1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma wits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:21,880 Speaker 1: at Bloomberg dot com. But we are awaiting a conversation 8 00:00:21,960 --> 00:00:26,560 Speaker 1: with Virgin Atlantic CEO Richard Branson and Social Capital CEO 9 00:00:27,280 --> 00:00:31,000 Speaker 1: Chamas Polly Hapat and he is coming to speak with 10 00:00:31,040 --> 00:00:34,120 Speaker 1: the Bloomberg's Body Queen and Guy Johnson to talk about 11 00:00:34,200 --> 00:00:39,080 Speaker 1: a new venture to take space tourism public. That is, 12 00:00:39,159 --> 00:00:42,400 Speaker 1: a Virgin Galactics effort to bring people to space who 13 00:00:42,400 --> 00:00:45,480 Speaker 1: want to just experiencing it, experience it. How there could 14 00:00:45,520 --> 00:00:49,120 Speaker 1: be an initial public offering and raise equity in it. 15 00:00:49,120 --> 00:00:51,480 Speaker 1: It'll be interesting to see whether there is a big 16 00:00:51,520 --> 00:00:54,280 Speaker 1: profit to be made here, as well as what the 17 00:00:54,360 --> 00:00:59,720 Speaker 1: links will be between the public venture and the private 18 00:01:00,120 --> 00:01:02,480 Speaker 1: in the private endeavor to try to go to space 19 00:01:02,920 --> 00:01:07,840 Speaker 1: and the NASAs type of agents in the government. In 20 00:01:07,880 --> 00:01:10,640 Speaker 1: other words, how much will the US sort of lean 21 00:01:10,880 --> 00:01:14,399 Speaker 1: on private companies or in this case, public companies, to 22 00:01:14,959 --> 00:01:19,640 Speaker 1: influence their decisions with respect to UH with with respected 23 00:01:19,800 --> 00:01:23,560 Speaker 1: decisions with respect to space exploration. Joining us now to 24 00:01:23,600 --> 00:01:27,039 Speaker 1: talk about that, as Christopher Jasper, transport aviation reporter for 25 00:01:27,280 --> 00:01:30,000 Speaker 1: Bloomberg News. Christopher, what are we expecting to hear and 26 00:01:30,040 --> 00:01:32,959 Speaker 1: what have we learned so far about Richard Branson's Virgin 27 00:01:33,160 --> 00:01:39,160 Speaker 1: Galactic space tourism venture going public? UM? Well, it's using 28 00:01:39,200 --> 00:01:42,399 Speaker 1: a somewhat unorthodox method to do this. Rather than going 29 00:01:42,440 --> 00:01:46,560 Speaker 1: down an I p O route, He's going to accomplish 30 00:01:46,560 --> 00:01:51,040 Speaker 1: a listing through a merger with a listed shell company 31 00:01:51,040 --> 00:01:56,880 Speaker 1: in New York UH, which will hand over stake in 32 00:01:56,920 --> 00:02:00,440 Speaker 1: the enlarged group and raise about eight hundred million dollars 33 00:02:00,960 --> 00:02:04,840 Speaker 1: to take the project further. That seems to suggest that 34 00:02:05,880 --> 00:02:07,560 Speaker 1: maybe an I p O might not have been a 35 00:02:07,560 --> 00:02:11,600 Speaker 1: good idea. There's still quite a lot of skepticism out there, 36 00:02:11,639 --> 00:02:16,720 Speaker 1: perhaps about whether UM space tourism really can work. We 37 00:02:16,800 --> 00:02:19,959 Speaker 1: know that he's got about six people signed up, having 38 00:02:20,720 --> 00:02:27,320 Speaker 1: paid eighty million dollars in deposits to travel, but the 39 00:02:27,360 --> 00:02:32,120 Speaker 1: whole plan suggests, by his reckoning, that there may be 40 00:02:32,800 --> 00:02:37,360 Speaker 1: millions of people who would be interested in flying to 41 00:02:37,400 --> 00:02:39,400 Speaker 1: the edge of space if the price can be brought 42 00:02:39,440 --> 00:02:42,880 Speaker 1: down enough, and if you're going to invest in Virgin 43 00:02:43,240 --> 00:02:45,920 Speaker 1: Galactic long term, then that's really about that you're taking. 44 00:02:47,160 --> 00:02:50,040 Speaker 1: Would you want to go to space, Well, I would 45 00:02:50,080 --> 00:02:52,640 Speaker 1: like to go to space, absolutely, But I think people 46 00:02:52,680 --> 00:02:54,840 Speaker 1: need to understand that this isn't a trip to the Moon. 47 00:02:55,240 --> 00:02:57,280 Speaker 1: It's not it's not even a trip into higher Earth 48 00:02:57,400 --> 00:03:00,519 Speaker 1: orbit where you can see the entire planet beneath few. 49 00:03:00,680 --> 00:03:03,840 Speaker 1: This is essentially to the edge of space, where you 50 00:03:03,840 --> 00:03:05,639 Speaker 1: get to see the curvature of the Earth and your 51 00:03:05,680 --> 00:03:09,560 Speaker 1: experience weightlessness for a limited time. But you know you're 52 00:03:09,680 --> 00:03:11,320 Speaker 1: you're you're not sort of going to feel like you're 53 00:03:11,320 --> 00:03:14,960 Speaker 1: in Apollo eleven all the all the International Space Station, 54 00:03:15,040 --> 00:03:17,280 Speaker 1: which perhaps is what people are looking for. Christopher Jasper, 55 00:03:17,320 --> 00:03:19,280 Speaker 1: thank you so much for being with us. Christopher Jasper 56 00:03:19,280 --> 00:03:23,000 Speaker 1: as Transport and aviation reporter for Bloomberg News. We are 57 00:03:23,080 --> 00:03:27,600 