Speaker 1: Bloomberg Audio Studios, podcasts, radio news from Marhard.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed lud Love.
Speaker 4: I'm Caroline Heyde a Bloomberg's World headquarters in New York,
Speaker 4: and I'm Ed Lodlow in San Francisco.
Speaker 5: This is Bloomberg Technology coming up.
Speaker 4: Full earnings coverage ahead. We've got Cisco. It's sliding because
Speaker 4: analysts dub its outlook conservative.
Speaker 6: We'll hear from the CFO Plust.
Speaker 7: We dig into Walmart's results as the commerce giant posts
Speaker 7: a big jump in its online business.
Speaker 4: Only We're just sitting down with the CEO of hot
Speaker 4: Ai search startup Perplexity to discuss growing competition in the
Speaker 4: search space and a new set of board advisors in
Speaker 4: the here and then now is to dig in to
Speaker 4: investor sentiment more broadly. We can do that across geographies,
Speaker 4: across industry groups, but really to really tackle these record highs,
Speaker 4: where with Principal Asset Management Chief Global Strategist Sema Shah
Speaker 4: joining us and look, I mean game on today from
Speaker 4: a macro perspective and will it carry on into the
Speaker 4: tech outperformance.
Speaker 3: Do you think hi creator the honesty. Look, it's clearly
Speaker 3: it's a good risk one day. I think there's fundamental
Speaker 3: reasons for that. You know, of course there's a discussion
Speaker 3: about rape cuts coming back onto the agenda. But I
Speaker 3: think more fundamentally, we can see that from the economic
Speaker 3: data it's slowing, but we're not talking about a weak
Speaker 3: economy as yet at least, so this is still a
Speaker 3: fundamentally strong economy, which means it and should be fairly
Speaker 3: solid as we go through THEA and that should translate
Speaker 3: into a broadening of the rally, which is why we're
Speaker 3: seeing so many of them.
Speaker 8: Disease reach record highs.
Speaker 7: As Sebahad dead in San Francisco. Looking at all the
Speaker 7: index level energy so far yere today, right and you
Speaker 7: look at the NAZAQ one hundred s and P five hundred.
Speaker 7: I can't believe we showed the Dow Jones Industrial average
Speaker 7: and the top of this program today. But I think
Speaker 7: what I'm trying to find out is if there's any
Speaker 7: commonality in the direction of the market and strip out
Speaker 7: the mag seven, because I know that that's top of
Speaker 7: mind for so many people. Is there something in common
Speaker 7: for this market, or is it still dominated by our
Speaker 7: view of those single technology names.
Speaker 3: So I think those single technous they are clearly still
Speaker 3: dominating the market.
Speaker 8: They're driving a lot.
Speaker 3: But what you have seen from the most recent earning
Speaker 3: season is that this good performance is spreading out to
Speaker 3: other parts of the economy.
Speaker 8: Other sectors have done pretty well. So if that can
Speaker 8: be maintained, and particularly if you.
Speaker 3: Do actually start adding in those ratee puts towards the
Speaker 3: last part of the year, that will help the story,
Speaker 3: particularly for certain segments of the market. I mean, even
Speaker 3: if you just thinking about small caps, they need those
Speaker 3: rate cuts. But overall this is a broad good story.
Speaker 3: We still probably need to see a little bit more
Speaker 3: evidence in order to secure that perspective, but at least
Speaker 3: for now, the evidence that is coming in suggests that
Speaker 3: this isn't just a year for the mag seven but
Speaker 3: it's going to be a year for the broad act market.
Speaker 4: What about the valuations of well, they're fewer than seven
Speaker 4: now when they're magnificent, But more broadly, let's call it
Speaker 4: chip stocks, let's call it the winning formula of Nvidia,
Speaker 4: of Well, Alphabet, even Apple getting some lift again.
Speaker 6: Now, are those valuations out of whack.
Speaker 8: It's interesting.
Speaker 3: I was traveling across the US last week and I
Speaker 3: was with investors everywhere, and that was a question that
Speaker 3: still keeps coming up, is you know, do we think
Speaker 3: of this as overvalued and is a time for a correction?
Speaker 3: So we would definitely push back on that. Yes, it's
Speaker 3: a little bit frothy, but do we make comparisons to
Speaker 3: the dot com bubble?
Speaker 8: Absolutely not. These earnings are somewhat believable, maybe a.
Speaker 3: Little bit frothy, as I said, but there's actually something
Speaker 3: fundamental in those valuations.
Speaker 8: So it doesn't really concern us.
Speaker 3: Inevitably with this kind of market, when there's so much
Speaker 3: good news priced in, there's always going to be risk
Speaker 3: of a bit of a pullback, But we look at
Speaker 3: the tech story as a long term play, and from
Speaker 3: a long term play, we still it's still one of
Speaker 3: our favored areas of the market.
Speaker 5: It talks about the good news that's priced in. Seema.
Speaker 7: I don't want to bring the mood down, but something
Speaker 7: we've been talking a lot about recently on the show
Speaker 7: is the relationship between the US and China, whether it's
Speaker 7: constructive or otherwise. Is that a headwind you're factoring in
Speaker 7: right now, particularly when you look at the technology sector,
Speaker 7: so Ineffe, it's.
Speaker 3: Something that we do to consider, especially when you're going
Speaker 3: into the presidential election, where China is going to be
Speaker 3: top of the news as we get close from closer
Speaker 3: to that point. So it is something we consider, but
Speaker 3: I think it's very much on a single stock name basis,
Speaker 3: because there's some which are going to be particularly exposed
Speaker 3: and others which are not so much. The good news
Speaker 3: from a China stundpoint, though, is from the most recent
Speaker 3: data that we're seeing come in there does seem like
Speaker 3: it's a bit of a sickle club term, nothing to
Speaker 3: rave on about, but something at least to lift at
Speaker 3: least expectations. If that is carried through then certainly for
Speaker 3: a lot of those bigger multinational tech companies which have
Speaker 3: got so much exposure to China, it does suggest.
