Speaker 1: From Mahard where Innovation, money and power. Collie in Silicon
Speaker 1: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: Ed Ludlove.
Speaker 2: I'm Caroline Heinder Bloomberg's World. I Callders in New York.
Speaker 2: Ed Ludlow He's back tomorrow. This is Bloomberg Technology coming up.
Speaker 2: Full earnings coverage ahead from Google to Microsoft a snap,
Speaker 2: we have got you covered. Plus we'll take a deep
Speaker 2: dive into the current state of social media as Elon
Speaker 2: Muskun veils his grand vision to turn Twitter into x
Speaker 2: into a one stop shop for financial services. Plus we'll
Speaker 2: stick with social media and push your head to Meta's
Speaker 2: earnings out after the bell today. How have those cost
Speaker 2: cutting initiatives impacted the bottom line? We'll discuss it all first. Alphabet, Microsoft,
Speaker 2: some key movers on the benchmarks today. Dive into each
Speaker 2: micro picture and please to say that Daniel Newman of
Speaker 2: the Future and Group is here with our CEO and
Speaker 2: Dania's always great to have some time with you. And
Speaker 2: let's dig into Alphabet first, because it was a good
Speaker 2: set of numbers. Is this a relief rally or is
Speaker 2: this actually signs of progress? And really AI is starting
Speaker 2: to work in their favor.
Speaker 3: Well, I think there was a lot of concern when
Speaker 3: Microsoft first hit with chat, GPT open AI being is
Speaker 3: this going to start taking market share away from where
Speaker 3: Google makes its money and so Cloud, you know, was
Speaker 3: starting to make a little money and all of a
Speaker 3: sudden people are like, ooh, Cloud's starting to make money,
Speaker 3: but his search.
Speaker 1: All of a sudden getting get hit.
Speaker 3: I think we saw with what they were able to
Speaker 3: do with deep mind and brain getting their palm model,
Speaker 3: getting you know, uh, you know, the search generative search
Speaker 3: into market Caroline that effectively they're going to be stable.
Speaker 3: And now you can see what happens today is people
Speaker 3: are looking at Microsoft and saying, was the first move
Speaker 3: truly giving them an advantage?
Speaker 2: Yeah? Interesting. I mean we understand there's reports even that
Speaker 2: Segei Brin's come back into the fold much more, helping
Speaker 2: drive the AI focus for over at Alphabet, But talk
Speaker 2: to us about market share, particularly around cloud, because it
Speaker 2: feels as though azure is the area that everyone's slightly
Speaker 2: worried about. With Microsoft that ramp up the double digits
Speaker 2: rule got so used to just cooling down a little bit.
Speaker 2: Is Alphabet taking any of that.
Speaker 3: Well, they're taking a little bit because you saw they
Speaker 3: had about a twenty eight percent growth this quarter. Microsoft
Speaker 3: was just a little bit less than that, and anytime
Speaker 3: that Google outpaces Microsoft, it means small bits of micro
Speaker 3: market share. Now, having said that, there's a lot of
Speaker 3: large numbers, Azure did reveal some of its size, said
Speaker 3: about one hundred and ten billion in cloud, about half
Speaker 3: of that being Azure I believe were the numbers they
Speaker 3: put out, So they finally revealed a little bit of
Speaker 3: what their cloud market looks like. I mean, Google's you know,
Speaker 3: sub ten tennich billion dollars this quarter in revenue for
Speaker 3: the cloud business, so it's still a bit smaller.
Speaker 1: And so you know, remember when AWUS was growing. They're
Speaker 1: up to eighty.
Speaker 3: Billion dollars in revenue at plus annually. These differences are
Speaker 3: hard to make up, so when you're young and you're
Speaker 3: growing fast care line. Having said that, I think Googles
Speaker 3: has some momentum. I think their AI play is really
Speaker 3: starting to pay off. So they came in late. But
Speaker 3: people are saying, well, you didn't have to be early
Speaker 3: in this case, because we're seeing how quick things are.
Speaker 2: Catching up and whether they were technically late or whether
Speaker 2: they were just being more cautious about a rollout, realizing
Speaker 2: the power that they ultimately have in the in the community,
Speaker 2: their size, their scale. I'm interested in AI more broadly.
Speaker 2: It's interesting here in New York today. I think AWS
Speaker 2: is showing off its AI prowess. How much is AI
Speaker 2: going to drive cloud ad option more broadly, Well.
Speaker 3: It's going to be significant across the board. We saw
Speaker 3: Azure and then Microsoft with Dynamics three sixty five rollout,
Speaker 3: some pricing companies like SAP, companies like Salesforce, they're all saying,
Speaker 3: you want our best AI features, You're going to have
Speaker 3: to use our services in the cloud. And so different
Speaker 3: companies like in SAP, you don't have a hyperscale cloud,
Speaker 3: so you have to use an Azure, or you have
Speaker 3: to use an AWS Salesforce. You have to use their
Speaker 3: service to get the best AI options. And we're seeing
Speaker 3: the market. You know, we've done some recent market forecasting Carolina.
Speaker 3: We see this market growing by about threefold over the
Speaker 3: next five years.
Speaker 2: What exact market we're talking cloud adoption market head.
Speaker 1: We're seeing the AI market.
Speaker 3: So we see about a sixty billion dollar market right now.
Speaker 3: Our future and forecast for five years out twenty twenty
Speaker 3: seven shows almost one hundred and eighty billion. This is
Speaker 3: in hardware, platforms software, So this is you know, a
Speaker 3: twenty two percent or so growth rate, which is big,
Speaker 3: but for how much AI.
Speaker 1: I actually think it's going to be quite a bit bigger.
Speaker 3: And I think some of this forecast is there's still
Speaker 3: a bit of conservatism. I think people are a little
Speaker 3: bit past the hype. Are they using the services? You know,
Speaker 3: I was using barred like crazy, I was using GPT
Speaker 3: and I found myself carrying over the last you know,
Speaker 3: a couple of weeks to month, almost like I'm not
Speaker 3: using them quite as much, so has a luster worn off?