Speaker 1: going to hear from Virgin Atlantic CEO himself, Richard Branson, 58 00:03:27,960 --> 00:03:31,200 Speaker 1: as well as Social Capitals CEO. They're going to be 59 00:03:31,280 --> 00:03:35,920 Speaker 1: talking about this joint venture space tourism going public with 60 00:03:36,000 --> 00:03:39,600 Speaker 1: an I p O. Take a listen. We'd like to 61 00:03:39,600 --> 00:03:43,000 Speaker 1: welcome now our Boomberg Radio and TV audience, as billionaire 62 00:03:43,080 --> 00:03:46,680 Speaker 1: Richard Branson's Virgin Galactic is becoming the first ever space 63 00:03:46,680 --> 00:03:49,840 Speaker 1: tourism venture to hit public markets. This after receiving an 64 00:03:49,840 --> 00:03:54,400 Speaker 1: eight hundred million dollar investment from the publicly traded Social Capital. 65 00:03:54,520 --> 00:03:57,680 Speaker 1: We joined now by Richard Branson and Social Capital co 66 00:03:57,800 --> 00:04:03,320 Speaker 1: founder tell us. How are you happy, dear gentlemen, Thank 67 00:04:03,320 --> 00:04:06,080 Speaker 1: you so much for joining. Richard? How did this meeting 68 00:04:06,120 --> 00:04:08,080 Speaker 1: come about? I know that you had been in talks 69 00:04:08,120 --> 00:04:11,480 Speaker 1: with the likes of Saudi Arabia and possibly other players 70 00:04:11,560 --> 00:04:13,520 Speaker 1: as well. You pulled out of those after the death 71 00:04:13,520 --> 00:04:16,719 Speaker 1: of journalists Kahog, for example, and that brought you to 72 00:04:16,800 --> 00:04:21,760 Speaker 1: this meeting. Explain the origins of this investment. Well, when 73 00:04:21,800 --> 00:04:25,360 Speaker 1: we sadly couldn't go ahead with the studies, um, I 74 00:04:25,400 --> 00:04:29,240 Speaker 1: decided that I would found Virgin Galactic to profitability myself 75 00:04:29,400 --> 00:04:33,560 Speaker 1: through through the Virgin group. And then we got a 76 00:04:33,560 --> 00:04:37,640 Speaker 1: call from Shamath who said that he was keen to 77 00:04:37,720 --> 00:04:41,240 Speaker 1: have a look and he went to see our space 78 00:04:41,279 --> 00:04:47,040 Speaker 1: people spent some months looking into it and let why 79 00:04:47,040 --> 00:04:49,080 Speaker 1: didn't you carry on from there? Well, I mean I've 80 00:04:49,120 --> 00:04:52,320 Speaker 1: been an admirer of the business from afar Um and 81 00:04:52,360 --> 00:04:54,120 Speaker 1: then we had a bunch of mutual friends who were 82 00:04:54,160 --> 00:04:57,040 Speaker 1: early customers. Um. So I was always wondering what's really 83 00:04:57,120 --> 00:04:59,000 Speaker 1: under the hood, And when I got to see the business, 84 00:04:59,040 --> 00:05:01,960 Speaker 1: I was floored, quite honestly about what they built and 85 00:05:02,720 --> 00:05:04,440 Speaker 1: the quality of the business that it would become. And 86 00:05:04,480 --> 00:05:06,479 Speaker 1: so it took us nine months, but we got here 87 00:05:06,640 --> 00:05:08,239 Speaker 1: and you were going to be chairman of the board 88 00:05:08,279 --> 00:05:11,640 Speaker 1: with one million dollar personal investment as well. So Richard, 89 00:05:11,920 --> 00:05:14,160 Speaker 1: did you talk with other funds? Did you look for 90 00:05:14,200 --> 00:05:17,919 Speaker 1: other backers in Asia, for example, or in the Middle East? No? 91 00:05:18,480 --> 00:05:22,600 Speaker 1: Um we we um. Yeah, as I said, I mean 92 00:05:22,880 --> 00:05:25,360 Speaker 1: that that we did have the deal from the studies 93 00:05:25,440 --> 00:05:30,120 Speaker 1: that that was not possible um and uh. And you know, 94 00:05:30,160 --> 00:05:33,120 Speaker 1: if we were to actually take this public ourselves, it 95 00:05:33,160 --> 00:05:37,719 Speaker 1: would take a long time. So I think that the 96 00:05:37,800 --> 00:05:42,520 Speaker 1: Chamas approach seemed to work very well for us. Shamas, 97 00:05:42,839 --> 00:05:44,599 Speaker 1: was this the last roll of the dice for you? 98 00:05:44,680 --> 00:05:46,359 Speaker 1: My understanding is that the fund would have had to 99 00:05:46,400 --> 00:05:51,360 Speaker 1: return investment money in September m Richard talked about the 100 00:05:51,360 --> 00:05:53,320 Speaker 1: fact that this has been nine months. In the jest 101 00:05:53,320 --> 00:05:55,760 Speaker 1: station it was it was you were kind of get 102 00:05:55,800 --> 00:05:58,360 Speaker 1: a bit fine, weren't you. I don't think so. Um. 103 00:05:58,400 --> 00:06:02,040 Speaker 1: You know, we've met more than two under companies over 104 00:06:02,160 --> 00:06:05,400 Speaker 1: many many countries over the last two years. Um. It 105 00:06:06,000 --> 00:06:08,800 Speaker 1: did take us nine months to do the diligence required 106 00:06:08,920 --> 00:06:11,120 Speaker 1: to really get under the hood and understand what they've 107 00:06:11,120 --> 00:06:13,880 Speaker 1: built and to feel comfortable across all aspects of the business. 