, because what
Speaker 1: surprises so many people, whether you cool why combinator, an accelerator,
Speaker 1: or an incubator, it's just a three month program. How
Speaker 1: can you get anything done in that time?
Speaker 11: Well, I think the cool thing that I get to
Speaker 11: do is I get to work with twelve of some
Speaker 11: of my closest friends who are known as group partners.
Speaker 11: And the big thing that's different now is actually as CEO,
Speaker 11: I am actually also a group partner, So we actually
Speaker 11: have thirteen people working with the companies.
Speaker 6: And so these are some.
Speaker 11: Of the people who literally work with these top revenue
Speaker 11: and top valuation companies from the zero to one stage,
Speaker 11: literally a few people just starting out. For me, I
Speaker 11: got the privilege of working with Apor Vimetta from Instacart,
Speaker 11: or Brian Armstrong from Coinbase, or Kyle Vote from Cruz Automation.
Speaker 11: These are all companies that have gone on to sort
Speaker 11: of change both their industry but also tech broadly. But
Speaker 11: I can't tell you how crazy it is to meet
Speaker 11: people when it's literally a YC application on the web.
Speaker 11: And that's really I think one of the great innovations
Speaker 11: of our time that Paul Graham, the founder of YC
Speaker 11: came up with here's this website where you go to
Speaker 11: y combinator, dot com slash apply and anyone with an
Speaker 11: idea anywhere in the world on the internet can apply
Speaker 11: and someone will go and read it, and our community
Speaker 11: will figure out, hey, should this person be a part
Speaker 11: of our community.
Speaker 1: Of the twenty four thousand that applied and then the
Speaker 1: two hundred and forty that were accepted, I guess the
Speaker 1: question goes to, like, what do they have in common?
Speaker 1: Or paradoxically, are any of them not AI companies?
Speaker 11: Oh yeah, so actually only thirty five percent of the
Speaker 11: companies in this batch are specifically AI focused. I'd say
Speaker 11: maybe half of them have some AI component. YC has
Speaker 11: always been generalists, you know. That's how YC was able
Speaker 11: to fund coinbase, really even years before anyone he'd even
Speaker 11: heard of bitcoin. And I think the key message here
Speaker 11: is that the best people in the world to sort
Speaker 11: of create these startups are actually the technologists, the builders,
Speaker 11: who are just a few people writing lines of code.
Speaker 6: It's a very fringe thing, and what YC does is
Speaker 6: take people who otherwise would.
Speaker 11: Be on the fringe, but they're some of the most
Speaker 11: technically and engineering wise brilliant people in the world, and
Speaker 11: you know, we sort of teach them how the pieces move.
Speaker 11: You know, we teach them chess the part of, you know,
Speaker 11: building a business that frankly is the easier part to
Speaker 11: being highly technical and being on the cutting edge of
Speaker 11: what's happening in technology.
Speaker 1: Gary, how do you ensure you've got the funds to
Speaker 1: deploy every year for two programs? Is there's still LP
Speaker 1: interest in backing you? Absolutely?
Speaker 11: I Mean one of the amazing things about YC is
Speaker 11: if you look at every single top venture capital firm
Speaker 11: in the world, pretty much all of them have a
Speaker 11: YC company that is either on their homepage or often
Speaker 11: multiple of them that have become fund returners for those
Speaker 11: VC funds.
Speaker 1: So to me, states becoming LPs in themselves. I mean,
Speaker 1: where are you getting the funds from?
Speaker 2: Oh?
Speaker 11: And really speaking, all the same kind of limited partners
Speaker 11: that you would expect in venture capital.
Speaker 6: And that makes sense because YC to me is actually.
Speaker 11: The fountain of prosperity for this type of activity in
Speaker 11: the world.
Speaker 1: Two pieces of news. So we've got through the class
Speaker 1: of summer twenty twenty three. You're also publishing this list
Speaker 1: of the top net revenue generating companies you backed in
Speaker 1: twenty twenty two, private or otherwise. Why, I mean, those
Speaker 1: are two different scales, ends of the scale.
Speaker 10: Ye.
Speaker 11: The reality is, and this is no news to anyone.
Speaker 11: Twenty twenty one was such an extreme sort of time
Speaker 11: and one of the things that we became very concerned
Speaker 11: about because we actually want to be a bellweather of
Speaker 11: trying to teach the next generation what they should focus on.
Speaker 11: There was this over reliance on thinking about what's my
Speaker 11: next round. The fast money meant that you were going
Speaker 11: to chase top line growth at all costs, and of
Speaker 11: course now we're on the other side of a very
Speaker 11: deep hangover about that, and so we thought, how do
Speaker 11: we as a community put forward the things that founders
Speaker 11: and people who are sort of creating this technology, what
Speaker 11: should they.
Speaker 6: Be thinking about? And right now you know, now more
Speaker 6: than ever, it's about gross margin.
Speaker 11: It's actually about net revenue sort of one of the
Speaker 11: things I'm calling it is literally edible revenue. And one
Speaker 11: of the wild things now just can you pay people?
Speaker 11: Can you pay salaries? Can you actually run your operations
Speaker 11: on this revenue? And what's funny is looking at the
Speaker 11: different financial and accounting sort of shenanigans that people pull
Speaker 11: often it's about sort of hiding this number. So I
Speaker 11: think maybe we should make this an industry standard, like
Speaker 11: should you know whether or not it's a marketplace or
Speaker 11: you know, there are lots of different specific accounting rules
Speaker 11: for specific comps.
Speaker 6: But why is that.
Speaker 11: Shouldn't we just use one metric that actually will allow
Speaker 11: founders to make the right decision, which is to build
Speaker 11: great sustainable companies and know that they can grow over
Speaker 11: the long term.