Speaker 3: Or now we're starting to see it applied into tools,
Speaker 3: and that's where it's going to really start to pay
Speaker 3: off in our CRM, in our search when we're actually
Speaker 3: using these things for business and enterprise purposes.
Speaker 2: Dan, can you when you're looking at modeling that out
Speaker 2: for the next five years, what are you using as
Speaker 2: price points? And we're only starting to see what a
Speaker 2: Microsoft would charge if you're going to adopt some of
Speaker 2: their overall being AI within the enterprise thirty bucks a month. Additional,
Speaker 2: how are you seeing companies charge for this, and how
Speaker 2: do you forecast that forward?
Speaker 1: Well, so here's the thing.
Speaker 3: The MODELINGUE is incredibly complicated because you have the modeling
Speaker 3: of things like hardware, where we have quite a bit
Speaker 3: of clarity whether it's an Nvidia, Intel AWS selling infrastructure.
Speaker 3: And then you have software. We have companies that are
Speaker 3: kind of saying, hey, we're going to give this away.
Speaker 1: You know, we're going to.
Speaker 3: Just include this because it's how we protect our moat.
Speaker 3: And then you had Salesforce that showed a really rich
Speaker 3: pricing and said we have a ton of features across
Speaker 3: service marketing, sales Cloud, and you're going to pay a lot,
Speaker 3: but it's going to be very, very feature rich, and
Speaker 3: it's going to be incremental. I think where Microsoft has
Speaker 3: a good play here is that they're going to be
Speaker 3: able to put all these copilots into every part of
Speaker 3: their business. And they charged twenty thirty, but remember they
Speaker 3: have hundreds of millions of users, so even small incremental
Speaker 3: gains across their product portfolio are going to drive it north.
Speaker 3: So I think the reaction today, I mean if I
Speaker 3: was an investor and I was looking at the reaction today,
Speaker 3: I would say it's a little bit of an overreaction.
Speaker 3: But look at how which these companies have run and
Speaker 3: you know, we're resetting. We're saying this AI thing was
Speaker 3: a lot of hype. It's not only hype. It is
Speaker 3: going to be real. But in the long run, the
Speaker 3: way this rebalances companies incremental revenue is going to take
Speaker 3: a little more time to play out.
Speaker 2: And when you looked at that five year forecast, when
Speaker 2: you're thinking of what was it one hundred and eighty
Speaker 2: billion being added? Does that vindicate the sort of valuation
Speaker 2: increases that we have seen so far, or do you
Speaker 2: think they've got ahead of themselves.
Speaker 3: I think the market is early, but it's very indicative
Speaker 3: of where we're going. You can't possibly see tools like
Speaker 3: supply chain management tools HR and hiring tools and see
Speaker 3: how AI could help us get to the right candidate,
Speaker 3: you know, streamline getting product into market. Everything here is
Speaker 3: about productivity gains. And when you think about productivity gains,
Speaker 3: you think about earnings increases, and you think about what
Speaker 3: the market is driven by. It's driven by can a
Speaker 3: company make more money in the future. All these tech
Speaker 3: companies have big bets on AI and we're seeing kind
Speaker 3: of the winners get separated. The companies that are going
Speaker 3: to lag in industries like real estate and oil and gas,
Speaker 3: that's what we're seeing from an AIU standpoint, are going
Speaker 3: to be the ones that are going to be harder
Speaker 3: to invest in. So in every field, what investors need
Speaker 3: to really be looking for is which companies are going
Speaker 3: to see these incremental and then exponential gains because they're
Speaker 3: going to be able to put AI to use.
Speaker 2: And is it from Microsoft, from Alphabet, from Amazon that
Speaker 2: those sectors adopt from or is it more bespoke focused
Speaker 2: AI tools. So we're actually seeing more fun and in
Speaker 2: the venture space right now.
Speaker 1: Well, I think it's going to be partnerships.
Speaker 3: So I think you've seen Jensen Wong of Nvidia out
Speaker 3: announcing partnerships with pretty much every tech company. You see
Speaker 3: him out in healthcare, you see him talking with financials,
Speaker 3: and then of course he's partnering with Hyperscale.
Speaker 1: Cloud providers, SaaS providers.
Speaker 3: You know him and Bill McDermott, we're on stage together
Speaker 3: at the Service Now event.
Speaker 1: I think there's a lot of collaboration.
Speaker 3: I do think vertical specific AI turnline is going to
Speaker 3: be tremendously opportunistic because knowing real estate.
Speaker 1: Knowing retail, you're going to have to build solutions.
Speaker 3: There's too many options, too much optionality of how to
Speaker 3: build an AI solution. People are going to want it
Speaker 3: in a box, just like we wanted CRM or HR
Speaker 3: management solutions. They're not going to want to try to
Speaker 3: build it from scratch, and we've seen that change in
Speaker 3: just a couple of months.
Speaker 2: Dan, great to get some mos of tees. Thank you
Speaker 2: running on over here in a very hot New York.
Speaker 2: Damn newman of the future and group. Great to have
Speaker 2: him on site. Mean, while coming up, look Snap plunging
Speaker 2: after its sales forecast disappoints. We're going to have much
Speaker 2: more next with jument Emburg of Insider Intelligence. Plus, I mean,
Speaker 2: we've got to talk more broadly about the social media space,
Speaker 2: the giant that is Meta reporting earnings after the bell today. Yes,
Speaker 2: there's been the hype about threads, but what about the
Speaker 2: reality of their financial discipline, what about the clampdown on costs?
Speaker 2: This is Bloomberg Technology. Let's talk product now. Samsung unveiling
Speaker 2: it fifth generation of foldable smartphones today, seeking to counter
Speaker 2: a sluggish market for devices and outcoming rival products coming
Speaker 2: from Apple. Some Sung's executive vice president and head of
Speaker 2: Customer Experience Officer Mobile Experience Business. It's quite a long titled.
Speaker 2: As Patrick Truman, he's work exclusively Bluemang News in Seul.
Speaker 2: Just take a listen.