108 00:06:14,240 --> 00:06:16,960 Speaker 1: Could we have done another one, sure, Could we have 109 00:06:17,040 --> 00:06:20,320 Speaker 1: invested in something else, yeah, Um, but I think that 110 00:06:20,400 --> 00:06:23,400 Speaker 1: we found the absolute best company, something that will thrive 111 00:06:23,400 --> 00:06:26,040 Speaker 1: in the public markets and frankly, something that's going to 112 00:06:26,160 --> 00:06:30,080 Speaker 1: capture an enormous amount of consumer interest, giving the average 113 00:06:30,080 --> 00:06:31,839 Speaker 1: person a chance to own a bit of space. And 114 00:06:31,880 --> 00:06:36,120 Speaker 1: I think there's frankly nothing more exciting than that, Richard. 115 00:06:36,160 --> 00:06:37,919 Speaker 1: The average person is going to own a bit of space. 116 00:06:38,000 --> 00:06:40,160 Speaker 1: When is the first flight gonna be? Let's try and 117 00:06:40,240 --> 00:06:44,120 Speaker 1: nail that down. Um. Now that we're a public company, 118 00:06:44,120 --> 00:06:47,680 Speaker 1: I'm gonna have to be very circumspect on what I say. Um, So, 119 00:06:47,800 --> 00:06:50,640 Speaker 1: what's happened. What's happening at the moment is we're moving 120 00:06:50,640 --> 00:06:55,560 Speaker 1: the whole operation to New Mexico and uh, that's where 121 00:06:55,600 --> 00:07:00,560 Speaker 1: the space sport is. We're moving our rockets there, We're 122 00:07:00,600 --> 00:07:03,960 Speaker 1: moving our spaceships there. We're moving up mother ships there. 123 00:07:05,040 --> 00:07:09,080 Speaker 1: Then we'll do a few final test flights from New 124 00:07:09,120 --> 00:07:12,760 Speaker 1: Mexico in the new in the new situation um and 125 00:07:12,800 --> 00:07:15,520 Speaker 1: then I'll go up and then and then we'll the 126 00:07:15,600 --> 00:07:17,680 Speaker 1: public will go up. I'm not going to give us 127 00:07:17,680 --> 00:07:21,120 Speaker 1: specific date because I'm told I'm not allowed to. But 128 00:07:21,400 --> 00:07:24,280 Speaker 1: we're we're, you know, we've had two very successful flights 129 00:07:24,280 --> 00:07:28,960 Speaker 1: into space recently. We've made five astronauts, the first five 130 00:07:29,000 --> 00:07:31,880 Speaker 1: astronauts to being made in America since two thousand and nine. 131 00:07:32,400 --> 00:07:35,880 Speaker 1: And so we're, you know, after fourteen years of hard 132 00:07:35,960 --> 00:07:39,000 Speaker 1: work getting this far, we feel we're on on the 133 00:07:39,080 --> 00:07:42,239 Speaker 1: verge of something very special. Now. It's very exciting because 134 00:07:42,280 --> 00:07:46,040 Speaker 1: you specialize in sub orbital flights slightly different from Jeff 135 00:07:46,040 --> 00:07:49,240 Speaker 1: bezos outfit and also Elon Mosque's outfit. They're looking at 136 00:07:49,480 --> 00:07:52,040 Speaker 1: slightly other segments of space. If you like, fifty six 137 00:07:52,080 --> 00:07:54,560 Speaker 1: miles above the Earth and three times the speed of 138 00:07:54,600 --> 00:07:57,000 Speaker 1: sound which you have now hit. You did say that 139 00:07:57,120 --> 00:08:02,160 Speaker 1: you will go up in will you uh if the 140 00:08:02,480 --> 00:08:04,880 Speaker 1: if if our brave test pilots are ready to say 141 00:08:04,920 --> 00:08:08,400 Speaker 1: to me, they've now tested the craft through and through, 142 00:08:08,840 --> 00:08:10,680 Speaker 1: I will I will go up when they tell me 143 00:08:10,720 --> 00:08:13,880 Speaker 1: to go up. But whether it's whether it's by the 144 00:08:13,960 --> 00:08:16,200 Speaker 1: end of this year or slips into next year, we'll 145 00:08:16,200 --> 00:08:19,760 Speaker 1: see how many customers have paid what a quarter of 146 00:08:19,760 --> 00:08:22,000 Speaker 1: a million dollars? What's it up to now? So we 147 00:08:22,000 --> 00:08:26,480 Speaker 1: we closed out booking people five years ago because we 148 00:08:26,560 --> 00:08:29,880 Speaker 1: had six hundred customers. We've got eighty million dollars on 149 00:08:30,000 --> 00:08:33,719 Speaker 1: deposits since the flot test flight, We've had two and 150 00:08:33,760 --> 00:08:37,439 Speaker 1: a half thousand more people saying they want to come in. 151 00:08:37,800 --> 00:08:43,000 Speaker 1: And you know, our research indicates that there's a very 152 00:08:43,080 --> 00:08:45,120 Speaker 1: large number of people. This is a this is an 153 00:08:45,160 --> 00:08:50,360 Speaker 1: incredibly capacity constrained market. Um. Just servicing the customers we 154 00:08:50,440 --> 00:08:53,160 Speaker 1: have will take two two and a half years. Once 155 00:08:53,160 --> 00:08:55,720 Speaker 1: you convert some of these people. The first three or 156 00:08:55,720 --> 00:09:02,200 Speaker 1: four years of operation is already mostly spoken for. Okay, 157 00:09:02,679 --> 00:09:04,720 Speaker 1: But to math, let me just kind of I'm gonna 158 00:09:04,720 --> 00:09:07,360 Speaker 1: try and kind of after what you just said, what 159 00:09:07,520 --> 00:09:09,640 Speaker 1: Richard said, I'm gonna try and nail down a little 160 00:09:09,640 --> 00:09:11,440 Speaker 1: bit more detail and when this is all going to happen. 