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Speaker 3: All right, folks, focus with us, because there's stuff headlines
Speaker 3: constantly coming at us. We do want to talk to
Speaker 3: you politics. That's what we begin on this Wednesday. President
Speaker 3: Trump's idea of depopulating and taking Overgaza was broadly welcomed
Speaker 3: in Israel, with officials praising the surprise proposal as it
Speaker 3: means to beeve up security following the war with Moss.
Speaker 3: We were following that story late yesterday and obviously and
Speaker 3: more into today, and just moments ago Tim noticing AFP
Speaker 3: coming out and saying that this is from Secretary of
Speaker 3: State Marco Rubio of the United States, saying that the
Speaker 3: President only wants Palestinian to leave Gaza temporarily while the
Speaker 3: territory is reconstructed. So again it feels like a little
Speaker 3: bit of a rolling back of what we had yesterday.
Speaker 4: Well to that point, the wit the White House saying,
Speaker 4: and this according to Fox News and the Washington Post
Speaker 4: that Trump has not committed to putting US troops on
Speaker 4: the ground in Gaza. So some a fast moving story
Speaker 4: here that we're continuing to get clarification on.
Speaker 1: Yeah, and these are all important details.
Speaker 3: I should point out though in the Arab world his
Speaker 3: suggestion of taking over Gaza was taken very differently. Saudi
Speaker 3: Arabia called the plan and an infringement on the legitimate
Speaker 3: rights of the Palestinian people, and that was a position
Speaker 3: echoed by governments across the Middle East.
Speaker 1: So let's get to our round table with us.
Speaker 3: Right now is Bloomberg Opinion International affairs columnist Mark Champion.
Speaker 3: He joins us from London. And then in DC we
Speaker 3: have Dana Stroll. She's senior fellow and research director at
Speaker 3: the think tank the Washington Institute for Near East Policy.
Speaker 3: Among her roles in civil service include from twenty twenty
Speaker 3: one to twenty twenty three, she was Deputy Assistant Secretary
Speaker 3: of Defense for the Middle East, and that, of course
Speaker 3: is the Pentagon's top civilians with responsibility for the region.
Speaker 3: So great to pair pairing, I should say, to talk
Speaker 3: about what's going on in the Middle East.
Speaker 1: Welcome to both of you. Mark, I do want to
Speaker 1: start with you.
Speaker 3: Your column today makes the point that President Trump's proposal
Speaker 3: to take over Gaza maybe more serious than initially thought,
Speaker 3: with language and the judgic similar to a real estate
Speaker 3: developer's approach. Again, we've just got some headlines that there
Speaker 3: seems to be some clarification that he doesn't necessarily maybe
Speaker 3: mean to take it over completely.
Speaker 1: But you say we should take this seriously. How come?
Speaker 5: Well? I think that what I'm trying to say is
Speaker 5: that it's clear that he and the people around him
Speaker 5: think in these terms. They've been talking about this, you know,
Speaker 5: Jared Kushner, his son in law who's in real estate,
Speaker 5: Trump himself, and of course his special ENVOYE Steve Whitcock,
Speaker 5: also in real estate, and this is you know, I
Speaker 5: think we should take seriously that this is the way
Speaker 5: that they think about these things. You know that said,
Speaker 5: you know that this is clearly very unlikely to go anywhere.
Speaker 5: And what worries me slightly is that you know, here
Speaker 5: you are at a juncture. You're you know, you're in
Speaker 5: a peace process that's in several stages. The second one
Speaker 5: is going to come up faster and when we you know,
Speaker 5: then think and it will require the kind of further
Speaker 5: forward looking strategy and planning in order to get that
Speaker 5: through that has not been there until now because Israel
Speaker 5: has not been willing and certainly how Maas has not
Speaker 5: been willing to you know, to engage. So you know
Speaker 5: what worries me is that, you know, the the administration
Speaker 5: will be you know, thinking and talking in these terms
Speaker 5: which really aren't going to go anywhere, and in the meantime,
Speaker 5: we have an unsolved problem that will simply return to fighting.
Speaker 4: Dana, come on in here. I'm wondering if, if, given
Speaker 4: your experience in the region, your experience when it comes
Speaker 4: to dipplematic affairs, if you see this as having any
Speaker 4: weight to it, or maybe perhaps an off the cuff
Speaker 4: re mark or something that doesn't necessarily or should not
Speaker 4: necessarily be taken seriously, how are you looking into it?