Speaker 4: Before these designed for productivities, we enlarge the ecosystem with
Speaker 4: a range of new application developers in the productivity domain.
Speaker 4: And the multitasking has improved with the taskbar, and that
Speaker 4: is because we have this incredible performance and AI capability
Speaker 4: with the new processor.
Speaker 5: Some Song has this open collaboration environment where like a
Speaker 5: culture for Galaxy, and like Google is part of it,
Speaker 5: and Microsoft and Meta and like they all have some
Speaker 5: kind of agendas to have their own generative AI tools.
Speaker 5: And now that Apple is joining the race, is there
Speaker 5: any like some songs efforts to do it.
Speaker 4: So there is a lot of intelligence and AI at
Speaker 4: play already in many parts of our devices. As said,
Speaker 4: we are working with Google on the partnership for a
Speaker 4: long time and we have a culture to foster the
Speaker 4: innovation together.
Speaker 5: Chinese smartphonemakers like I'm Shoo, me Opo and o'hawe, they're
Speaker 5: all rolling out their own version of voldoble phones with
Speaker 5: cheaper prices. Is there any chance that someone would like
Speaker 5: to provide more foldable prices for foldable users, let's say
Speaker 5: in India or China in the near future.
Speaker 4: Some analysts predict the market to grow beyond one hundred
Speaker 4: million units by twenty twenty seven. In the next three years,
Speaker 4: we really expect to capture a large part of the growth.
Speaker 4: Right now, I can say it's a growing category and
Speaker 4: what dies the appeal the pool is actually quality. It's
Speaker 4: quality and innovation.
Speaker 5: And is there a chance that you're going to add
Speaker 5: more feature about the flip after the fifth generation.
Speaker 4: On the software on the xperiancede, we continue to improve
Speaker 4: many mini experiances with are intelligions coming in more so
Speaker 4: there it's just the beginning. I would say we are
Speaker 4: still at the beginning of a new ar and we
Speaker 4: are very excited about.
Speaker 2: The potent voldable phones now about five percent of the market.
Speaker 2: We understand Samsung's executive vice president and the head of
Speaker 2: customer Experience, that's Patrick Trumman. The Bloomberg's Sue Kim. Let's
Speaker 2: return now to where AI has perhaps been taking away
Speaker 2: a little bit from the bottom line. We're going to
Speaker 2: talk snap right now, tumbling today, after the social media
Speaker 2: company reported well second quored results that gave revenue outlooks
Speaker 2: a little bit weaker than expected, even as it continues
Speaker 2: to invest in new ways you can be advertising on
Speaker 2: the platform. Let's talk about the earnings, and we're broadly
Speaker 2: about social media landscape. Jasmine mbugs with us lead coverage
Speaker 2: of influencer marketing and social commerce and insider intelligence. Of
Speaker 2: course you look at Snapchat, you also look at TikTok, Instagram, YouTube, Twitter,
Speaker 2: now x Facebook will get onto all of them. But jusmin,
Speaker 2: I mean Snap always does this. It feels like it
Speaker 2: has pretty volatile reaction to earnings and often to the downside.
Speaker 2: Is there hope that in the forward looking future we
Speaker 2: will start to see well benefits of the investments they made.
Speaker 6: Yeah, well, Snap is clearly not out of its revenue
Speaker 6: slump yet, and prior to earnings yesterday, I had said
Speaker 6: that its ad business wouldn't start to turn around until
Speaker 6: at least the second half of this year, and now
Speaker 6: it's looking like Q four at the earliest. But despite
Speaker 6: the weak guidance for Q three, there were plenty of
Speaker 6: bright spots to look to, and its earnings, Snap made
Speaker 6: all of the right moves. During Q two, it worked
Speaker 6: to strengthen its user base, diversify its revenue streams, and
Speaker 6: improve on its ad platform. We saw a couple of
Speaker 6: positive signs already from those efforts, including in the number
Speaker 6: of active advertisers as well as advertiser retention. There's clearly
Speaker 6: still a lot of work to do, and efforts to
Speaker 6: diversify its revenue streams through Snapchat Plus, for example, will
Speaker 6: take time to actually have an impact on its bottom line.
Speaker 6: And my AI is where I'm most hopeful for Snap's
Speaker 6: business in the future, because it really does or has
Speaker 6: the potential, to give Snapchat access to first party data
Speaker 6: that it can use to serve more relevant content and
Speaker 6: advertising across its surfaces, and actually making up for some
Speaker 6: of those lost signals from Apple's privacy changes.
Speaker 2: Interesting that, of course, a subscription model therefore still to
Speaker 2: bear fruit. What's interesting is well, other companies have started
Speaker 2: to do subscription models, and we think of the way
Speaker 2: in which Twitter now X is trying to monetize, trying
Speaker 2: to make up for some advertising weakness, to the tune
Speaker 2: of fifty percent, what have you been making of social media?
Speaker 2: More broadly, the competition, the fact that everyone seems to
Speaker 2: be on each other's toes. Can you just talk about
Speaker 2: X and the rebrand for a moment, What do you
Speaker 2: make of it?
Speaker 7: Well?
Speaker 6: Absolutely, I mean, first of all, there is a ton
Speaker 6: of competition in social media. That's another reason, of course
Speaker 6: why Snap continues to struggle. But with X and the rebrand,
Speaker 6: I mean, it was a massive moment for social media.
Speaker 6: It really truly is the end of an era. I mean,
Speaker 6: Twitter is an incredibly recognizable brand. The word tweet is
Speaker 6: part of the public consciousness, but the rating was also
Speaker 6: on the wall here. I mean, Musk has been very
Speaker 6: vocal about transforming Twitter into X. I think the timing
Speaker 6: in some ways was right. You know, Musk is a
Speaker 6: master of media, and he may have wanted his news
Speaker 6: cycle back, but that that's not to say that this
Speaker 6: wasn't coming. The question now is, though, you know, there's
Speaker 6: obviously a vision for X, but what is the strategy
Speaker 6: behind it?
Speaker 2: Does he truly have one?