161 00:09:11,920 --> 00:09:14,480 Speaker 1: Is are there any closes in the deal that you 162 00:09:14,640 --> 00:09:17,840 Speaker 1: struck with Richard about when that first flight has to 163 00:09:17,880 --> 00:09:21,360 Speaker 1: happen no. UM. The model that we are operating from, 164 00:09:21,360 --> 00:09:24,320 Speaker 1: the operating model around which we're building the business, shows 165 00:09:24,360 --> 00:09:26,800 Speaker 1: that we're going to be in commercial operations within a year. 166 00:09:26,840 --> 00:09:29,079 Speaker 1: In the first half of next year is when we'll 167 00:09:29,120 --> 00:09:32,320 Speaker 1: start to see the really ramping of of customer flights, 168 00:09:32,360 --> 00:09:37,120 Speaker 1: of revenue generating flights. We expect profitability in mid UH 169 00:09:37,240 --> 00:09:39,920 Speaker 1: two thousand and twenty one UM, and it's a business 170 00:09:39,920 --> 00:09:46,800 Speaker 1: that frankly UH should achieve real scale by math. We 171 00:09:46,840 --> 00:09:50,000 Speaker 1: will leave it there. Thank you very much, indeed math Richard, gentlemen, 172 00:09:50,040 --> 00:09:53,280 Speaker 1: thank you very much, indeed, good luck. We've been listening 173 00:09:53,559 --> 00:09:56,920 Speaker 1: to a conversation with Virgin Atlantic CEO Richard Branson as 174 00:09:56,920 --> 00:10:01,200 Speaker 1: well as CEO of Social Capital about venture to take 175 00:10:01,400 --> 00:10:05,679 Speaker 1: the space tourism business of Virgin Galactic public. As an 176 00:10:05,679 --> 00:10:09,079 Speaker 1: increasing number of people seek to pay tons of money 177 00:10:09,120 --> 00:10:11,880 Speaker 1: to just get a glimpse of the edges of space. 178 00:10:26,440 --> 00:10:30,240 Speaker 1: There is a big question today how best to adapt 179 00:10:30,320 --> 00:10:35,079 Speaker 1: to the radical changes currently that are happening in technology 180 00:10:35,120 --> 00:10:38,640 Speaker 1: and frankly every single field, whether it's the consumer goods industry. 181 00:10:38,679 --> 00:10:42,560 Speaker 1: When we see with Amazon, healthcare or beyond joining me now, 182 00:10:42,600 --> 00:10:45,120 Speaker 1: I'm so pleased to say as Thomas Siebel. He is founder, 183 00:10:45,480 --> 00:10:49,440 Speaker 1: chairman and CEO of C three, A long time innovator 184 00:10:49,520 --> 00:10:52,760 Speaker 1: in the technology space. He's also the author of a 185 00:10:52,840 --> 00:10:57,280 Speaker 1: new book, Digital Transformation, Survive and Thrive in an Era 186 00:10:57,440 --> 00:11:01,560 Speaker 1: of Mass Extinction. Hydro Mamma, thank you so much for 187 00:11:01,600 --> 00:11:04,080 Speaker 1: being with us, Tom, I want to start with why 188 00:11:04,080 --> 00:11:06,880 Speaker 1: did you write this book? Well, it I've been in 189 00:11:06,880 --> 00:11:10,200 Speaker 1: the information technology industry for four decades, and in the 190 00:11:10,280 --> 00:11:14,520 Speaker 1: last decade I've seen as I go from boardrooms in Shanghai, Paris, Rome, 191 00:11:14,600 --> 00:11:17,679 Speaker 1: New York, the CEOs and the chairman are all talking 192 00:11:17,679 --> 00:11:22,160 Speaker 1: about this mandate for digital transformation, and candidly I couldn't 193 00:11:22,160 --> 00:11:24,760 Speaker 1: figure out what they were talking about, and like as 194 00:11:24,800 --> 00:11:29,040 Speaker 1: opposed to what analog transformation and uh so I spent 195 00:11:29,080 --> 00:11:32,120 Speaker 1: about years thinking about it and and talking with these 196 00:11:32,160 --> 00:11:34,560 Speaker 1: executives about what they were thinking about, and then the 197 00:11:34,640 --> 00:11:38,320 Speaker 1: last two years writing about it to distill what the 198 00:11:38,440 --> 00:11:42,760 Speaker 1: essence of digital transformation is all about. And the answer well, 199 00:11:42,800 --> 00:11:45,520 Speaker 1: as we power into the twenty one century, we have 200 00:11:45,600 --> 00:11:49,480 Speaker 1: a new step function of information technologies that are becoming available, 201 00:11:49,559 --> 00:11:53,400 Speaker 1: including elastic cloud computing, big data, the Internet of Things, 202 00:11:53,440 --> 00:11:57,560 Speaker 1: and artificial intelligence, and these technically. At the convergence of 203 00:11:57,640 --> 00:12:01,400 Speaker 1: this technology. Of these technologies, we find this phenomenon called 204 00:12:01,440 --> 00:12:06,080 Speaker 1: digital transformation that changes everything about the way that companies operate, 205 00:12:06,160 --> 00:12:09,360 Speaker 1: the way that they manage themselves, the way they produce products, 206 00:12:09,360 --> 00:12:13,239 Speaker 1: in the way they serve customers. And we see innovators 207 00:12:13,280 --> 00:12:16,880 Speaker 1: in this field like Amazon is using ai IoT and 208 00:12:17,000 --> 00:12:22,440 Speaker 1: cloud computing into completely revolutionized retailing, or Tesla ai IoT 209 00:12:22,800 --> 00:12:28,080 Speaker 1: on wheels