Speaker 6: Well, first of all, I don't think it's an off
Speaker 6: the cuff remark. I think it's quite consistent with the
Speaker 6: negotiating strategy we've seen from President Trump and just his
Speaker 6: first two weeks in office here, which is to create
Speaker 6: a crisis mostly with words and threats animate his team
Speaker 6: to then have backchannel negotiations which de escalate a situation.
Speaker 6: And then largely if you look at Columbia or Mexico
Speaker 6: or Canada, each government has come with modest or moderate
Speaker 6: reactions that appear to address Trump's concerns, and then all
Speaker 6: of a sudden there's a delay in what he has
Speaker 6: promised in terms of a harsh response. In this case,
Speaker 6: NETANYAHUO was about to face a fork in the road.
Speaker 6: If the Gaza ceasefire moves to pace to Israel would
Speaker 6: have had to end this war. And we seen with
Speaker 6: all of these hostage releases Hamas come out in their uniforms.
Speaker 6: It certainly doesn't look like the total victory that Prime
Speaker 6: Minister in Nathan Yahu promised the Israeli people. Now, rather
Speaker 6: than talk about what Israel's going to do, or the
Speaker 6: Palestinians or the region, all the talk today is about
Speaker 6: what the United States is going to do. It's totally
Speaker 6: shifted the dynamics and the focus of this conversation. And
Speaker 6: I think Trump knows exactly what he's doing here.
Speaker 1: Well, And that's a really good point.
Speaker 3: And you know, Mark, come on back in, because I
Speaker 3: think some of what we've been hearing is that, you know,
Speaker 3: this is about President Trump taking the focus of what
Speaker 3: really matters, what is the next phases of the ceasefire
Speaker 3: between Hamas and Israel, and really figuring that out. Do
Speaker 3: you agree that it's kind of like the flashy thing,
Speaker 3: you know, look over here, but it kind of gets
Speaker 3: everybody off the hook of thinking about what's the next
Speaker 3: phase of the ceasefire.
Speaker 5: I think it is. I do think that's part of
Speaker 5: what he's doing. It's simply that I don't believe he
Speaker 5: has a thought through strategy that he's trying to you know,
Speaker 5: unlike with the trade, where you know, he had things
Speaker 5: that he could get. I simply don't think that he
Speaker 5: has a strategy that will be able, you know, to
Speaker 5: to get a movement forward, to get the Israelis to
Speaker 5: on board, to to you know, get to a place
Speaker 5: where you can have a serious proposal and therefore, you know,
Speaker 5: this kind of real estate talk and so on. I
Speaker 5: think it is serious in the sense that it's a
Speaker 5: real distraction, you know, you know, I take it that
Speaker 5: he knows what he's doing when he's doing making you know,
Speaker 5: throwing up all these you know, balls of fire in
Speaker 5: the air.
Speaker 7: So everybody's looking a different.
Speaker 5: Way, but you need to have something underneath there that
Speaker 5: you can realistically get people to do, and that I
Speaker 5: think is missing, you.
Speaker 1: Know, Dana.
Speaker 3: One of the things I think we keep thinking about
Speaker 3: as we watch, you know, what's been going on in
Speaker 3: terms of threats of tariffs, then maybe a little bit
Speaker 3: of a rollback and you know, or things change or
Speaker 3: they're postponed in terms of their enactment. Having said that,
Speaker 3: you know, we thought about with tariffs, what's the goal
Speaker 3: here of President Trump? What's the goal here in your
Speaker 3: view of President Trump in terms of meeting with Benjamin
Speaker 3: Netanyahu and what his real aim is. President Trump's aim
Speaker 3: is for Israel and for the Palestinians.
Speaker 6: Well, first of all, what Trump wants is Israel's security,
Speaker 6: and he doesn't want to see homos return to a
Speaker 6: position of governance. And right now, the Arab leaders of
Speaker 6: the rest of the Middle East aren't really cooperating. They're
Speaker 6: unwilling to commit any sort of security presence or boots
Speaker 6: on the ground, meaningful resources beyond humanitarian aid. Pressure on
Speaker 6: the Palestinian authority in terms of what its leadership could
Speaker 6: look like in gods or reconstruction or an actual day
Speaker 6: after plan for Gaza. All he's heard from Arab leaders
Speaker 6: is mostly know what they're unwilling to bring to the table.
Speaker 7: And now you see the dynamics sort of shifting.
Speaker 6: And of course next week the table is set for
Speaker 6: King of Dullah of Jordan, followed by perhaps Egyptian President
Speaker 6: c c All coming to Washington, and this is going
Speaker 6: to be the focus. So you see a lot of
Speaker 6: movement because of what Trump has said yesterday.