Speaker 6: Because super apps, of course, are unproven in most of
Speaker 6: the Western world, including in the.
Speaker 2: US, Can you tell us a little bit about super apps?
Speaker 2: It feels like maybe everyone's trying to build them right now.
Speaker 2: I mean, of course, in the past what's interesting about
Speaker 2: X is there's a real focus on payments that are
Speaker 2: going forward, and we know that, you know, Musk, that's
Speaker 2: where it's made a fortune to begin with this PayPal,
Speaker 2: But PayPal can never quite make the cross that rubicon
Speaker 2: in terms of actual banking services. You look at how
Speaker 2: meta originally Facebook was looking at its own payments infrastructure
Speaker 2: and wipe that away. And then it feels like TikTok
Speaker 2: is starting to get in on the text based communication
Speaker 2: as well. Is everyone eventually going to try and go
Speaker 2: for some sort of we chat model.
Speaker 6: Well, it looks like everybody wants to do a little
Speaker 6: bit of everything, right, but with the we chat model
Speaker 6: in particular, I mean that is one that Musk has
Speaker 6: pointed to for you know, over a year now. And
Speaker 6: the reason why super apps really haven't taken off in
Speaker 6: the US is one, you know, we have established habits,
Speaker 6: We are used to doing different activities in different apps,
Speaker 6: and it is incredibly difficult to change consumer behavior. There's
Speaker 6: also a lot of privacy concerns, especially when you move
Speaker 6: into things like payments and financial services. People have to
Speaker 6: hand over a lot of personal and payment information and
Speaker 6: they're not necessarily willing to do that, especially on a
Speaker 6: social media platform. In some ways, I understand the rebranding
Speaker 6: as Musk is trying to move towards this exhivision of
Speaker 6: a super app, because it does distance the company from,
Speaker 6: you know, the problem that did exist at Twitter before.
Speaker 6: But there's a lack of trust and Musk itself himself too.
Speaker 6: And X of course is a new company or a
Speaker 6: new brand that really doesn't have that same kind of recognition.
Speaker 2: But they do actually have a CEO who's very well
Speaker 2: known within the spending market area, and Lindi Akarino doing
Speaker 2: her best to navigate X as Zeno Musk does appear
Speaker 2: from the outside looking in very much still calling the shots.
Speaker 2: How much do you think, just in general, were at
Speaker 2: some sort of bottom when it comes to advertising sentiment
Speaker 2: here because I asked report at that of Alphabet and
Speaker 2: she didn't really want to make any sort of call there.
Speaker 6: Well, one of the biggest challenges Linda Yakarino was always
Speaker 6: going to have was balancing Musk's vision for the platform
Speaker 6: with what Twitter users and advertisers want. You know, it
Speaker 6: was never going to be an easy job, even for
Speaker 6: somebody with as much experiences as Yakarino. I think that
Speaker 6: early optimism that you know a lot of people had,
Speaker 6: including myself after her appointment, has faded and is mostly gone.
Speaker 6: At this point, we can tell that, you know, Elon
Speaker 6: Musk is very much still calling the shots, and publicly
Speaker 6: she hasn't said much more than applaud many of these
Speaker 6: changes and his vision. Of course, you know, the Twitter's
Speaker 6: ad revenue struggles are very very well documented and there
Speaker 6: hasn't been much movement in a more positive direction, and
Speaker 6: it's going to be even more difficult to do so now.
Speaker 2: In Cider Intelligence, principal analyst Jasmine Enberg, it is such
Speaker 2: a busy space and you're always so clear thinking and
Speaker 2: click out about it. We appreciate it a lot. From
Speaker 2: New York.
Speaker 8: It's a blue meg technology.
Speaker 9: I've always been a person who's just been attracted to hair.
Speaker 9: I like to sit and think and theorize how I
Speaker 9: can manifest these visions that I have for braiding, and
Speaker 9: how I can take something that may seem like it's
Speaker 9: a line drawing in my mind and apply that to
Speaker 9: someone's scalp.
Speaker 10: We are the only culture that has hair that grows
Speaker 10: out of our head the way that it does anyone
Speaker 10: from the African diaspora is born with this amazingly curly
Speaker 10: hair that can be shaped into a variety of different
Speaker 10: ways of expression.
Speaker 9: I want Black people to love themselves for how they
Speaker 9: naturally appear, and also to appreciate the cultural practices such
Speaker 9: as braiding, that our ancestors have practiced for centuries.
Speaker 2: It's time now for work shifting, where we look at
Speaker 2: the changing landscape for the labor market amid advances in technology,
Speaker 2: and we therefore to look at how the head of
Speaker 2: the largest US private sector union, Teamsters is turning his
Speaker 2: attention to e commerce giant Amazon.
Speaker 11: Amazon's definitely going to be a target to organize. We're
Speaker 11: going to take this historic agreement and use it as
Speaker 11: a temple to show the Amazon workers what they will
Speaker 11: receive when they join the team Stite union and we
Speaker 11: organize them.
Speaker 2: Of course, this comes just hours after reaching a tentative
Speaker 2: deal to boost pay and benefits for hundreds of thousands
Speaker 2: of UPS workers. Brilliant plus, Google, the Microsoft, and Open
Speaker 2: Ai are launching a safety model for artificial intelligence. The effort,
Speaker 2: called the Frontier Model Forum, aims to consolidate the expertise
Speaker 2: and member companies and create new AI industry standards meanwhile,
Speaker 2: and is planning a restructuring now. The jackmar backed company
Speaker 2: is looking to break off its blockchain and overseas units
Speaker 2: to pave a way for its revival of an initial
Speaker 2: public offering, and that's likely to be down out of
Speaker 2: Hong Kong rather than that duel listing that was initially
Speaker 2: targeted in Shanghai and Hong Kong. That of course comes
Speaker 2: over after a change of ownership that prevents them doing
Speaker 2: that in Shanghai for at least three years. Meanwhile, coming up,
Speaker 2: part of the Elon Musk grand vision to rebrand Twitter
Speaker 2: into an everything app includes pushing into financial services. We're
Speaker 2: just talking about with Jasmine Enburg, but let's talk about
Speaker 2: whether he can really succeed where some other tech giants
Speaker 2: have failed to really bring on board the banking services
Speaker 2: within a social media company. Plus, watching shares at teledoc,
Speaker 2: this shares absolutely surging well a quarter for their entire
Speaker 2: market cap today, best move since February twenty twenty. The
Speaker 2: virtual healthcare provider is raising the bottom end of its
Speaker 2: revenue forecast range for the full year. Annaly is saying
Speaker 2: that that burns control over its costs because bearing fruit
Speaker 2: even as it faces a tough backdrop, so much more
Speaker 2: on earnings to come from New York.