revolutionizing the automotive industry, or Airbnb doing the 210 00:12:28,120 --> 00:12:31,439 Speaker 1: same thing to the hospitality industry, or you know, Uber 211 00:12:31,520 --> 00:12:35,880 Speaker 1: no cars, no drivers, and yet they're you know, dramatically 212 00:12:35,960 --> 00:12:40,960 Speaker 1: changing transportation, and so um companies that seem to be 213 00:12:40,960 --> 00:12:43,640 Speaker 1: adopting these technologies are going to be in a position 214 00:12:43,720 --> 00:12:47,680 Speaker 1: to thrive in this century, and those that don't will 215 00:12:47,720 --> 00:12:52,240 Speaker 1: go the way of General Electric and Westinghouse and treasure Us. 216 00:12:52,240 --> 00:12:54,320 Speaker 1: It seems like in a lot of conversations that we've 217 00:12:54,320 --> 00:12:58,040 Speaker 1: had on this show, a lot of executives understand this 218 00:12:58,280 --> 00:13:02,960 Speaker 1: and are highly focused on artificial intelligence cloud computing that 219 00:13:03,080 --> 00:13:05,360 Speaker 1: is where their energies are going. But do you think 220 00:13:05,360 --> 00:13:09,240 Speaker 1: that people are thinking abstractly enough about it, In other words, 221 00:13:09,400 --> 00:13:12,880 Speaker 1: how to deploy some of this information or or do 222 00:13:12,920 --> 00:13:15,480 Speaker 1: you think that they're not applying it enough. I think 223 00:13:15,480 --> 00:13:19,480 Speaker 1: there's a recognition that it's urgent and whether and then 224 00:13:19,520 --> 00:13:23,280 Speaker 1: we see leaders at companies like World dout Shell or 225 00:13:23,320 --> 00:13:27,560 Speaker 1: a NOL in Europe, or CAT or three M or 226 00:13:27,559 --> 00:13:30,559 Speaker 1: even the United States Air Force that seemed to understand it, 227 00:13:30,720 --> 00:13:35,000 Speaker 1: get it or taking very concrete steps to realize this future. 228 00:13:35,360 --> 00:13:37,440 Speaker 1: And then there are nine out of ten companies that 229 00:13:37,480 --> 00:13:39,480 Speaker 1: are still floundering with it and haven't quite figured it 230 00:13:39,520 --> 00:13:42,520 Speaker 1: out yet. And that's the mass extinction part UM. I 231 00:13:42,559 --> 00:13:45,120 Speaker 1: think out of those nine out of ten companies, probably 232 00:13:45,520 --> 00:13:47,600 Speaker 1: UM six or seven out of ten will figure it 233 00:13:47,600 --> 00:13:49,440 Speaker 1: out and three or four will go out of business. 234 00:13:49,679 --> 00:13:53,320 Speaker 1: So your company C three dot AI is working with 235 00:13:53,400 --> 00:13:56,559 Speaker 1: Baker Hughes, which is a GE company, on a venture 236 00:13:56,679 --> 00:13:59,679 Speaker 1: to use artificial intelligence in the energy space. Can you 237 00:13:59,720 --> 00:14:01,439 Speaker 1: talk a little bit about that. Yes, we formed a 238 00:14:01,520 --> 00:14:03,880 Speaker 1: joint venture with Baker Hughes, which one was one of 239 00:14:03,880 --> 00:14:07,840 Speaker 1: the world's largest oil service providers, to bring an entire 240 00:14:08,320 --> 00:14:13,320 Speaker 1: to bring AI and IoT to the entire value chain upstream, midstream, 241 00:14:13,400 --> 00:14:21,280 Speaker 1: downstream of UM petrochemical UH and chemical UM exploration, production 242 00:14:21,320 --> 00:14:25,320 Speaker 1: and delivery in a way to increase safety lower cost, 243 00:14:25,680 --> 00:14:30,080 Speaker 1: increase liability, and decrease environmental impact. So one thing that 244 00:14:30,240 --> 00:14:33,320 Speaker 1: I was struck by that you highlight in your book 245 00:14:33,360 --> 00:14:36,120 Speaker 1: is that you actually think that big companies have a 246 00:14:36,240 --> 00:14:38,640 Speaker 1: leg up when it comes to innovation in this space 247 00:14:38,720 --> 00:14:41,000 Speaker 1: because they have access to the money that they need 248 00:14:41,040 --> 00:14:44,680 Speaker 1: to put into it as well as the data. And 249 00:14:44,720 --> 00:14:47,480 Speaker 1: I'm wondering how you think that will skew things going 250 00:14:47,560 --> 00:14:50,640 Speaker 1: forward if sort of the small startups don't have as 251 00:14:50,720 --> 00:14:53,080 Speaker 1: much of a chance to succeed. Oh, I think the 252 00:14:53,120 --> 00:14:57,200 Speaker 1: small startups are very well positioned to really prosper by 253 00:14:57,240 --> 00:15:01,880 Speaker 1: providing the enabling technologies for these big companies to realize 254 00:15:01,880 --> 00:15:05,000 Speaker 1: their vision. When we get into AI. You know, data 255 00:15:05,160 --> 00:15:08,080 Speaker 1: is the lifeblood of AI. Okay, and the more data 256 00:15:08,120 --> 00:15:10,800 Speaker 1: they have, the more the more the more powerful you 257 00:15:10,840 --> 00:15:13,840 Speaker 1: can be, and more precise you can be in using 258 00:15:13,880 --> 00:15:17,440 Speaker 1: AI to customers advantage, to society's advantage, and to the 259 00:15:17,520 --> 00:15:20,200 Speaker 1: environment's advantage. So I think there's a win win here. 260 00:15:20,200 --> 00:15:24,600 Speaker 1: There's a win for small companies to develop the enabling technologies, 261 00:15:24,800 --> 00:15:27,400 Speaker 1: and the big companies have the data and the CEO 262 00:15:27,640 --> 00:15:29,960 Speaker 1: of the management teams with the will and the vision. 