Speaker 4: Mark, does it threaten relationships that the US has in
Speaker 4: the region, such as President Trump's relationship with the Kingdom
Speaker 4: of Saudi Arabia for example.
Speaker 5: Well not at this point. I do think that there's
Speaker 5: a huge difference in the situation between his first term
Speaker 5: and this his second term. You know, in his first term,
Speaker 5: the interests of the Gulf States and Israel were more
Speaker 5: or less aligned. Their biggest concern was Iran, the threat
Speaker 5: from Iran. And you know, so he was able then
Speaker 5: to get the Abrams Accords, and after that the Biden
Speaker 5: administration was able to talk to the Saudis a lot
Speaker 5: about similar deals because there was no real impediment. And
Speaker 5: this time around, since October twenty three, when you've got
Speaker 5: the you know, you've had the war in Gaza in between,
Speaker 5: and also the sort of interests of Saudi Arabian particular
Speaker 5: have changed much more focused on the economy and stability,
Speaker 5: less worried about Iran. You now have a different situation,
Speaker 5: and I just think it's going to be quite difficult
Speaker 5: to bring these different interests together where you've got the
Speaker 5: domestic political concerns of Saudi Arabia and the Gulf State's
Speaker 5: now focused on their own populations and their view of Gaza,
Speaker 5: and it just makes it harder to bring everybody together.
Speaker 5: And I'm not clear that you know he's got a
Speaker 5: plan for.
Speaker 2: That, Dana.
Speaker 3: When we think about what is the plan though for Palestinians,
Speaker 3: you know, Marx column gets into you know, Gaza is
Speaker 3: a demolition site. You know, it's a mess, and to
Speaker 3: think about the Palestinians going back there, I mean, how
Speaker 3: do they live. There's no infrastructure, so there needs to
Speaker 3: be some kind of rebuild. And you do wonder how,
Speaker 3: you know, how this happens going forward, how do you
Speaker 3: see it playing out in terms of Yeah, first.
Speaker 6: Of all, the estimates for the cost of rebuilding Gaza
Speaker 6: are upwards of eighty billion dollars and we're probably talking
Speaker 6: about decades to clear out the rubble and rebuild Gaza,
Speaker 6: so there's not really a temporary relocation of Palestinians.
Speaker 7: And based on past US.
Speaker 6: Experiences for example, post conflict reconstruction in Iraq and then Afghanistan,
Speaker 6: the difference in Gaza is how concentrated the destruction is
Speaker 6: and the closed nature of the border, so civilians can't
Speaker 6: move around when we're trying to get ordnance, unexploded mines
Speaker 6: and bombs and the.
Speaker 7: Rubble cleared out.
Speaker 6: So this was always going to be a huge challenge
Speaker 6: just on the on the remarks about the region, what's
Speaker 6: totally different from Trump's first term is this strategic nature
Speaker 6: of the Middle East. Iran is more vulnerable today than
Speaker 6: it ever has been because of Israel's military strikes that
Speaker 6: have taken out its air defenses. But Charyl Ossatt has
Speaker 6: gone in Syria. There's also a ceasefire in Lebanon and
Speaker 6: a chance an opportunity to reimagine Lebanon without a stranglehold
Speaker 6: of Hazbolah governance, and the same thing in Amasque in Gaza.
Speaker 7: Trump can't do this alone.
Speaker 6: He needs the Europeans, he needs the Arab leaders, and
Speaker 6: I think there's an opportunity here for different leaders to
Speaker 6: bring things to the table.
Speaker 7: It's not only about Gaza.
Speaker 4: Well, sticking on Gaza does raise the question of what
Speaker 4: the future of Gaza is if this ceasefire holds, if
Speaker 4: and when the war does end, what is the plan
Speaker 4: for Gaza? If the United States does not go through
Speaker 4: with the plan that President Trump said yesterday at the
Speaker 4: White House.
Speaker 6: On the current trajectory, without anything other than what we
Speaker 6: see right now, Gaza is probably going to become something
Speaker 6: like Mogadishu on the Mediterranean. There's no non Hamas alternative
Speaker 6: to governing Gaza. We've seen that there's plenty of Hamas.
Speaker 6: Guys who have come out of the tunnels, put their
Speaker 6: uniforms back on, are distributing humanitarian aid and telling people
Speaker 6: we're going to help you get back to your homes
Speaker 6: and we're going to help you rebuild. So that means
Speaker 6: that Hamas reconstitutes, it regains governance over Gaza, and its
Speaker 6: remaining leaders have already threatened to do October seventh over
Speaker 6: and over and over.