Speaker 8: That they are a little bit less at risk than
Speaker 8: we would have considered.
Speaker 3: But certainly the geopolitics is something we always have to watch,
Speaker 3: but it's not yet at that point where it's changing
Speaker 3: up perspective on positivity about the sector.
Speaker 4: I like that we go global because look, it's not
Speaker 4: just US stocks have done particularly well of late Japanese
Speaker 4: stocks on a tear, European stocks at Sandraman and at
Speaker 4: a record as well. Where are you liking other geographies
Speaker 4: right now?
Speaker 3: Yeah, And it's a great question because at the moment,
Speaker 3: I mean, at least for the last couple of weeks,
Speaker 3: what we've been challenged with in the market is that
Speaker 3: although I think a lot of people continue to believe
Speaker 3: in use exceptionalism, they have been confounded by the fact
Speaker 3: that the rat debate continues. We're not very sure about
Speaker 3: where that's going. When you think about the growth story,
Speaker 3: you're suddenly the economic downside surprises in the US, and
Speaker 3: then of course there's evaluation. So then this is probably
Speaker 3: a good time to start thinking outside of the US,
Speaker 3: and there are some good stories.
Speaker 8: So if you think about Europe, which.
Speaker 3: Is the perennial disappointment, but now you're seeing that we
Speaker 3: know what the ECB is going to do, we have
Speaker 3: I think pretty much good confidence that there's going to
Speaker 3: be cut in June, and then thereafter we know that
Speaker 3: we're starting to see a cyclical economic upside upside surprise,
Speaker 3: not an acceleration, but at least we're seeing some good
Speaker 3: news come through, and then valuations more attractive.
Speaker 8: So if you look across Europe, that's fairly good news.
Speaker 3: And even in China, as I said, given where sentiment was,
Speaker 3: you couldn't get much worse than that. And now with
Speaker 3: the economic data seeing some signs of brightness, that is
Speaker 3: looking like a more attractive part of the market too.
Speaker 7: A Seema, you're a regular on Bloomberg Television. You're a
Speaker 7: regular here on Bloomberg Technology away from the market, So
Speaker 7: I wanted to ask you about how you're using AI
Speaker 7: at work or at home. You know we're going to
Speaker 7: be talking later about AI driven search. What have you
Speaker 7: been up to in the world of AI.
Speaker 3: Look, I mean, I think any company out there has
Speaker 3: to be embracing AI and trying to figure out where
Speaker 3: they can.
Speaker 8: Use it in any parts of working home.
Speaker 3: So from a work perspective, of course, trying to adopt
Speaker 3: AI into our models, trying to analyze the companies from
Speaker 3: a single sector, single stock perspective. That is going to
Speaker 3: be the easiest way to try and do full analysis
Speaker 3: and get a full complete level of information.
Speaker 8: So that is something that we're trying to bring into work.
Speaker 3: I have some more children. AI is the stuff that
Speaker 3: they talk about it at school. As well, so you
Speaker 3: can see that this is everywhere. It's not just dominated
Speaker 3: by the finance news.
Speaker 7: Princevill Asset Management, Chief Global Strategy as semashark Ai everything
Speaker 7: all the time and markets.
Speaker 5: What more can you ask for? On Bloombo Technology.
Speaker 7: Coming up on the show, we're going to hear from
Speaker 7: the Cisco CFO Scott Heron is the company's slides and
Speaker 7: its outlook is being seen as conservative as coming up next,
Speaker 7: Stick with us because we'll be right back.
Speaker 5: This is Bloombo Technology.
Speaker 6: Got to talk.
Speaker 4: Cisco because it's been quite the volatile trade after hours
Speaker 4: and in today's training. We're now off by one point
Speaker 4: seven percent, moving lower well despite the forecast actually showing
Speaker 4: a return of customer spending of networking gear, analysts dubbing
Speaker 4: the outlook perhaps a little conservative. Wiliam had got the
Speaker 4: chance to discuss all of the results earlier with Cisco
Speaker 4: CFO Scott Heron Tickulasen.
Speaker 9: So this was our fiscal third quarter that we announced.
Speaker 9: Then normally I wouldn't guide fiscal twenty five until we
Speaker 9: get to the fourth quarter earnings call. But you know,
Speaker 9: we just acquired Splunk. So the big news for us
Speaker 9: is we acquired Splunk. We got a closed mid quarter,
Speaker 9: and I think the analysts are all trying to adjust
Speaker 9: now to what does the combined company look like.
Speaker 2: So what I wanted to do is kind of.
Speaker 9: Get ahead of that with fiscal twenty five and without
Speaker 9: doing a fulsome guide, just get enough information out there
Speaker 9: so that they could narrow down their expectations for fiscal
Speaker 9: twenty five conservative. I think it's a first view of
Speaker 9: where that's going, you know. I think the encouraging thing
Speaker 9: for us is we've worked through the supply chain disruptions
Speaker 9: that we had that caused us to build up a
Speaker 9: huge backlog, and then we're able to clear as we
Speaker 9: got the components in, we're able to clear that backlog,
Speaker 9: revenue spiked, and now we're having to compare to those
Speaker 9: to those compare points, so the year on years are
Speaker 9: a little bit difficult to actually discern what's happening in
Speaker 9: the underlying business. We spent some time trying to unpack
Speaker 9: that for the for investors yesterday, and we'll do some
Speaker 9: more of that with the byside later. So first view,
Speaker 9: but really just trying to give them enough insight so
Speaker 9: that the models would start to converge on what we think.