263 00:15:30,320 --> 00:15:32,880 Speaker 1: I think everybody wins So it's one thing when we 264 00:15:32,920 --> 00:15:36,600 Speaker 1: talk about corporations, but what about governments? What where are 265 00:15:37,360 --> 00:15:40,600 Speaker 1: say where what's the government of the United States doing 266 00:15:40,680 --> 00:15:43,920 Speaker 1: in terms of trying to adopt artificial intelligence and how 267 00:15:43,920 --> 00:15:47,680 Speaker 1: that's going to shape their policies and uh surveillance. Well, 268 00:15:47,760 --> 00:15:50,440 Speaker 1: I think the most extreme case, in the most important 269 00:15:50,440 --> 00:15:53,840 Speaker 1: cases probably defense, and there is I mean, we are 270 00:15:54,080 --> 00:15:57,400 Speaker 1: candidly at war today with China, and the first front 271 00:15:57,520 --> 00:16:01,840 Speaker 1: is a I okay, and alex sorry Vladiman Putin said, 272 00:16:01,880 --> 00:16:04,720 Speaker 1: whoever wins the battle in AI dominates the world. And 273 00:16:04,760 --> 00:16:07,160 Speaker 1: it's true, and it won't be Russia. And so there 274 00:16:07,240 --> 00:16:10,880 Speaker 1: is a dramatic acceleration going on between China that's spending 275 00:16:10,880 --> 00:16:14,040 Speaker 1: between twenty billion dollars a year now and sixty billion 276 00:16:14,040 --> 00:16:17,240 Speaker 1: dollars a year soon in this kind of top down 277 00:16:17,360 --> 00:16:23,280 Speaker 1: to talitarian command and control state to um really advanced 278 00:16:23,320 --> 00:16:26,600 Speaker 1: AI for events purposes. In the United States, we're doing 279 00:16:26,600 --> 00:16:29,440 Speaker 1: the same thing in a much more messier way because 280 00:16:29,440 --> 00:16:31,680 Speaker 1: we have a free market economy. So this is happening 281 00:16:31,680 --> 00:16:35,480 Speaker 1: in garages in Silicon Valley and storefronts and Bronx. But 282 00:16:35,760 --> 00:16:38,200 Speaker 1: you know, leaders like Heather Wilson, the Secretary of the 283 00:16:38,240 --> 00:16:41,240 Speaker 1: Air Force or Ryan McCarthy, the Secretary of the Army. 284 00:16:41,400 --> 00:16:43,600 Speaker 1: I mean these people get it. I mean they know 285 00:16:44,080 --> 00:16:47,920 Speaker 1: John Murray, the head of the Army Futures Command. They 286 00:16:48,000 --> 00:16:50,800 Speaker 1: get it. They know exactly what they're doing, and they're 287 00:16:50,800 --> 00:16:55,200 Speaker 1: applying AI in UM in very effective ways to increase 288 00:16:55,200 --> 00:17:02,080 Speaker 1: of efficiency, lower cost um uh, more efficient uh logistics, 289 00:17:02,160 --> 00:17:04,600 Speaker 1: to be able to engage in cyber defense and in 290 00:17:04,640 --> 00:17:06,919 Speaker 1: fact cyber war if they have to. One that I'm 291 00:17:06,920 --> 00:17:10,840 Speaker 1: struggling to understand is what sort of the next iteration 292 00:17:10,920 --> 00:17:14,119 Speaker 1: of transformation or disruption is to happen. I mean, we 293 00:17:14,119 --> 00:17:16,880 Speaker 1: talk about Amazon, and we talk about the retail apocalypse 294 00:17:16,920 --> 00:17:20,040 Speaker 1: that ensued based on the fact that they became less 295 00:17:20,080 --> 00:17:23,440 Speaker 1: relevant because of the online marketplace. Is there some other 296 00:17:23,520 --> 00:17:26,600 Speaker 1: industry that you think is next to be disrupted at 297 00:17:26,640 --> 00:17:31,399 Speaker 1: a similar level due to the increasing use of artificial intelligence. 298 00:17:31,560 --> 00:17:35,240 Speaker 1: I think there's no industry that isn't disrupted travel, transportation, 299 00:17:35,320 --> 00:17:41,920 Speaker 1: financial services, government services, UM, police services, retail. I mean, 300 00:17:42,040 --> 00:17:45,320 Speaker 1: you name it. There's no sir, there's no industry uh 301 00:17:45,359 --> 00:17:48,960 Speaker 1: that isn't affected. This is a this is a quarter 302 00:17:49,080 --> 00:17:53,000 Speaker 1: of a trillion dollar software market in three It's an 303 00:17:53,160 --> 00:17:55,920 Speaker 1: entire replacement market for everything that's happened in the last 304 00:17:55,920 --> 00:17:59,320 Speaker 1: thirty years and enterprise application software. So there's no industry 305 00:17:59,320 --> 00:18:02,439 Speaker 1: that is an upend. Is there is there any truth 306 00:18:02,520 --> 00:18:06,320 Speaker 1: to the idea that with the increasing use of artificial intelligence, 307 00:18:06,320 --> 00:18:10,520 Speaker 1: it will make human beings less relevant as employees. Oh? No, 308 00:18:10,640 --> 00:18:14,560 Speaker 1: I think there will be more opportunities for for people. 