Speaker 3: Yeah, So hence you understand the difficulties in figuring the
Speaker 3: way forward and what really is the next step. Dana,
Speaker 3: thank you so much. Really appreciate your input. Dana Strol.
Speaker 3: She's senior fellow and research director at the Washington Institute
Speaker 3: for Near East Policy and someone who has been on
Speaker 3: the inside within the US government really understanding and working
Speaker 3: on this region.
Speaker 1: Dana, thank you so much.
Speaker 3: Hey, Mark, before we wrap up with you, we did
Speaker 3: want to ask you about Russia and Ukraine, the role
Speaker 3: the US and President Trump will play in what happens next.
Speaker 3: We know US allies expect the Trump administration to present
Speaker 3: a long awaited plan to end Russia's war in Ukraine
Speaker 3: at the Munich Security Conference in Germany next week.
Speaker 1: This is coring to folks in the know.
Speaker 3: You've got a second column out today about President Trump
Speaker 3: saying he wants some of Ukraine's resources in return for
Speaker 3: continuing aid. Your note, or you note that this is
Speaker 3: a price worth paying.
Speaker 5: Why, Well, first of all, it's something that President Zelensky
Speaker 5: of Ukraine offered. So he put out this victory plan
Speaker 5: last year, and one of the five baskets in there
Speaker 5: was incentives for the West. But you know, it's quite
Speaker 5: clear that he had a transactional Donald Trump in mind.
Speaker 5: Incentives to say, look, you're not just helping us, you're
Speaker 5: helping yourselves.
Speaker 7: After the war.
Speaker 8: We have a lot of.
Speaker 5: Resources and you know, we're willing to open them up
Speaker 5: and you know, make them available to you. So there's lithium,
Speaker 5: there's you know, magnesium, there's you know a number of
Speaker 5: different resources that would be useful in industry and the
Speaker 5: ev industry and so on. So you know, he was
Speaker 5: just it's already there offered. Trump has taken up the offer.
Speaker 5: It's exactly what Zelensky was trying to do. And you know,
Speaker 5: given Europe's weakness militarily, its failure to really build military capabilities,
Speaker 5: you know what's became clear that the peace devan of
Speaker 5: the Cold War was over. It really isn't able to
Speaker 5: do it on its own. So Ukraine needs the US
Speaker 5: and Europe, you know, is if you could describe this
Speaker 5: as the price that Europe should be willing to pay
Speaker 5: allowing the you know, the US under Trump to have
Speaker 5: access to some of these materials, to keep quiet about it,
Speaker 5: because they need the American military, they need Trump Mark.
Speaker 4: We're three years into this reward, though, you know, how
Speaker 4: does how does this actually end it?
Speaker 1: And just got about thirty seve and Mark.
Speaker 5: Yeah, I mean, we'll see what the US plan actually
Speaker 5: is on offer, and you know, there are ways to
Speaker 5: do it. I've written about it, but it's you know,
Speaker 5: it's it's really not going to be easy, and you
Speaker 5: know an instant overnight deal is highly unlikely.
Speaker 3: Yeah, there's a lot, it's a full plate, certainly when
Speaker 3: you look around the world. Mark, thank you so much,
Speaker 3: so appreciate you weighing in on both what's going on
Speaker 3: potentially in the Middle East and then of course the
Speaker 3: ongoing war there in Russia and Ukraine. Bloomberg Opinion International
Speaker 3: Affairs columnist Mark Champion joining us from London.
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Speaker 9: Quite a bit of news in the world.
Speaker 4: Adventure capital Cherry Ventures, it's a VC firm based in Berlin,
Speaker 4: has raised five hundred million dollars in funding. That's the
Speaker 4: back Europeans startups that come in from our Bloomberg team
Speaker 4: across the Pond and the VC firm General catalyst Carol
Speaker 4: checked this out they're getting into wealth management. They hired
Speaker 4: twenty former staffers from First Republic Bank. Remember it's one
Speaker 4: of the casualties of the twenty twenty three regional banking
Speaker 4: crisis to create a wealth management business. I wonder if
Speaker 4: you're gonna be able to at those two point five
Speaker 4: percent mortgages that you're found for. Yeah, maybe the one
Speaker 4: point nine percent that I've heard of.
Speaker 1: Maybe not anytime soon.
Speaker 6: Now.
Speaker 1: Jeff Garbo is with us. He's US venture capital leader already.
Speaker 1: Why he joins us here in our Bloomberg Interactive Broker studio.