Speaker 2: Is the right set of numbers.
Speaker 1: So it sounds like you're not saying no, but making
Speaker 1: the point that it's very early. I mean, twenty twenty five,
Speaker 1: who knows what will happen. But let's talk a little
Speaker 1: bit more about inventory.
Speaker 10: You make the point that it feels like you've turned
Speaker 10: a corner when it comes to a lot of those
Speaker 10: supply chain disruptions, and what does that say about corporate spending.
Speaker 10: A lot of people looked at this report and said,
Speaker 10: there's screenshoots there, there's a bit of an uptick.
Speaker 1: That's the case. Where is that coming from? What kind
Speaker 1: of customers are we seeing that demand from?
Speaker 9: You know, what's really interesting for us? And of course
Speaker 9: we've got Splunk added in for just half a quarter.
Speaker 9: So if you net that out and look at what
Speaker 9: the core business apples to Apple's basis, looks like. Actually
Speaker 9: orders were flat overall, which is an improvement from where
Speaker 9: it's been as customers have been really trying to implement
Speaker 9: the huge amount of product that we shipped out to
Speaker 9: them in three consecutive quarters.
Speaker 2: We see that ending.
Speaker 9: We see them getting through implementing all of the product
Speaker 9: that we ship to them. By about the end of
Speaker 9: this fiscal quarter, which for US will end at the
Speaker 9: end of July, and as that happens, we're already starting
Speaker 9: to see demand return and product orders flat, I think
Speaker 9: encouragingly within that overall flat growth in security orders, growth
Speaker 9: in collaboration orders, but most importantly growth in data center
Speaker 9: networking orders, which has been a headwind for some time,
Speaker 9: and growth in campus switching. And I think the campus
Speaker 9: switching one surprised a lot of people that we're seeing
Speaker 9: growth there with the sense that you know, there's more
Speaker 9: vacant office space than there's ever been. How can campus
Speaker 9: switching be growing? So I think it's an encouraging sign.
Speaker 1: So some tailwinds there, and it took me through questions,
Speaker 1: but we.
Speaker 10: Have to talk about AI because of course a detail
Speaker 10: that caught a lot of people's eyes was the fact
Speaker 10: that you have about a billion dollars on AI infrastructure
Speaker 10: orders in sight. And I guess my question there is
Speaker 10: is that for a particular line of business, where would
Speaker 10: that spending actually be taking.
Speaker 1: Place within Cisco.
Speaker 9: Yeah, it's a great question. That's not a new data
Speaker 9: point we put that out there. It's in the back end.
Speaker 9: So if you think of how these AI models get
Speaker 9: trained and then get used, which is called inferencing. It's
Speaker 9: in the back end, so it's networking and optics in
Speaker 9: the back end. A lot of that going to the big,
Speaker 9: large public clouds that you'd expect in the Tier two
Speaker 9: AI infrastructure build out is what drives them.
Speaker 7: Cisco CFO Scott Heron giving Frankly a classic class on
Speaker 7: being a CFO for a technology company. Let's get some
Speaker 7: clarity on Cisco It's technology and its endings. Efering Bloombergsy
Speaker 7: and King. There was a lot of CFO speaking on
Speaker 7: pick it for us and explain the quarter that's just gone.
Speaker 11: Yeah, I think the best way to view it is
Speaker 11: through the lens of what happened with the share price.
Speaker 11: We had an initial spike yesterday and after hours right
Speaker 11: exactly and after hours trading, and today we're sort of
Speaker 11: down moderately a little bit more sober.
Speaker 2: What really happened and Scott kind.
Speaker 11: Of alluded to that was the expectation for orders was
Speaker 11: that they would be down possibly as much as ten percent,
Speaker 11: maybe even.
Speaker 2: More in the quarter that they just reported came in.
Speaker 11: It's kind of okay, maybe up slightly when you include
Speaker 11: this new acquisition. So there was like, oh, things aren't
Speaker 11: as bad as we had feared. Kind of reaction that
Speaker 11: happened in the after hours. Then when we go through
Speaker 11: the numbers and listen to the call, we've seen a
Speaker 11: reaction this morning which is more like, yeah, okay, it's okay.
Speaker 11: But bearing in mind they've just done this massive acquisition,
Speaker 11: maybe they're not getting quite the kick from that.
Speaker 4: Yeah, I mean, we have to take Splunk into consideration here,
Speaker 4: and there's gonna be new role of president for example,
Speaker 4: in But what about some of the other partnerships natural
Speaker 4: M and A. But you know, they had this big
Speaker 4: fanfare of an end video deal and partnership has that
Speaker 4: bringing in any much needed revenue streams.
Speaker 11: Well that is still in the early day, so we
Speaker 11: don't really know. But you know, back to the conversation
Speaker 11: that was had with Scott and the big question of
Speaker 11: this billion dollar of AI related orders. Obviously Cisco wants
Speaker 11: to go to the party too at the moment though,
Speaker 11: and there were a lot of questions on the call yesterday, well,
Speaker 11: what exactly do you mean by a billion dollars?
Speaker 2: Who's giving you these orders?
Speaker 11: How sure are you that these are real orders and
Speaker 11: not just an aspirational goal, and there was a lot
Speaker 11: of to and fro with a leadership team about you
Speaker 11: know what that really means and whether this is real
Speaker 11: and really the bottom line is that investors aren't quite
Speaker 11: yet ready to let Cisco go into that AI party.