Speaker 1: We should talk about San Francisco and where to build
Speaker 1: for the long term. I mean, your position on this
Speaker 1: city is well known, but as of today, where is
Speaker 1: your head at?
Speaker 6: Yeah?
Speaker 1: Absolutely, you know.
Speaker 11: The great thing about San Francisco to me is that
Speaker 11: it gave me everything I have. I learned a code
Speaker 11: in the city, taking bart into Petrero Hill in Web
Speaker 11: one point zero, I learned how to make database backed websites.
Speaker 11: And what I realize is San Francisco and the Bay
Speaker 11: Area is the place that is a magnet for all
Speaker 11: of the most technical people in the world. And when
Speaker 11: you have those type of agglomeration effects, when you have
Speaker 11: all the smartest, most brilliant, most driven people in the
Speaker 11: world coming here, of course they're going to create wealth.
Speaker 1: But we have problems as well, and you've been very
Speaker 1: vocal acknowledging them absolutely. And I guess where my question
Speaker 1: goes is how much more deeply you would be involved
Speaker 1: in political cycles, putting money into initiatives and candidates, yourself
Speaker 1: being involved in politics.
Speaker 11: Well, some of my friends started an organization called growsf
Speaker 11: which is one of the most important things. How do
Speaker 11: we take really some of the smartest people who have
Speaker 11: created this wealth, and how do we have an impact
Speaker 11: that's positive on our local economy. We want that wealth
Speaker 11: to actually be shared with everyone. I think a lot
Speaker 11: of people criticize tech and tech people broadly as sort
Speaker 11: of ann Randian libertarians, and speaking for myself and my friends,
Speaker 11: you know we're not Randians where Gene Roddenberry type of
Speaker 11: Gene Roddenberry is sort of.
Speaker 6: Our spiritual future.
Speaker 11: You know, what we believe is Starfly The Academy was
Speaker 11: in San Francisco for a reason, and we can actually
Speaker 11: build San Francisco into San Francoccio if we actually have
Speaker 11: the right policies and the right politicians in place. And
Speaker 11: in November of twenty twenty four, I think.
Speaker 6: If you follow grows up. You'll see our plan to
Speaker 6: make that happen.
Speaker 1: This is the first opportunity I've had speech to you
Speaker 1: since the collapse of Silicon Valley Bank, and the commonality
Speaker 1: with y Combinator is that SVB was often the first
Speaker 1: institution to write a check. Bloomberg reported last week that
Speaker 1: the FDIC had mistakenly released this document to our news
Speaker 1: organization that revealed the backstop on all depositors with balances
Speaker 1: exceeding two hundred and fifty thousand was also inclusive of
Speaker 1: Sequoia and many large tech startups that didn't need it. Frankly,
Speaker 1: and you were an advocate for that initiative in the
Speaker 1: first place, on the smallert side of things. What's your
Speaker 1: kind of thoughts on that and reaction?
Speaker 6: Absolutely, you know, I.
Speaker 11: Think the hard part about SVB is that it really
Speaker 11: did hit the little guy. You know what I realized
Speaker 11: for us, you know, YCS fun over four thousand companies,
Speaker 11: and of course the top one hundred, top two hundred
Speaker 11: are some of the biggest names that you could think of.
Speaker 11: But what the backstop was really about was saving the
Speaker 11: tens of thousands of small and medium sized businesses that
Speaker 11: literally would not be able to make payroll. And I
Speaker 11: think this fact coming out doesn't change any of that.
Speaker 11: We would have set back technology perhaps five years, perhaps
Speaker 11: a decade if you just suddenly killed at a very
Speaker 11: early stage of company. And so you know, I hear
Speaker 11: that argument, but the truth remains that there were hundreds
Speaker 11: of thousands of jobs that were saved.
Speaker 6: In that moment.
Speaker 11: And I think the FED and the FDIC and the
Speaker 11: people in charge they did the right thing.
Speaker 1: Gary. When I think of you, I think have also
Speaker 1: about initialized and you returned to YC in January. You
Speaker 1: were the key man alongside Alexisanian and you've kind of
Speaker 1: come back to y see quickly. How did that conversation
Speaker 1: go with LPs of analized? And is it now just
Speaker 1: all alexis initialized?
Speaker 11: Oh so alexis left to start his own fund called
Speaker 11: seven Semi six a number of years ago.
Speaker 6: The new managing partners are Brett Gibson and Jen Wolf.
Speaker 6: They've done an incredible job.
Speaker 11: I mean, the number one thing I love is that
Speaker 11: in venture, the best and highest to me is not
Speaker 11: to elevate a single person, but to really create an
Speaker 11: institution that lasts well beyond anyone who sort of started
Speaker 11: the business. And you know, I looked at Paul Graham
Speaker 11: and Jessica Livingston who created YC for us. They're still there,
Speaker 11: but they made space for what is now an institution,
Speaker 11: and I am merely the steward of that institution going forward.
Speaker 1: Why you comminated to see you, Gary Town was so
Speaker 1: grateful for your time here in San Francisco. This is
Speaker 1: going viral. Taylor Swift's Eras Tool is on track to
Speaker 1: become the biggest in concert history. It could potentially gross
Speaker 1: over a billion dollars that milestone or break the record
Speaker 1: for global concert tours currently held by Elton John followed
Speaker 1: by Ed Sheeran. Swift will play one hundred and six
Speaker 1: contexts by next summer, including fifty four shows over seats.
Speaker 1: There does it, guys, for this edition of Bloomberg Technology,
Speaker 1: so much to recap. Don't forget the podcast. Wherever you
Speaker 1: get yours, Apple, Spotify, iHeart, and of course Bloomberg from
Speaker 1: San Francisco. This is Bloomberg Technology.