Speaker 5: Hello.
Speaker 3: Hello, We were remarking that it's been since pre pandemic
Speaker 3: that you've actually been here in our studio.
Speaker 1: It's been a while.
Speaker 8: Yeah, it's great to be back. Thanks for having me.
Speaker 1: Well, it's great to have you here.
Speaker 3: You know, the M and A market has gone through
Speaker 3: a lot, just like the rest of the world, right
Speaker 3: through the pandemic, coming out of the pandemic, dealing with
Speaker 3: a higher rate environment after a very low rate environment
Speaker 3: in the cross of capital was nothing. How would you
Speaker 3: describe the venture world right now?
Speaker 8: So it's a very interesting time in the venture world
Speaker 8: because the pace of change probably has never been greater.
Speaker 8: I was just up on sand Hill Road on Monday
Speaker 8: with a top tier AI investor and he was remarking at,
Speaker 8: you know, how fast things He's amazed at how fast
Speaker 8: things are going. And that's something that we kind of expect.
Speaker 8: And I'm drawing a lot of analogies to kind of
Speaker 8: what's happened in the internet through the Internet phase.
Speaker 1: Is it really a fair comparison, do you think?
Speaker 8: I think so? And is it you know, is it exact?
Speaker 8: You know, time will tell, but you know, there is
Speaker 8: so much change. There is so much you know, you
Speaker 8: take a step back and look at the big picture.
Speaker 8: What were we going to do on the Internet, Well,
Speaker 8: we were going to do like I was going to
Speaker 8: buy something. I was gonna, oh catalog. So by the way,
Speaker 8: I would never have to make another catalog if I
Speaker 8: was a company, it was just oh, I would put
Speaker 8: it up there and then I would never have to
Speaker 8: reprint it. And if I wanted to dislike do it.
Speaker 8: But now you think about, you know, twenty five years later,
Speaker 8: if the Internet would went down, you know, the economic
Speaker 8: engine of the United States runs and the world runs
Speaker 8: on the internet. So yeah, I was gonna go ahead,
Speaker 8: and so I just think I think that has that
Speaker 8: same possibility and a lot of you know, with AI
Speaker 8: and some of the things that are happening now, but
Speaker 8: the stack is being built and over time that will
Speaker 8: grow up and build and then it will collapse, but
Speaker 8: you'll you'll have just much more efficiencies.
Speaker 4: Who's the company that sends out that huge catalog restoration hardware?
Speaker 4: All right, yeah, we just got that. Yeah, I know,
Speaker 4: they went right into the recycling.
Speaker 1: Multiple ones usually, right, Yeah, it.
Speaker 4: Was like they didn't get the memo of the nineties.
Speaker 4: Is it moving even faster though? Than I mean, I
Speaker 4: talked to somebody today today. He's in the AI space,
Speaker 4: and he said, things move like we're talking three month
Speaker 4: increments for revolutionary changes here.
Speaker 8: That's what it feels like. And it feels like it
Speaker 8: is faster. And part of that maybe because of all
Speaker 8: the capital that's out there. You know, we have multiples
Speaker 8: of capital that are available through the venture pipeline. The
Speaker 8: world has become flatter, You've got more international participation both
Speaker 8: from an LP perspective, putting money into the pipeline as
Speaker 8: well as direct investments. So it just feels like, yeah,
Speaker 8: and one of the by products of that has been.
Speaker 8: You know, in two thousand and five there were five
Speaker 8: thousand venture back startups. At the end of twenty twenty four,
Speaker 8: there are fifty five thousand venture back startups in existence.
Speaker 8: So a venture cycle is about ten years. You know,
Speaker 8: through the math on that you've got multiples of venture
Speaker 8: cycles in twenty years.
Speaker 3: Is there a pets dot Com version of the AI
Speaker 3: era and exuberance?
Speaker 8: Well, you're always you know, it's funny because you always
Speaker 8: are we going to ultimately dot.
Speaker 1: Com of course being.
Speaker 3: A flop, a flop you could say web then too,
Speaker 3: there's many of them, like you just through dot Com, right,
Speaker 3: and like there was just models that didn't have any
Speaker 3: kind of financials or profitability behind them, and it was
Speaker 3: just like, yeah.
Speaker 8: There will be companies that don't succeed, but that's not
Speaker 8: that's not necessarily just part of an era. That's part
Speaker 8: of the business. You think about, This is a portfolio
Speaker 8: management business, and I have to produce outsized returns on
Speaker 8: the amount of money that I raise if I'm a
Speaker 8: venture investor, So I have to take some really big swings,
Speaker 8: and you know what, they're not all going to work
Speaker 8: out because we're making bets based upon what we know
Speaker 8: today what is today will not be what happened was
Speaker 8: what is going on in three years.