Speaker 7: I and you broke a story literally as we started
Speaker 7: the show and before you walked on set about ampare
Speaker 7: the chip company teaming up with to make AI technology
Speaker 7: AI infrastructure. I didn't know that Qualcom was in that
Speaker 7: line of business. I do now give us the details.
Speaker 11: Yeah, I mean what's going on. There is Umpair, who
Speaker 11: we had at our tech conference flash It. They're an
Speaker 11: armed server chip company trying to get into all of
Speaker 11: the big hyperscalers. They're teaming up with Qualcomm to bring
Speaker 11: in this accelerator to try to basically bring a cheaper
Speaker 11: alternative to the kind of thing that Nvidia is selling
Speaker 11: for many tens.
Speaker 2: Of thousands of dollars. We'll see how well that goes.
Speaker 2: We'll see how well that performs.
Speaker 4: I mean, we sat with Renee James, both you and
Speaker 4: I individually at various points throughout that event last week.
Speaker 4: I and she has a brother fresh air in many
Speaker 4: ways to the area of computing and the startup side
Speaker 4: of things. But it looks like there's kind of a
Speaker 4: trifecta going on. They can't just do it alone. They've
Speaker 4: got to be working whether super Micro's involved, super Microcomputer
Speaker 4: alongside Qualcom, alongside a pair. But the key refrain coming
Speaker 4: from everyone is energy right efficiency.
Speaker 11: Here, Yeah, as you as you point out, Reno is
Speaker 11: pretty fired up about this, and she's making a point
Speaker 11: which many agree, which is we cannot carry on like this.
Speaker 11: The cost of AI in terms of power, in terms
Speaker 11: of money is just too great right now. We need
Speaker 11: technology answers to that problem. We need more efficient chips,
Speaker 11: we need cheaper chips, and she's trying to offer that
Speaker 11: her company as a solution to that problem.
Speaker 4: Well, certainly managing to come out to the market with
Speaker 4: a combination offering at the moment, Ian, it's brilliant that
Speaker 4: you got to break it for us.
Speaker 6: Thank you, Blue Meg's Ian King. Time now for talking tech.
Speaker 4: First up, Microsoft is said to have asked hundreds of
Speaker 4: its China based AI staff to consider relocating.
Speaker 6: That's all, according to the Wall Street Journal.
Speaker 4: Now, the tech giant has asked its employees based in
Speaker 4: China to move to a different country, perhaps US, but Ireland,
Speaker 4: Australia and New Zealand. It's all a growing tensions between
Speaker 4: the US and China on technology. Those who choose not
Speaker 4: to transfer could remain working in the country for now. Plus,
Speaker 4: Michael Varie's investment firm is doubling down on its Chinese
Speaker 4: investments JD dot Com, Ali barber Now. According to thirteen
Speaker 4: f filings, JD was the firm's top holding after boosting
Speaker 4: its stake by eighty percent, with Ali Barba coming in second.
Speaker 4: Laberia has been making a return to the Chinese tech
Speaker 4: sector after exiting them at one point in twenty twenty three,
Speaker 4: and revenue for Baydo grew at actually its slowest pace
Speaker 4: in more than a year. Chinese internet search leader look
Speaker 4: At struggling to turn its investments into generative AI into actually.
Speaker 6: Real revenue real earnings.
Speaker 4: They came in at four point four billion for the
Speaker 4: three months ending in March. Meanwhile, JD dot Com reported
Speaker 4: well better than expected seven percent rise in revenue, this
Speaker 4: after the Beijing based retailer actually cut prices ramped up
Speaker 4: customer perks to counter us on that competition. JD dot
Speaker 4: COM's results are seen as one of the key bellweathers
Speaker 4: of Chinese consumption, which look a struggle to recover since
Speaker 4: the country lifted COVID curbs.
Speaker 7: Yeah, there's going to be a big global e commerce
Speaker 7: theme in today's show because Walmart's also out with its
Speaker 7: results this morning. It showed a twenty two percent jump
Speaker 7: year over year in its online business. This is e
Speaker 7: commerce growth, principally in the US. Let's get out to
Speaker 7: Bloomberg's Jay one Com who covers Walmart for US, and
Speaker 7: that's the story.
Speaker 5: But what's behind it?
Speaker 7: What's Walmart been doing with its digital presence?
Speaker 12: Yeah, so e commerce has been a really important business
Speaker 12: for Walmart. It's you know, definitely one of the factors
Speaker 12: of growth. And what they've been doing is, you know,
Speaker 12: really adding capabilities like delivering orders super early in the morning.
Speaker 12: They're also working to deliver their items faster so you know,
Speaker 12: the same day, you know, or in a couple of hours.
Speaker 8: They're also improving what.
Speaker 12: The company calls a perfect order, which refers to different
Speaker 12: metrics like you know, when orders arrive or how complete
Speaker 12: the orders are, and they've been working on improving all
Speaker 12: of those things while cutting down costs associated with delivery.
Speaker 6: The numbers are phenomenal.
Speaker 4: And when you're looking at what four billion items in
Speaker 4: the last twelve months delivered by in the same day
Speaker 4: or next day, that's comparable to Amazon. What's also comparable
Speaker 4: to Amazon is some of the teething problems that they
Speaker 4: have back in the day when they started having third
Speaker 4: party sellers. Look, I was just sat down in makeup
Speaker 4: and make a part of saying, look, have you seen
Speaker 4: that there's like some fake handbags being sold on Walmart?
Speaker 6: Now, I had an.
Speaker 4: Issue with my son's gift arriving during Christmas because it
Speaker 4: was from a third party vendor and that bender didn't
Speaker 4: seem to live up to the expectations.
Speaker 6: What's going on in terms of teething issues.