309 00:18:15,000 --> 00:18:18,560 Speaker 1: There will be more interesting jobs. Okay, I think things 310 00:18:18,640 --> 00:18:21,440 Speaker 1: will change. It's just like jobs changed when we move 311 00:18:21,600 --> 00:18:24,840 Speaker 1: from you know, horse drawn carriages to automobiles. But more 312 00:18:24,920 --> 00:18:28,159 Speaker 1: jobs were created, not less. And I think more jobs 313 00:18:28,200 --> 00:18:30,320 Speaker 1: will be created here, but there will be different kinds 314 00:18:30,320 --> 00:18:32,960 Speaker 1: of jobs, and there'll be more interesting jobs. But we're 315 00:18:33,000 --> 00:18:36,400 Speaker 1: not marginalizing humans. There's just I mean the idea that 316 00:18:36,720 --> 00:18:38,560 Speaker 1: you know, that that we're going to have you know, 317 00:18:38,800 --> 00:18:41,639 Speaker 1: these you know, killer robots that are going to be 318 00:18:41,680 --> 00:18:44,840 Speaker 1: embedded in your refrigerator. They're gonna take all over the household. 319 00:18:45,200 --> 00:18:47,320 Speaker 1: You know, I think this is pretty far affected. I 320 00:18:47,320 --> 00:18:49,000 Speaker 1: don't think we need to worry about that anytime. So 321 00:18:49,080 --> 00:18:51,320 Speaker 1: we're not We're not heading to a full doctor who 322 00:18:51,359 --> 00:18:54,439 Speaker 1: type scenario. Um. I do want to wonder what you 323 00:18:54,480 --> 00:18:56,320 Speaker 1: think the government should be doing. So you talked about 324 00:18:56,320 --> 00:18:59,040 Speaker 1: the army in the United States and how they seem 325 00:18:59,080 --> 00:19:02,320 Speaker 1: to be very aware of the AI war that they're 326 00:19:02,359 --> 00:19:06,240 Speaker 1: at with China. I'm wondering whether there is more that 327 00:19:06,440 --> 00:19:08,439 Speaker 1: should be done, whether it's in the United States or 328 00:19:08,480 --> 00:19:13,800 Speaker 1: Europe or in China, to fund different artificial intelligence incubators 329 00:19:13,960 --> 00:19:18,119 Speaker 1: or other other factors that would actually give give people 330 00:19:18,200 --> 00:19:19,480 Speaker 1: like I mean, do you feel like there's enough of 331 00:19:19,520 --> 00:19:21,280 Speaker 1: an investment right now in a government level? Do you 332 00:19:21,280 --> 00:19:23,240 Speaker 1: think they should be more involved? Well, I don't think 333 00:19:23,240 --> 00:19:26,560 Speaker 1: there's any problem of shortage of investment in China. I canna. Shoot, 334 00:19:26,680 --> 00:19:28,960 Speaker 1: they're doing it, and I think that the free market 335 00:19:29,000 --> 00:19:31,240 Speaker 1: can take care of this, Okay, in the United States 336 00:19:31,240 --> 00:19:34,960 Speaker 1: and Europe very well. I think a proper role of government, however, 337 00:19:35,320 --> 00:19:38,000 Speaker 1: relates to social media. I think what's going on in 338 00:19:38,040 --> 00:19:42,439 Speaker 1: social media is very troubling, okay, And these these companies 339 00:19:42,440 --> 00:19:48,080 Speaker 1: are not regulating themselves. They're misusing personal and private data 340 00:19:48,240 --> 00:19:52,359 Speaker 1: in in kind of very nefarious ways. Um, they are, 341 00:19:52,640 --> 00:19:55,440 Speaker 1: you know, controlling the nature of speech and the Internet. 342 00:19:55,640 --> 00:19:59,480 Speaker 1: They're controlling what's news. They're allowing these systems to be 343 00:19:59,520 --> 00:20:03,080 Speaker 1: weapon I used to buy bad actors and you know this, 344 00:20:03,080 --> 00:20:05,960 Speaker 1: This gets to very fundamental issues like whether or not 345 00:20:06,000 --> 00:20:09,360 Speaker 1: we're able to conduct a democracy. So I think this 346 00:20:09,560 --> 00:20:13,280 Speaker 1: is a proper role for government, and government government does 347 00:20:13,359 --> 00:20:17,120 Speaker 1: not regulate, I think we're gonna have a problem. Tom Siebel, 348 00:20:17,200 --> 00:20:19,800 Speaker 1: thank you so much for being here. Tom Siebel is 349 00:20:19,800 --> 00:20:23,720 Speaker 1: founder and chief executive officer of C three dot AI 350 00:20:24,080 --> 00:20:26,320 Speaker 1: based in California, but he joins me here in New York. 351 00:20:26,320 --> 00:20:30,320 Speaker 1: He is the author of Digital Transformation, Survive and Thrive 352 00:20:30,400 --> 00:20:34,359 Speaker 1: in an Era of Mass Extinction, with a forward by 353 00:20:34,520 --> 00:20:53,919 Speaker 1: the Honorable Condolza Rice. Another slew of companies in the 354 00:20:53,920 --> 00:20:58,040 Speaker 1: news are boutique investment banks Piper Jeffrey saying today it 355 00:20:58,119 --> 00:21:01,040 Speaker 1: was agreeing to buy Sandler on neil and Partners for 356 00:21:01,040 --> 00:21:03,720 Speaker 1: four hundred and eighty five million dollars. What does this 357 00:21:03,840 --> 00:21:07,119 Speaker 1: mean for the boutique broker dealer space joining us now? 358 00:21:07,200 --> 00:21:09,600 Speaker 1: I'm so pleased to say, as Chris Whalen, chairman of 359 00:21:09,760 --> 00:21:12,960 Speaker 1: Whalen Global Advisors, Chris, I just want to start with 360 00:21:12,960 --> 00:21:15,240 