Speaker 3: So do we get a bubble, there will be anyone,
Speaker 3: There will be There will be over exuberants just.
Speaker 8: Because there's so much capital. But you never get advances
Speaker 8: without taking those kind of leaps.
Speaker 9: What was the reaction on sand Hill Road about deep Seek?
Speaker 8: Well, I think the you know, we can't really comment
Speaker 8: direct land companies, but I think at some point you
Speaker 8: see the technology wave happen where costs always come down
Speaker 8: and you're always going to have to be dealing with
Speaker 8: cost curves. And so, as I was talking about earlier,
Speaker 8: you have a scenario where thirty years ago you would
Speaker 8: raise fifty million dollars to spend to start an internet company.
Speaker 8: Today you can do that for fifty dollars, and you
Speaker 8: could do it on consumption, on a swipe of a
Speaker 8: credit card. Whars before you had to add full cost
Speaker 8: of ownership. So you're going to see AI do that.
Speaker 8: That's why I talked about the AI stack collapsing. It's
Speaker 8: getting built up because it's being created and then at
Speaker 8: time that will happen. It happened in networking with boxes.
Speaker 9: I'm not asking you to comment on deep seek.
Speaker 4: I want to know how freaked out the venture capitalists
Speaker 4: are about the billions they've invested in the AI companies
Speaker 4: that seem to be less efficient than deep seek.
Speaker 8: Why we don't have all the information on what's really
Speaker 8: happened and what the ramifications are going to be. I
Speaker 8: think you as an investor, you always need to be
Speaker 8: taking into consideration what you're seeing. So I think one
Speaker 8: of the things you know that will be one of
Speaker 8: the things that may not have been talked about a lot,
Speaker 8: you'll see more open source because a lot of this stuff,
Speaker 8: a lot of the investments have been in closed environments,
Speaker 8: and open source is cheaper, cheaper to develop, it's cheaper
Speaker 8: to license, So that may be one of the by
Speaker 8: products in and if we've truly reached efficiencies, then you
Speaker 8: can start to build on top of that stack and
Speaker 8: start to build the pyramid up.
Speaker 3: I mean, isn't that something venture capitals do like it's
Speaker 3: it's about disrupting kind of the establishment. And already you
Speaker 3: might say that in video is the establishment or open
Speaker 3: AI is the establishment in AI.
Speaker 5: And so the.
Speaker 3: Expectation is that sure, we're going to come across probably
Speaker 3: a model that costs a fraction of the existing AI
Speaker 3: build that we are talking about today, and who knows
Speaker 3: how long that takes or maybe it's already happened.
Speaker 1: You know, we don't know.
Speaker 3: You're right, deep seek We have to find out a
Speaker 3: lot more information. But is it kind of the venture
Speaker 3: perspective that of course we're going to find probably a.
Speaker 1: Faster way to do this, a cheaper way to do this.
Speaker 8: That's all was and that if there wasn't, if that
Speaker 8: wasn't that proposition, there wouldn't be a venture business. You know,
Speaker 8: it's innovation, it's driving change. And so does that mean.
Speaker 1: Investors the established investor who has plowed a ton of
Speaker 1: money into Nvidia, and Nvidia so dominates the market that
Speaker 1: they there's a possibility that they're not the ones who
Speaker 1: dominate going forward.
Speaker 8: That also may open up opportunity because you know, think
Speaker 8: about we're early when you think about the visions that
Speaker 8: have been painted out. And I was talking about this
Speaker 8: this morning. There was a talk a while ago about
Speaker 8: Internet first the first people who are the Internet first workforce. Well,
Speaker 8: just think what happens when you get the first AI
Speaker 8: workforce and what the capabilities that they have a lot
Speaker 8: of the stuff that they will be using. I'm talking
Speaker 8: twenty years from now, haven't been built today. That needs
Speaker 8: to get built. So but you need to have foundation
Speaker 8: and because and you need to have that foundation and
Speaker 8: infrastructure laid. It's the same thing.
Speaker 9: You know.
Speaker 8: The other analogy to look at is internet building. You know,
Speaker 8: if you remember during bandwidth, everybody said, oh, we have
Speaker 8: so much bandwidth over bandwidth, we'll never use it. We'll
Speaker 8: guess what we burned through that usage in a fraction
Speaker 8: of the time anybody ever thought it was so Oftentimes,
Speaker 8: when you find you have abundance and overbuild, you don't
Speaker 8: necessarily have that in these technology markets because it gets
Speaker 8: used up. And that is also the mother of invention
Speaker 8: and innovation.