Speaker 12: So Marketplace has also been one of the factors of
Speaker 12: growth for Walmart, and it's been trying to you know,
Speaker 12: add sellers and increase the number of items that it
Speaker 12: sells on on Marketplace in the US and abroad. And
Speaker 12: a huge benefit of that business is the fact that
Speaker 12: you know, the company can really grow the range of
Speaker 12: items that it selves online and they you know, see
Speaker 12: a lot of opportunities with general merchandise in particular. So
Speaker 12: you know, this morning they talked about items like pets
Speaker 12: and beauty. They're you know, going up in sales by
Speaker 12: more than thirty percent on marketplace, and you know, at
Speaker 12: the same time it is it is a more decent.
Speaker 8: Business compared to selling items in stores.
Speaker 12: And so you know we'll see the different puts in
Speaker 12: takes that they'll you know, test start with that business for.
Speaker 4: Now, and thing's looking very strong. Thank you so much,
Speaker 4: Joy and Kang on All Things warm Up. Welcome back
Speaker 4: to Blue Bag Technology and Karin Hide in New York.
Speaker 5: And I'm id love Low in San Francisco.
Speaker 4: But for now, there's news from Perplexity, the developer of
Speaker 4: an AI based search engine platform. It's creating brand new
Speaker 4: advice board that will include Mikhale Parakin, the former head
Speaker 4: of Microsoft being researched, of course, Rich Minor, Google Advisor,
Speaker 4: Android co founder, and Emil Michael, former.
Speaker 6: Chief business officer over al Uber.
Speaker 4: Here for more on this news is Perplexity CEO Aravin Shunibas.
Speaker 4: So we have this new set of advisors. I'm going
Speaker 4: to start with the obvious. Having your look to the pictures.
Speaker 4: You're four male co founders and you've got three men
Speaker 4: on your advisory board. You are a man of color.
Speaker 4: I don't need you to preach to the converted. Whereas
Speaker 4: the women, where's a diversity.
Speaker 13: So one of our board directors Cacile Hem from IVP,
Speaker 13: she's a woman. We also have another board observer and
Speaker 13: board 'ski from Anya who's also a woman. And Susan Wojitski, farmer,
Speaker 13: YouTube CEOs and investor in US and she's also very
Speaker 13: helpful in advice. So we have a lot of people
Speaker 13: from many different diverse backgrounds helping us right now.
Speaker 4: Okay, so one female board member, one observer, one investor
Speaker 4: that you name. That doesn't feel like a lot, but
Speaker 4: I get it. You feel this diversity enough. Many would
Speaker 4: quibble with that, but let's talk about what these three
Speaker 4: people bring from a across the board, across experience.
Speaker 6: What is it that you need right now in terms
Speaker 6: of advice.
Speaker 13: Yeah, So as a startup, we've been fortunate to scale
Speaker 13: up so much in such a short period of time.
Speaker 13: The next step for us is to really think hard
Speaker 13: about strategy, both in terms of search, how to build
Speaker 13: our own index and how to like scale it up
Speaker 13: to like even more users, and in terms of how
Speaker 13: our mobile and distribution strategy. It was right, So search
Speaker 13: is all about distribution. They all say soon their purchases
Speaker 13: CEO Google because he really cracked the distribution code to Chrome.
Speaker 13: So we are working with Email who is the farmer
Speaker 13: business officer of Uber, who is so aggressive on growth
Speaker 13: in terms of getting such a large user base, So
Speaker 13: we need to think have similar ideas here.
Speaker 6: And in terms of mobile, I would say it was
Speaker 6: too aggressive.
Speaker 14: Yeah, we'll try to tone it down, sure, but.
Speaker 13: Look, startups have to be aggressive in terms of competing
Speaker 13: against incumbents who already have like billion users or Opening
Speaker 13: I has one hundred million users.
Speaker 14: We don't have that today, so we have to be
Speaker 14: it's on us to do that.
Speaker 13: And it requires a good mobile strategy to a great
Speaker 13: mobile experience, so rich from Android it would be very
Speaker 13: helpful there. And of course the core thing is search,
Speaker 13: and no one better than Mikail who used to head bing.
Speaker 13: He rolled out being chat co pilot and was previously
Speaker 13: doing all the search infrastructure for yandex. So he's going
Speaker 13: to advise us on building a lot of in house
Speaker 13: infrastructure for us.
Speaker 5: Aravin. Thanks.
Speaker 7: Coming back on the program, I've got to ask you
Speaker 7: about Google Io and the real emphasis frankly that Google
Speaker 7: put on integration of AI into search specifically, it's like this.
Speaker 5: Idea of AI overviews.
Speaker 7: Right, you know, you search for something, it gives you
Speaker 7: a text answer as opposed to link. A lot of
Speaker 7: people want to know what is Aravin Shinabas's reaction to
Speaker 7: what you saw out a Google IO.
Speaker 13: That's the same reaction to what I saw last year
Speaker 13: when they called it Search Generative Experience. It's just the
Speaker 13: exact same thing called it is a different name. There's
Speaker 13: literally no change to it. And sure it's being rolled
Speaker 13: out to more people, but it's not going to be
Speaker 13: rolled out for.
Speaker 14: Every single query you type on Google.
Speaker 13: And the most important thing when someone uses a product
Speaker 13: is they should know what's.
Speaker 14: Going to happen.
Speaker 13: When people go to Google, they hate the latency being bad.
Speaker 13: They expect instant and the links to render. So the
Speaker 13: moment you start making people wonder what's going to happen,
Speaker 13: whether that's going to be a streaming of tokens for
Speaker 13: an answer, or is this going to be links, or
Speaker 13: whether it's going to be ads, or whether it's going
Speaker 13: to be some other panels and a UI that's so
Speaker 13: cluttered with all these elements at one face versus a
Speaker 13: single UI just focus for a question answering. That's what
Speaker 13: users are going to decide between perplexity and Google AI overviews.