Speaker 8: This is Bloomberg Technology.
Speaker 2: Welcome back to Bluebg Technology. I'm Caarenhid in New York.
Speaker 2: Quick check on the markets because the day is a
Speaker 2: day of macro data and decision making. You've got to
Speaker 2: be focused in on what happening with the Fed. Of course,
Speaker 2: most anticipating there will be some sort of rate hike.
Speaker 2: The question is will there be signal for rate hike
Speaker 2: comes September two? Many feeling that that shouldn't be taken
Speaker 2: off the table in terms of an option, even as
Speaker 2: we do see inflation starts. Cool Naza currently off by
Speaker 2: four ten percent and large part on the back of
Speaker 2: key earnings. Microsoft just pulling us a little bit lower
Speaker 2: the Dow I show it only because it's on his
Speaker 2: best run since nineteen eighty seven. Folks, thirteen straight days
Speaker 2: of games. Bitcoin does have about two tens percent, but
Speaker 2: it looks we're still languishing around thirty thousand. In fact,
Speaker 2: volumes are the lowest in thirty months in terms of
Speaker 2: spot Bitcoin training. We understand moving on and we go
Speaker 2: to some in particular earnings that maybe we've missed out.
Speaker 12: So far.
Speaker 2: I mean, we haven't missed Outabet just leading the pack
Speaker 2: when it comes to the outperformance on benchmarks today up
Speaker 2: almost six percent. Remember new role being expanded for with
Speaker 2: poorat as she looks for a new CFO but takes
Speaker 2: the reins of CIO and indeed president. But most notably
Speaker 2: this is a company that's managing to show advertising coming
Speaker 2: back five percent increase in particular on that advertising juggernaut.
Speaker 2: We're looking at eBay just up three tens of percent
Speaker 2: results of all some software is merchandise maybe was being anticipated,
Speaker 2: but we keep an eye on what's happening in terms
Speaker 2: of eBay and then look ahead to its own earnings
Speaker 2: coming a little bit later. We look at targets being
Speaker 2: raised ahead of them to fifty dollars by Jeffreys in fact,
Speaker 2: that came yesterday. I'm looking at what's happening with in
Speaker 2: terms of Micron. We're up to and a quarter of
Speaker 2: a percent now. Micron actually getting some strong talk coming
Speaker 2: from video moves in terms of its memory chips could
Speaker 2: be advantageous. We understand some analysts signaling that this is
Speaker 2: looking brighter for Micron, particularly in its application to artificial intelligence.
Speaker 2: We're up to and a quarter percent, unlike the rest
Speaker 2: of the chip sector after Texas Instruments. Now let's move
Speaker 2: away from earnings and go back to the billion billionaire
Speaker 2: Elon Musk, known for you know, dabbling in different sectors aerospace,
Speaker 2: electric cars, course more recently social media and AI. But
Speaker 2: he's rebranded Twitter to X. Musk is buying to actually
Speaker 2: got back to his previous role as a banker. Re
Speaker 2: Magni's Finance Reports of Jenny Strain has a great piece out,
Speaker 2: what are you thinking about the tough task X has
Speaker 2: to into wee've financial transactions, maybe even banking. This is
Speaker 2: all about becoming a super app. But it's a tough
Speaker 2: space to get into. Yeah, I mean that's exactly right.
Speaker 12: We've seen many, many tech giants go before him, and
Speaker 12: we really haven't seen much traction. You know, you have
Speaker 12: the likes of the Facebook or Google, even Amazon. You
Speaker 12: know where they've gone this path. It really hasn't been
Speaker 12: as successful as they you know, might have hoped when
Speaker 12: they first set out. And it's just because banking is
Speaker 12: a really hard space. It's highly regulated. The relationships that
Speaker 12: big banks have with their consumers are extremely sticky and
Speaker 12: hard to disintermediate. So Elon's got some high hopes here
Speaker 12: and it'll be a really tough road duho to to
Speaker 12: you know, get to where.
Speaker 2: He wants to get, because ultimately we've not only seen,
Speaker 2: as you say, the likes of Alphabet sort of drop
Speaker 2: all plans to eventually odd banking services. We saw, of course,
Speaker 2: what happened with liber and the long road it took
Speaker 2: to get crypto interwoven within now Meta and that didn't
Speaker 2: pull off. But PayPal, I mean what ultimately Elon is
Speaker 2: original x dot com became they couldn't even offer banking
Speaker 2: service as a wealth management ride. It's still a transaction company. Yeah, no,
Speaker 2: that's exactly right.
Speaker 12: So it was about two years ago actually where PayPal
Speaker 12: had set out on this big journey where they wanted
Speaker 12: to be that super app and they had a big,
Speaker 12: ambitious goal that they would have seven hundred and fifty
Speaker 12: million users and they were going to be kind of
Speaker 12: the one stop financial spot for consumers. And two years on,
Speaker 12: you know, they have seen their s thoughts tank, they've
Speaker 12: had to really retrench, they've had to focus on that
Speaker 12: core checkout but and that kind of everyone knows PayPal for.
Speaker 12: So it really just shows that even when you already
Speaker 12: have a background in finance, you know, it's really hard
Speaker 12: to kind of push that envelope and go into that
Speaker 12: next step. And really a lot of these folks just
Speaker 12: end up having to stick to their knitting.