Speaker 9: Where's the money going now?
Speaker 8: So obviously ai AI is taking up about forty percent.
Speaker 1: Well kind of AI though, like what Well.
Speaker 8: Obviously we've seen a lot of foundational model, yeah things,
Speaker 8: we've seen some open source things, starting to see applications
Speaker 8: going after professional services. We had that conversation earlier this
Speaker 8: week on Sandhill Road. The other thing with the classification,
Speaker 8: it's going to be you know, that's going to be
Speaker 8: a little squishy because right now, if you're not. We
Speaker 8: are in a have and have not environment. I talked
Speaker 8: about the fifty five thousand venture backed startups in the world.
Speaker 8: Half of them haven't read about half of them haven't
Speaker 8: raised in three years. So you're going back to market
Speaker 8: in an AI market and having to sell a story.
Speaker 8: So you're going to have to pivot. So a lot
Speaker 8: of people that may not have been AI native companies
Speaker 8: now are positioning themselves as AI company. So you're going
Speaker 8: to see that number influenced by that.
Speaker 1: I mean, how many of them are?
Speaker 3: Of those they have to go back for more money, right,
Speaker 3: I mean they're not ready to go public, they're not
Speaker 3: ready to do what have you?
Speaker 1: What kind of money is out there?
Speaker 8: So in that fifty five so oh, dry powder is
Speaker 8: about three hundred and ten billion.
Speaker 1: How does that compare with where we've been.
Speaker 8: I don't know.
Speaker 1: The last couple of years.
Speaker 8: It's about par It hasn't grown substantially because interesting the
Speaker 8: past couple of years have been down fund rate fund formation,
Speaker 8: yeah years, and it kind of dropped. It lagged the
Speaker 8: investment cycle by about a year. So when twenty twenty
Speaker 8: two things slowed down in venture and the investment side,
Speaker 8: and then twenty twenty three. The formation side started slow,
Speaker 8: but twenty twenty four was an up year for the
Speaker 8: first year and two years on an investment into companies
Speaker 8: last year.
Speaker 1: Okay, okay, do you use.
Speaker 9: AI in your job?
Speaker 8: Yes?
Speaker 9: I do. How do you use it?
Speaker 8: I use it to help distill information. We've got something
Speaker 8: called EYAI that basically we've you know, it's kind of
Speaker 8: our large language model that we help feed information into.
Speaker 4: So essentially it's I'm guessing it's built on a LM
Speaker 4: like an open AI for example, chat GPT.
Speaker 9: It's built on something like that, and.
Speaker 4: You copy and paste a large document into it and
Speaker 4: get it summarized. What do you how do you do it?
Speaker 8: Summarization helping to analyze a lot of it, So, you know,
Speaker 8: how do you prompt in? You know, that's that's a
Speaker 8: key of how you can help get better value out
Speaker 8: of it? Is what are the questions? It's funny it
Speaker 8: used to be you know it now we're our tagline
Speaker 8: is all lan. It used to be asked the better
Speaker 8: you know one of the things on our ey private
Speaker 8: has asked a better question.
Speaker 9: Yeah, and if you give a better prompt engineer, So if.
Speaker 8: We ask the better questions that helps, you know, distill
Speaker 8: And that's actually you know, when you think about the
Speaker 8: AI workforce, that's going to be critical thinking is going
Speaker 8: to be something that's very important.
Speaker 9: I was I was talking.
Speaker 4: We were talking to Man Deep earlier from Many Intelligence,
Speaker 4: and I mean we were off Mike and we were
Speaker 4: talking about AI and he was saying, you know, everybody
Speaker 4: who you know, you have to embrace this stuff.
Speaker 9: You have to experiment with it.
Speaker 5: Uh.
Speaker 4: If you want to understand the technology, you got to
Speaker 4: start using it.
Speaker 3: Ethan Mollock, who we have had on is co author
Speaker 3: of co Intelligence. Living and Working with AI is basically
Speaker 3: like if you if you haven't been working and playing
Speaker 3: with it, you are behind the curve in a big way.
Speaker 8: Telling you that Chicken Mary and by the time you
Speaker 8: see it, it's too late. Yeah, that's the thing. That's
Speaker 8: why you have to be ahead of the curve.