Speaker 13: And I think like users like simple, minimum, clean products,
Speaker 13: so we are pretty confident in our own direction.
Speaker 7: Aravin, Do you have any information or even just sense
Speaker 7: that this was Google responding directly to perplexity, pulsa and
Speaker 7: possible right? And how do you plan to respond yourself?
Speaker 13: But being a better product by actually working on categories
Speaker 13: of searches that they're definitely going to be not incentivized to,
Speaker 13: for example, shopping. If it's still like I'm on the
Speaker 13: SGE experiment already, and when I still type on shoes,
Speaker 13: I don't get any of the AI overviews. I just
Speaker 13: get all the Google Shopping clutter UI, so I still
Speaker 13: get ads. So there are like query categories, commercially intended
Speaker 13: query categories insurance, travel, shopping, or like education, the universities
Speaker 13: from different fution programs, taxes, all these different categories where
Speaker 13: all these advertisers are screaming.
Speaker 14: At you to click on them.
Speaker 13: There's just no incentive for them to put an AI
Speaker 13: overview for those querries and like lose their revenue share.
Speaker 4: What's interesting though, is you actually are built in some ways.
Speaker 4: You use claw three, you also use open aiyes underlying
Speaker 4: large language model. And there's rumors that open aie got
Speaker 4: to come out with some sort of search. That worry
Speaker 4: a little bit more.
Speaker 14: Not really though.
Speaker 13: Their strategy is cleaner than what Google is doing. They're
Speaker 13: not actually just changing chat GPT to put in search.
Speaker 13: They're building out a separate product. But by building out
Speaker 13: a separate product, you're competing for users from you know,
Speaker 13: in the same way as like Google rolling out Gemini
Speaker 13: or Bard. You're not actually taking advantage of the existing
Speaker 13: user base. And we are confident that like our existing
Speaker 13: work on using many models and many indexes and all
Speaker 13: the orchestration that we do will still keep us a
Speaker 13: superior product. But it's a good competition, Like we're definitely
Speaker 13: going to watch what they're going to release and make
Speaker 13: sure we execute even faster than what we're doing.
Speaker 4: It's competition for talent, it is competition for dollars because
Speaker 4: this is not a cheap process to be answering all
Speaker 4: our questions, are you fundraising again?
Speaker 6: As rumors that you are are there rumors?
Speaker 14: I mean, I don't know.
Speaker 13: Look, all I'll say is that we are trying to
Speaker 13: be as efficient as possible and not going and raising
Speaker 13: like a billion dollar round or something like that. I
Speaker 13: would say, yes, I agree with you, this is going
Speaker 13: to be expensive. We would have to fundraise again at
Speaker 13: some point. But our goal is to get our revenue
Speaker 13: in good shape so that as we scale in terms
Speaker 13: of a number of people, that's a good revenue per
Speaker 13: employee and we're a healthy business too.
Speaker 7: Aravins, Welcome to Bloomberg Technology. I'm glad that you're in
Speaker 7: the studio with us today. When we say that you're
Speaker 7: coming on the show, we get a lot of questions
Speaker 7: from the audience. Unsurprisingly, there are many perplexity users out
Speaker 7: there right. What always strikes me is how simple the
Speaker 7: questions are. They just want to know from you, what
Speaker 7: your daily active user metrics are, the latest on the
Speaker 7: user base geographically where these people are.
Speaker 13: Yeah, so we actually care more about the number of
Speaker 13: queries we get every single day. That's a better metric
Speaker 13: for us because that's more directly tied to expanding our
Speaker 13: index and getting our models in better shape. So we
Speaker 13: are pretty close to ten million daily queries of this
Speaker 13: fine somewhere in the late single digits of millions, So
Speaker 13: that's actually a really good progress from where we started.
Speaker 13: Every single month we are basically serving close to like
Speaker 13: one hundred and ninety million queries, and this is only expanding.
Speaker 13: We started like one and a half years ago and
Speaker 13: one looking forward like we can definitely for example, bing
Speaker 13: chat served like a billion queries in twenty twenty three,
Speaker 13: and we sell five hundred million this year itself. We've
Speaker 13: already surpassed the entirety of twenty twenty three in the
Speaker 13: first three months of four months. So looking forward, if
Speaker 13: we keep sustaining these growth rates, we're headed for a
Speaker 13: great future.
Speaker 7: Aravin I wrote on Monday in The Tech Daily that
Speaker 7: consolidations coming among AI startups essentially, have you held talks
Speaker 7: with a bigger technology company about the potential of being
Speaker 7: acquired or do you see yourselves as an acquirer of
Speaker 7: some of the other smaller names or teams that are
Speaker 7: out there.
Speaker 13: Yeah, so I agree with you on the broader point
Speaker 13: of consolidation. It's already happening. Like a lot of us
Speaker 13: startups that used to be there no longer there, and
Speaker 13: like the fewer ones that exist continue to keep getting
Speaker 13: more and more powerful in terms of user based or
Speaker 13: market share and APIs. So we've had interests in the past,
Speaker 13: I'm not going to deny that. And we've also looked
Speaker 13: into acquiring a few smaller startups, and in fact we've
Speaker 13: made one active hire already, like a company called spell Wise,
Speaker 13: which helped revamp our mobile team. And we're always looking
Speaker 13: for like new hungry founders who are like you know,
Speaker 13: even earlier stage than we are, faster at executing than
Speaker 13: like typical engineers from big tech, and we're always excited
Speaker 13: about like talking to more people like that.