Speaker 2: Here, and as our resident fintech expert, as our banking expert,
Speaker 2: you'll know more than anyone that it's ulto many trust
Speaker 2: that they have to build. Not everyone at the moment
Speaker 2: feels all that trusting of whatever you know Musk is
Speaker 2: doing in social media. Yeah, I think that's such a
Speaker 2: great point. You know, especially in the US.
Speaker 12: We're a very different market than say China, where super
Speaker 12: aps have actually taken off, and consumers have shown this
Speaker 12: really big willingness to bank and do shopping and do
Speaker 12: their social media all with one company. We've seen it
Speaker 12: with Ali pay, We've seen it with WeChat pay. They
Speaker 12: haven't had that same willingness here in the US. They
Speaker 12: seem to really like the fact that they get their
Speaker 12: banking services from a bank, and they get their social
Speaker 12: media services from a social media company, and they get
Speaker 12: their commerce from an Amazon.
Speaker 2: Or a retailer.
Speaker 12: So there's that trust piece, and there's this really that
Speaker 12: willingness not to kind of cross those borders. They like
Speaker 12: those things to be very segmented. And to your point,
Speaker 12: you know, Elon's on a name they know in banking.
Speaker 12: They know him as Tesla, they know him as Bacex.
Speaker 12: So it would be kind of interesting to see if
Speaker 12: you can bridge that gap, because it's hasn't been done
Speaker 12: before really successfully here in the US.
Speaker 2: With an Indigaco couldn't do that as well, Who, if anyone,
Speaker 2: would be the most to lose if X could crack
Speaker 2: this from like a wealth management? Is it the online
Speaker 2: wealth managers? Is it the banks lose out? Who really hurts?
Speaker 12: He seems really keen on payments, and so I mean
Speaker 12: I think PayPal, I think an Apple pay, I think
Speaker 12: the credit card companies. So I think payment seems to
Speaker 12: be what he's most interested in. It makes sense. It's
Speaker 12: the piece of finance that consumers touch every day. And
Speaker 12: so when you look at a tech company that just
Speaker 12: really wants to gen up usage, payments makes the most sense.
Speaker 12: And so you know in that it's a very hotly
Speaker 12: competitive field, and so I think you'd see lots of
Speaker 12: pressure on different players, whether it's a bank or even
Speaker 12: a payments company like a PayPal.
Speaker 2: Well, many have learned that to their detriment to bet
Speaker 2: against you, Muss. So we'll see whether you can cross
Speaker 2: this particular vercon. Thank you, Jenny Surine Go check out
Speaker 2: her story. It's brilliant time now for our VC Spotlight
Speaker 2: prime Mover's lab. Well, it's plays two hundred and forty
Speaker 2: five million dollars to back young startups working on some
Speaker 2: unconventional ranges of technologies. The firm specializers in making investments
Speaker 2: kind of at the edge what's technically possible, including brain implants,
Speaker 2: psychedelics related therapies, space infrastructure, new funding rings its total
Speaker 2: assets under management to more than one point two billion dollars.
Speaker 2: Let's get more on well, the state of venture capital
Speaker 2: and some exits finally occurring. Rebecca Lynn, the co founder
Speaker 2: and general partner of Canvas Ventures, is a firm specializing
Speaker 2: in fintech in artificial intelligence, among other things. And Rebecca,
Speaker 2: what you've got eight hundred and thirty five millions in
Speaker 2: assets under management and just now one of your portfolio
Speaker 2: company's case texts it's an AI legal assistant. It looks
Speaker 2: like it's just been acquired by Thompson Reuters for a
Speaker 2: cool sum of cash. Tell Us a little bit about
Speaker 2: why now we saw this sort of exit.
Speaker 13: Yeah, I mean, it's really exciting to have sort of
Speaker 13: their first and largest our cash exit in this recent
Speaker 13: wave of AI, and it's been really exciting. I mean,
Speaker 13: kse Tex has been a company at the forefront of
Speaker 13: AI since we invested about six years ago, and was
Speaker 13: working heavily on it even before that. And they had
Speaker 13: developed some really incredible technology even prior to GPT four
Speaker 13: involving parallel search technology that earned them a customer base
Speaker 13: of over ten thousand people. So because of that, they
Speaker 13: were invited to be in the sandbox very early on
Speaker 13: GPT four with open Ai, and they launched this new
Speaker 13: product called co Council in March and within forty five
Speaker 13: days they added another thousand plus customers using this new product.
Speaker 13: So you know, we've seen we've seen AI come a
Speaker 13: long way in a very short period of time. The
Speaker 13: delta from GPT three point five to GPT four was
Speaker 13: pretty incredible.
Speaker 2: So case Text actually tried to pass.
Speaker 13: The bar with GPT three point five and they scored
Speaker 13: sort of a measly ten percent on the California state bar.
Speaker 2: I took the bar years ago.
Speaker 13: I'm a lawyer as well, and I probably could still
Speaker 13: do ten percent, I hope.
Speaker 1: And then when they.
Speaker 13: Launched their new co council product using the fully featured
Speaker 13: GPT four, they actually scored ninety four percent on the
Speaker 13: California State Bar, which essentially means that this product could
Speaker 13: stand in the shoes of a full legal associate in
Speaker 13: many ways.
Speaker 2: It was Chat GPT three point five and four that
Speaker 2: got the whole world suddenly ignited and excited about artificial intelligence.
Speaker 2: But you have been investing in it for a long time.
Speaker 2: This is a company you're backed years ago and continue
Speaker 2: to then see its trajectory. Will Are we in a
Speaker 2: hype cycle or is it necessary that that had to
Speaker 2: happen to get this sort of level of sudden application
Speaker 2: of a case text for example right now.
Speaker 13: I don't think we're necessarily in a hype cycle. I
Speaker 13: think the technology just came up the curve to that
Speaker 13: last increment very very quickly. So we've been investing in AI,
Speaker 13: you know, since I've been an a venture at Morgenthaler.