Speaker 1: Playing with it on my phone a little bit. Jeff Graybow,
Speaker 1: thank you so much.
Speaker 3: Us Venture Kappa leader at Ey adding us right here
Speaker 3: in our Bloomberg Interactive Broker studio.
Speaker 2: This is the Bloomberg Business Week podcast. Listen live each
Speaker 2: weekday starting at two pm Eastern on Applecarplay and the
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Speaker 2: Just say Alexa, I played Bloomberg eleven thirty.
Speaker 4: But once again, check out the stock market, Charlie, give
Speaker 4: us giving us an update there, Carol, we are flat.
Speaker 4: It's yellow on the Nasdaq. You don't see that every day.
Speaker 4: It's not red, it's not green, it's yellow. Three tens
Speaker 4: of one percent to the upside on the S and P,
Speaker 4: five hundred and seven tenths on the dow to the upside.
Speaker 4: Let's drive to the clothes and get an idea of
Speaker 4: what Jennet Gerritty has to think about these markets.
Speaker 1: Yeah, exactly.
Speaker 3: She's managing director, chief economist over at Robertson Stevens, a
Speaker 3: wealth management firm with more than seven billion in assets
Speaker 3: under management, and she joins us on this Wednesday from
Speaker 3: Menlo Park, California. Janette, good to have you back here
Speaker 3: with Tim and myself. A lot coming out investors right now.
Speaker 1: We are seeing stocks.
Speaker 3: So pretty much at their best levels of the session,
Speaker 3: but just a little bit higher here. How are you
Speaker 3: looking at this investment environment? Are there more opportunities or
Speaker 3: more reasons to be cautious.
Speaker 10: Well, there's a lot of opportunities, and I think your
Speaker 10: previous speaker was highlighting some of them. There's a lot
Speaker 10: going on. Sometimes there's a little bit too much going on.
Speaker 10: I think that's been maybe the story of this week.
Speaker 10: And the markets are appear to be and I think
Speaker 10: most investors are sort of saying, Okay, let me focus
Speaker 10: on the fundamentals as they are and look forward. And
Speaker 10: the economic fundamentals are very good. It's an economy firing
Speaker 10: on all cylinders right now, and I think that's carrying
Speaker 10: through on how people are thinking about the immediate opportunities.
Speaker 11: Having said all of.
Speaker 10: That, there is risk here that things get disrupted, even
Speaker 10: sometimes just by the things that are talked about. One
Speaker 10: example of that would be, you know, the manufacturing sector
Speaker 10: is now growing again. It's actually been in a bit
Speaker 10: of a slump for a couple of months, as indicated
Speaker 10: by the purchasing managers indices, and now it's picking up
Speaker 10: and you can see things picking up in January. What
Speaker 10: remains to be seen is to a degree, things kind
Speaker 10: of come to a stop for a minute while people
Speaker 10: try and figure out what the real substance is in
Speaker 10: the discussion of tariffs or anything else.
Speaker 4: That's so it's you know, that's what we're trying to
Speaker 4: figure out right now. I mean, I was joking earlier today,
Speaker 4: it's like, is it only Wednesday, because it feels like
Speaker 4: we've been talking about tariffs for two weeks at this point.
Speaker 3: Well, we expected on day one because that was a
Speaker 3: tefic part of his campaign, right and then when it
Speaker 3: didn't happen, we were kind of like, wait, what's going on?
Speaker 4: What were your clients doing on that? Were they calling
Speaker 4: you Monday? Were they, you know, trying to figure out, Okay,
Speaker 4: what's what's going on here? Is everybody because they've seen
Speaker 4: this movie before, they're just like, Okay, sit back and
Speaker 4: we'll wait to see what he does.
Speaker 11: Well to a certain extent, they've seen this movie before,
Speaker 11: but not quite in this way. And and so, but
Speaker 11: I think most of our clients we were talking about
Speaker 11: them to them about this some time ago. Per the
Speaker 11: point that this is this is should not be entirely
Speaker 11: a surprise. The speed, the magnitude, the lack of clarity
Speaker 11: as to what the objective really is, I think is
Speaker 11: what surprised people is they say, we can understand why
Speaker 11: this is being done. Then that gives us a certain
Speaker 11: amount of sense of certainty. But that's been hard to absorb.
Speaker 11: But they there's not enough there for them to be
Speaker 11: worried about.
Speaker 7: Yet they're just a little bit worried.
Speaker 1: All right, Jeanette, Thank you so much. Jeannette Garrity.
Speaker 3: She's managing director economist at Robertson Stevens.
Speaker 2: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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