Speaker 7: An arab intion Abatis pop CEO, thank you for coming
Speaker 7: back on the show in Bluebot Technology and joining.
Speaker 5: Us at the New York studio. Appreciate it.
Speaker 7: Sticking with AI, the Senates by Partners in AI working Group,
Speaker 7: which is led by Majority leader Chuck Schumer, finally released
Speaker 7: its highly anticipated roadmap yesterday to provide guidance on congressional
Speaker 7: efforts to harness AI's benefits but mitigate potential risks. The
Speaker 7: blueprint recommends thirty two billion dollars in annual government spending
Speaker 7: to support non defense AI research and development efforts, in
Speaker 7: part to stay ahead of rivals like China.
Speaker 4: Caroline long time coming, a fur bit of criticism from
Speaker 4: some lobby years over there. But now we're going to
Speaker 4: take the conversation forward and actually maybe divert into the
Speaker 4: world of web three.
Speaker 6: For a moment.
Speaker 4: Segey Nazarrov's gonna be with US co found and Chainlink
Speaker 4: to discuss the trend in asset tokenizations from New York,
Speaker 4: where we're also looking at meta shares, talking of all
Speaker 4: things social media. Look, we're currently under pressure just by
Speaker 4: one point four percent, and the day interesting risk off
Speaker 4: tone given that the rest of the market is pushing
Speaker 4: higher measure being suspected by the EU of hooking kids
Speaker 4: on Facebook and Instagram. Look, this is yet another investigation,
Speaker 4: this time coming under the Digital Services Act that could
Speaker 4: lead to some finds from New York. For San Francisco,
Speaker 4: this is a Bloomberg technology.
Speaker 7: Let's talk crypto an assets ognization with chain Link, a
Speaker 7: company that connects blockchains and brings real world data on
Speaker 7: chain and which now works with the likes of BNP,
Speaker 7: Bank of America and Citybanking. Just in the last few
Speaker 7: moments has had some pretty significant breaking news. Sergey Nazarov
Speaker 7: is the co founder of chain Link and joins US
Speaker 7: now let's start with that news.
Speaker 5: DTCC.
Speaker 7: You have a new arrangement with them, a new relationship,
Speaker 7: explain it to us.
Speaker 5: Yes, yeah, sure.
Speaker 15: So we've been working with them for some time now
Speaker 15: on how to create high quality on chain digital assets
Speaker 15: that are driven by data. And so the report that's
Speaker 15: just come out today shows how data can flow into
Speaker 15: assets on chain and prove critical things about the assets
Speaker 15: on an ongoing basis, which is very different from how
Speaker 15: the current financial system works, where the ownership of an
Speaker 15: asset doesn't give you access to data that becomes your responsibility.
Speaker 15: So the BTCC report was around something called smart now
Speaker 15: where chain link was used to put critical pieces of
Speaker 15: data on chain around funds tokenized funds, and the collaboration
Speaker 15: included big firms like JP Morgan, Franklin, Templeton, BNYML and
Speaker 15: State Street.
Speaker 5: And others were part of the pilot with them.
Speaker 15: And I think what this shows is that real world
Speaker 15: asset to organization is taking a more mainstream institutional interest level,
Speaker 15: especially the real world assets that are backed by data,
Speaker 15: because the big difference here is that the asset can
Speaker 15: have critical information about it continually updated, and the holder
Speaker 15: of the asset or the buyer of the asset doesn't
Speaker 15: have to search for that data and they don't need
Speaker 15: to have any special expertise. And also the data can
Speaker 15: move across chains. That was the other big part of
Speaker 15: the collaboration is how does the data and the asset
Speaker 15: end up moving across chains. But this is just some
Speaker 15: of our initial work together, and I'm hopeful there will
Speaker 15: be more with them and other large csds.
Speaker 4: It's interesting, of course, because there are many vocal critics
Speaker 4: of some of the actual coins and investment opportunities when
Speaker 4: it comes to crypto, but they've always all together now said,
Speaker 4: but we like the underlying technology. We like blockchain CEO
Speaker 4: Jamie Diamond for example of JP Morgan. How does this
Speaker 4: disintermediate longer term financial institute?
Speaker 15: I think financial institutions have a fundamental role to play
Speaker 15: in terms of compliance and in terms of allowing users
Speaker 15: to use digital asset products in a compliant way, in
Speaker 15: relation to their identity, in relation to ways that regulators
Speaker 15: and csds and central banks find acceptable. So I don't
Speaker 15: think banks are going away. I don't think things like
Speaker 15: the DTCC are going away. I don't think central banks
Speaker 15: are going away. I think they're going to use the
Speaker 15: technology I think there will actually be the biggest net
Speaker 15: users of blockchain technology, and they're going to generate the
Speaker 15: most assets, they're going to generate the most payments, and importantly,
Speaker 15: they're going to do it in a way that complies
Speaker 15: with legal requirements. We're kind of at a place in
Speaker 15: the crypto industry where if you're a two and a
Speaker 15: half trillion maybe you can go to as high as
Speaker 15: ten trillion off of hedge funds and prop traders in
Speaker 15: the retail community.
Speaker 5: But in my opinion, if you want to go.
Speaker 15: To the hundreds of trillions that will be the blockchain format,
Speaker 15: you need the global c as these the central banks,
Speaker 15: the big commercial banks, to basically adopt the technology for
Speaker 15: its value. And that's what this collaboration with the DTCC
Speaker 15: has been about, is providing that technical value in ways
Speaker 15: that benefits both the traditional financial system and consumers and
Speaker 15: the Web three blockchain community.