Speaker 13: We were the first institutional investors in Siri, and just
Speaker 13: to see the evolution of how good AI has become
Speaker 13: since then, I remember, you know, product testing Siri in
Speaker 13: the early days, and it could understand you know, very
Speaker 13: little initially. And then we came into figure eight, which
Speaker 13: was really the picks and shovels for AI, and that
Speaker 13: company was acquired by a public company called Appen, and
Speaker 13: then we did Luminar, and Luminar, you know, has AI
Speaker 13: at its core. They're an autonomous driving company and they
Speaker 13: reinvented the entire light our stack and the AI software
Speaker 13: to go with it. Right, So I think AI just
Speaker 13: suddenly had a leap forward in its capabilities. As we
Speaker 13: saw from the leap forward from GPT three five to four.
Speaker 2: How many public companies, so how many ultimately big companies
Speaker 2: A desperate to stop buying in this space was Dojo
Speaker 2: is the only one out there who was wanting to
Speaker 2: buy case text.
Speaker 13: You know, I can't comment exactly on the on the
Speaker 13: other possible acquirers. I can say that the company has
Speaker 13: you know, more than their fair share of venture term
Speaker 13: sheets they could have chosen from if they wanted to
Speaker 13: go ahead and take an equity round. And then you know,
Speaker 13: Thompson Reuters was just the logical acquisition partner for this company.
Speaker 2: Let's talk therefore about the venture equity that still wants
Speaker 2: to get into AI, and more broadly, in the space,
Speaker 2: what does it look like, what are terms? What devaluations appear?
Speaker 2: To you as someone who's looked at AI before, it
Speaker 2: kind of got frothy.
Speaker 13: Yeah, so overall, you know, valuations are down, but for
Speaker 13: AI right so AI is I would say, the most
Speaker 13: heavily invested, you know sector right now. However, I think
Speaker 13: it's really hard to imagine an AI company starting from
Speaker 13: scratch right now and becoming a big entity.
Speaker 2: I mean what we like to see.
Speaker 13: I actually love sort of Series B companies, right so,
Speaker 13: companies that are late A or early Series B. And
Speaker 13: what that means is they have some semblance of product
Speaker 13: market fit. They're actually solving a real problem, and then
Speaker 13: AI can come in and really supercharge that initiative. And so,
Speaker 13: you know, for me, I think the bigger opportunities leveraging
Speaker 13: a technology like AI are companies that have a unique
Speaker 13: data set that already have a client base that they
Speaker 13: understand the use cases for quite well, and now they
Speaker 13: can come in and solve the problem in a much
Speaker 13: more robust and interesting way. So we're focusing a lot
Speaker 13: on that sector and we're seeing it in our own
Speaker 13: portfolio even how this new technology is really helping to
Speaker 13: I guess, supercharge our current customers, including companies like Skyflow
Speaker 13: and offer fit in Connecticut that are all really benefiting
Speaker 13: from this new technology.
Speaker 2: Now, I'm not going to say which of your portfolio
Speaker 2: companies aren't managing to cross that AI void, but all
Speaker 2: of their companies out there that are going to ultimately
Speaker 2: become obsolete. How are vcs in particular trying to ensure
Speaker 2: that they're founders, their companies already backed, can pivot when necessary.
Speaker 13: I think you just they need to stay ahead of
Speaker 13: the curve. And so anyone who kind of got the
Speaker 13: press release on open Ai and now thought they should
Speaker 13: do something or our GPT four is behind right, And
Speaker 13: so you know, the companies and the good companies that
Speaker 13: are out there have already been thinking about this and
Speaker 13: been incorporating the benefits and the and the and the
Speaker 13: advantages of you know, GPT four and have been way
Speaker 13: ahead of it. And we were just lucky to be
Speaker 13: sort of part of that, you know, having seen kind
Speaker 13: of what was coming they were going to release with
Speaker 13: GPT four.
Speaker 2: What about venture more broadly, like, obviously you've had the
Speaker 2: benefit of the odd exit just now, but IPO still
Speaker 2: remains pretty much shot for many people. People are feeling
Speaker 2: that there's a regulatory hurdle of big companies buying smaller ones.
Speaker 2: At the moment, how does your industry look? How is
Speaker 2: it thriving or not?
Speaker 13: I have never been more excited about our industry since
Speaker 13: I came into venture really in O eight. I entered
Speaker 13: a venture right when Lehman crashed, which I thought was
Speaker 13: probably the best time I possibly could have entered adventure.
Speaker 13: I think these kind of dislocations bring an incredible amount
Speaker 13: of opportunity and that come I mean, I'm a fairly
Speaker 13: contrarian investor, I believe. But we are seeing early stage
Speaker 13: funding down probably about forty to fifty percent. We're seeing
Speaker 13: late stage funding down even more, and probably the most
Speaker 13: exciting thing for me is we're seeing the Series b's,
Speaker 13: which are always the hardest round for a company to raise,
Speaker 13: taking longer than they have in twelve years to get
Speaker 13: their funding. So the time span from like a Series
Speaker 13: A to a Series B investing round is about thirty
Speaker 13: one months right now, which is longer than you know,
Speaker 13: really I can remember on record. And on top of that,
Speaker 13: when you look really under the covers of what's happening.
Speaker 13: About forty percent of the Series A and B rounds
Speaker 13: happening that are happening right now after taking thirty one months,
Speaker 13: are actually being led by insiders, so people that are
Speaker 13: already investors in the company that are trying to support
Speaker 13: the valuation that they currently have, which in many cases
Speaker 13: is too high. And so for us, what that means,
Speaker 13: you know, we're because of where we invest, we have
Speaker 13: a lot of time to look at the companies and
Speaker 13: to make our choices, which is ideal.
Speaker 2: What about coming in as a new investor, So if
Speaker 2: you're not just as some of many just being the
Speaker 2: insider that backs the company that's already in your portfolio,
Speaker 2: but wanting to come in and write checks to new companies,
Speaker 2: what are the terms look like? How much control do
Speaker 2: you have when you're that person looking from the outside
Speaker 2: to get in.
Speaker 13: I think right now, when you're it's definitely a buyer's market.