Speaker 4: This is about, you, say, accelo, to the investment fund
Speaker 4: tokenization movement, which particular real world assets we're ultimately going
Speaker 4: to see being put forward on the blockchain. First, it's
Speaker 4: already being done, already being experimented with. But for the
Speaker 4: audience out there who also happen to be training equities
Speaker 4: or in a commodity space, maybe they're upond syndicate desk.
Speaker 4: Where are they going to see their assets at HIT first?
Speaker 15: So it's actually going to vary by institution and what
Speaker 15: institutions are good at tokenizing or good at turning into securities.
Speaker 5: There are basically two categories.
Speaker 15: There are the core financial pro products of the current
Speaker 15: financial system, treasuries, money market funds, bonds. These are being
Speaker 15: tokenized by bigger institutions, and the benefits of tokenizing them
Speaker 15: are around collateral management, and they're around diversifying your on
Speaker 15: chain holdings so that you're not just holding cryptocurrencies on chain,
Speaker 15: you're holding treasuries on chain. Then you have what are
Speaker 15: called assets at the edges. These are assets that have
Speaker 15: traditionally not been tokenized. So these are assets like carbon credits,
Speaker 15: real estate, private equity. These are the assets that have
Speaker 15: not been securitized that are now being securitized in the
Speaker 15: form of a tokenized product. These are the things that
Speaker 15: people have more press releases about. They hear more about
Speaker 15: because they are more exciting kind of net new product.
Speaker 15: And I think that there is tens of trillions of
Speaker 15: dollars in value just in the net new product category.
Speaker 15: But I am actually seeing both of them happening at
Speaker 15: the same time. I'm seeing the toe organization of treasuries
Speaker 15: and money markets and more foundational financial products and very
Speaker 15: foundational parts of the financial system. And then I'm also
Speaker 15: seeing the more advanced kind of securitization two point zero
Speaker 15: waves of tokenized products. The ones that come to mind
Speaker 15: are private equity, real.
Speaker 5: Estate, and carbon credits. So again, Nazrov co founder Chainling,
Speaker 5: great to have you on the show. Thank you.
Speaker 2: So.
Speaker 4: Service Now is beefing up, It's increasing its workforce, its
Speaker 4: expanding in enterprise software.
Speaker 6: How pretty simple. The hiring from a larger.
Speaker 4: Competitor salesforce me to Brodie Ford is here with a
Speaker 4: very well read story today because everyone loves to hear
Speaker 4: about people pinching people from workplaces, and this is.
Speaker 6: What's going on.
Speaker 16: We all love a rivalry, The tech industry loves a rivalry,
Speaker 16: and we're seeing one here. Service Now is a very
Speaker 16: fast growing software company. A lot of other software companies
Speaker 16: have seen this real almost oppressive environment. They've managed to
Speaker 16: keep growing quick. They're expanding into new product categories. Where
Speaker 16: does that leave them? Edging up? Into Salesforce, right, and
Speaker 16: so what do you do? You poach a couple hundred people.
Speaker 16: And that's what we're seeing here, right. They have hired
Speaker 16: pretty aggressively from Salesforce, their CEOs taking some potshots at them.
Speaker 16: I mean they even stopped using Slack once Slack got
Speaker 16: bought by Salesforce. So we have kind of one of
Speaker 16: these fun little rivalries bubbling up here.
Speaker 8: You know.
Speaker 5: Emily Changs can be speaking to Benioff later today. I'm
Speaker 5: speaking to Bill McDermott on Monday.
Speaker 14: Yeah.
Speaker 5: I wonder if it come I wonder if it comes up.
Speaker 5: Put that aside.
Speaker 7: Put that aside for a second. Competition is not new
Speaker 7: in this place, this town. Is it salaries?
Speaker 5: Is it stock? How they're doing it?
Speaker 16: Yeah, I would say part of it is that there's
Speaker 16: been disruption at Salesforce, right, I mean they had the
Speaker 16: big layoffs a little over a year ago. A lot
Speaker 16: of it I hear is that salespeople got laid off
Speaker 16: over there. Service Now said hey, we actually need more
Speaker 16: salespeople with your kind of experience or come on over.
Speaker 16: But it's not at the executive level too, right, I
Speaker 16: mean Service Now's new chief marketing officer came from Salesforce,
Speaker 16: so I imagine there are some pretty aggressive offers happening here,
Speaker 16: and it's really across the board. So it's interesting to
Speaker 16: see what this kind of new infusion of talent does
Speaker 16: for them. I mean, they've grown their headcount maybe three
Speaker 16: thousand over the last year, which most companies have cut
Speaker 16: by that amount, so it'll be interesting to see how
Speaker 16: that impacts them.
Speaker 4: I love that Phil Patterson is giving you the quote
Speaker 4: of basically that imitation is the best form of flattery.
Speaker 4: So it's quite flattering, honestly that they happen to aspire
Speaker 4: to be more like us.
Speaker 16: The larger company doesn't usually want to engage with this
Speaker 16: kind of thing because then it validates it, right, So yeah,
Speaker 16: they they kind of poo poo to the competition.
Speaker 4: Oh well, we'll see how they handle some of the questions. Yeah, Emily,
Speaker 4: and from our own end a little bit later, Bridie
Speaker 4: Ford always great writing, great explaining. He love having on Meanwhile,
Speaker 4: that does it for this edition of BlueBag Technology.
Speaker 7: Yet what an addition of BlueBag Technology was check out
Speaker 7: the pod. Lots of chat about the pod all the time,
Speaker 7: you know exactly where to find it. One day left
Speaker 7: in this fantastic week. Keep with us from San Francisco
Speaker 7: and New York. This is Bloomberg Technology,