Speaker 13: Right when you're looking at the outside to get in,
Speaker 13: you have more time for diligence because of just it's
Speaker 13: the time that it's taking and you can pretty much
Speaker 13: set the terms. We are beginning to see something we
Speaker 13: haven't seen in a long time, which is down rounds.
Speaker 13: Right when I did a lending club and the depth
Speaker 13: to the credit crisis in Q one of nine, it
Speaker 13: was actually a down round which which ended up quite good.
Speaker 13: It was the largest US tech IPO of twenty fourteen. Right,
Speaker 13: but in that climate that most of those companies that
Speaker 13: were being funded were actually down rounds. We're seeing companies
Speaker 13: being recapitalized, so in other words, the new investor coming
Speaker 13: in and really cleaning up the cap table and funding
Speaker 13: that company for the go forward. So you know, it's
Speaker 13: a tough market when companies are raising rounds.
Speaker 2: Right now, I would say camas Bench's co founder, general
Speaker 2: partner of Rebecca Lyn and talk about the tough but
Speaker 2: also the opportunities and indeed, congratulations on one of the
Speaker 2: exits just now, thank you for joining us. Meanwhile, coming
Speaker 2: up a more tech earnings, we're going back to the
Speaker 2: public market. We're getting into meta results that's coming after
Speaker 2: the closing boll more, what to expect from Mark Zuckerberg's
Speaker 2: Empire mid cost cutting efforts, and of course the lords
Speaker 2: threads from New York. This is really big technology.
Speaker 7: We are making sure we develop and deploy AI technology
Speaker 7: responsibly so that everyone can benefit. Last week, we signed
Speaker 7: on to joint commitments with other leading AI companies at
Speaker 7: the White House, building on the principles that have guided
Speaker 7: our work for many years. To take advantage of the
Speaker 7: AI opportunities ahead, we've been sharpening our focus as a company,
Speaker 7: investing responsibly with great discipline, and finding areas where we
Speaker 7: can operate more cost effectively.
Speaker 2: Alfa bet CEOs no picture there on the company's earning
Speaker 2: school discussing AI, the responsibility there from not only driving
Speaker 2: revenue but ultimately building it ethically. There's another company that's
Speaker 2: about to go viral, and it's Meta out with its
Speaker 2: second quarter results after the market close, and expert in
Speaker 2: covers that social media more broadly for us. And I
Speaker 2: remember last time on earnings, you're really showing how much
Speaker 2: time basically Mark sokobad to talk about ALI rather than
Speaker 2: the metaverse. Are we thinking the same thing again?
Speaker 1: That's right.
Speaker 14: It was six minutes last time on AI height and
Speaker 14: thirty seconds on the metaverse.
Speaker 2: I expect that.
Speaker 14: Might be the same. But what I think the street
Speaker 14: will actually be paying a lot of attention to is
Speaker 14: the health of the core business, the social media businesses.
Speaker 14: Maybe not the bright shiny objects of AI, the metaverse,
Speaker 14: or perhaps even threads.
Speaker 2: But how is Instagram? How is Facebook doing?
Speaker 14: And can this company actually come back to revenue growth?
Speaker 14: You'll recall that last year Meta actually posted its first
Speaker 14: ever year of revenue declines. Growth was around two percent
Speaker 14: last quarter, an let's expect about eight percent of revenue
Speaker 14: growth this quarter. When does that change? When did those
Speaker 14: double digits come back? I think that's what the stock
Speaker 14: will move on, though I'm sure the executives would love
Speaker 14: you to focus on the big ticket spending items like
Speaker 14: AIAI infrastructure and the excitement around threads.
Speaker 2: I mean it feels like pretty optimacy. I'm looking at
Speaker 2: the am function on the Bloomberg right now, and they're
Speaker 2: seeing double digits and revenue growth back so their fiscal
Speaker 2: third quarters, so we only have to wait one more.
Speaker 2: But to that point, how much are we seeing perhaps
Speaker 2: talk of an advertising balsom at the moment. I mean,
Speaker 2: Snap was ugly, but Alphabet showing much more resilience when
Speaker 2: it comes to people wanting to spend on search.
Speaker 14: And I think Meta will probably fall somewhere in the middle.
Speaker 14: So Snap was ugly and they typically do brand ads
Speaker 14: where brands are talking about kind of their brand name,
Speaker 14: their upper funnel ads. Search ads where Alphabet is really strong.
Speaker 14: Those are ads that are really high intent. A user
Speaker 14: goes to search for something, then they buy something. There's
Speaker 14: a direct impact on the marketer's bottom line.
Speaker 2: Meta kind of falls.
Speaker 14: Somewhere in the middle and has a bit of both,
Speaker 14: so that's where we kind of expect.
Speaker 2: It to fall.
Speaker 14: Stabilization has kind of been the name of the game
Speaker 14: across a lot of the digital ad industry. Meta tends
Speaker 14: to move a little bit closer with Alphabet because they
Speaker 14: are the two kind of duopolistic giants and digital ads.
Speaker 14: So if there is stabilization, and if that if we
Speaker 14: see any kind of guidance like analysts are expecting toward
Speaker 14: double digit growth into the third quarter, that will be
Speaker 14: a really exciting move. But if we get more bearish
Speaker 14: signals from Meta's executive team, perhaps on the call, then
Speaker 14: investors could have a little bit of frustration with some
Speaker 14: of the more fun things that Meta has been talking
Speaker 14: about lately.
Speaker 2: Like Lama too, whether that's ever going to drive revenue
Speaker 2: certainly not, and well threads when they start to turn
Speaker 2: on any advertising around that Alex Barinka, brilliant as ever.
Speaker 2: Thank you ahead of those all important earnings. And while
Speaker 2: that does it so this edition of Bloomberg Technology, do
Speaker 2: not forget to check out our podcasts. Do not forget
Speaker 2: to tune in when the earnings come at four pm.
Speaker 2: We'll be there with the meta numbers. But of course
Speaker 2: go for our podcast in the interim on Apple, Spotify,
Speaker 2: and iHeart from New York. This is Bloomberg Technology.