Speaker 1: what your first impression was when you saw the news 361 00:21:15,280 --> 00:21:19,720 Speaker 1: that Piper Piper Jaffrey had agreed to buy Sandler O'Neill. Well, 362 00:21:19,760 --> 00:21:22,920 Speaker 1: I think it's a great transaction for both firms. I've 363 00:21:22,920 --> 00:21:25,520 Speaker 1: worked with Sandler for many years, going back to when 364 00:21:25,560 --> 00:21:29,240 Speaker 1: I was at CROWL Bond Ratings. UH. They came in 365 00:21:29,560 --> 00:21:33,840 Speaker 1: and were able to execute multiple transactions I think well 366 00:21:33,880 --> 00:21:37,280 Speaker 1: over a hundred for small to midsize banks that we 367 00:21:37,280 --> 00:21:39,520 Speaker 1: were rating at crow These were banks that it had 368 00:21:39,640 --> 00:21:42,680 Speaker 1: no chance of being rated by the other agencies. And 369 00:21:42,720 --> 00:21:45,120 Speaker 1: once they came in and they actually earned an investment 370 00:21:45,119 --> 00:21:48,320 Speaker 1: grade rating, they could selp that to insurance companies. And 371 00:21:48,320 --> 00:21:51,280 Speaker 1: the guys at Sandler jumped on this opportunity. They had 372 00:21:51,359 --> 00:21:54,560 Speaker 1: historically been really an equity shop, and they came in 373 00:21:54,640 --> 00:21:58,800 Speaker 1: and very effectively pursued that. They have wonderful research in 374 00:21:58,880 --> 00:22:03,000 Speaker 1: that sector, both bank inks reads small non bank financial companies, 375 00:22:03,359 --> 00:22:06,639 Speaker 1: and I think I hope that the guys that Piper 376 00:22:06,640 --> 00:22:08,920 Speaker 1: are going to build that business because it's an area 377 00:22:08,960 --> 00:22:11,800 Speaker 1: of the market that is not well followed. Is virtually 378 00:22:11,840 --> 00:22:14,920 Speaker 1: nobody writing research about small banks, and I think it's 379 00:22:14,920 --> 00:22:17,600 Speaker 1: an opportunity for them. So one thing that I'm struck 380 00:22:17,640 --> 00:22:20,400 Speaker 1: by is back in two thousand twelve, even two thousand thirteen, 381 00:22:20,480 --> 00:22:23,159 Speaker 1: actually two thousand and eleven, going back as far as then, UH, 382 00:22:23,280 --> 00:22:26,080 Speaker 1: there was a wave of consolidation and talk of much 383 00:22:26,080 --> 00:22:28,879 Speaker 1: more to come among smaller broker dealers, and it was 384 00:22:28,880 --> 00:22:31,040 Speaker 1: sort of the which you kill kinds of shops that 385 00:22:31,119 --> 00:22:34,880 Speaker 1: started up outside of the in the aftermath of the crisis, 386 00:22:34,880 --> 00:22:38,399 Speaker 1: And I'm just wondering that kind of tapered down and 387 00:22:38,800 --> 00:22:40,199 Speaker 1: what are we left with here? I mean, do we 388 00:22:40,280 --> 00:22:43,280 Speaker 1: have another wave of M and A that you're expecting 389 00:22:43,320 --> 00:22:46,280 Speaker 1: to see in some of these smaller broker dealers. I 390 00:22:46,320 --> 00:22:50,280 Speaker 1: think the consolidation has to come in part because, as 391 00:22:50,280 --> 00:22:54,360 Speaker 1: you know, the business is extremely competitive, and larger firms 392 00:22:54,400 --> 00:22:58,359 Speaker 1: have been just hammer and tongue in combat over larger 393 00:22:58,400 --> 00:23:01,119 Speaker 1: mandates because that's how they survive. Five they tend not 394 00:23:01,200 --> 00:23:03,760 Speaker 1: to chase the smaller deals. But over the past few 395 00:23:03,840 --> 00:23:06,320 Speaker 1: years you've seen the Goldman's and you've seen the JP 396 00:23:06,440 --> 00:23:09,639 Speaker 1: Morgan's actually chasing deals that five years ago, ten years ago, 397 00:23:09,680 --> 00:23:12,120 Speaker 1: they wouldn't have even looked at. So I think this 398 00:23:12,440 --> 00:23:15,120 Speaker 1: is good because again, if they can take what they've 399 00:23:15,160 --> 00:23:18,720 Speaker 1: built a Sandler, both the research and the execution capability 400 00:23:18,760 --> 00:23:21,800 Speaker 1: and the investment bankers and grow that they have the 401 00:23:21,840 --> 00:23:25,800 Speaker 1: space to themselves well, the small firms eventually have to 402 00:23:25,840 --> 00:23:28,560 Speaker 1: compete with the larger firms. Yes, once the deal sizes 403 00:23:28,600 --> 00:23:31,520 Speaker 1: get up in the hundreds of millions of dollars. But 404 00:23:31,560 --> 00:23:34,600 Speaker 1: if you're doing a hundred hundred fifty million dollar UH 405 00:23:34,920 --> 00:23:38,720 Speaker 1: subordinated dead issues, for example, for a small bank, you 406 00:23:38,800 --> 00:23:42,760 Speaker 1: pretty much have that business yourself. I'm wondering what you're 407 00:23:42,800 --> 00:23:46,040 Speaker 1: expecting in terms of potential tie ups. Are there any 408 00:23:46,080 --> 00:23:48,119 Speaker 1: firms you're setting your eyes on to see whether they 409 00:23:48,200 --> 00:23:53,160 Speaker 1: might join forces? Well, among the smaller ones are all 410 00:23:53,160 --> 00:23:55,399 Speaker 1: private first off, so you don't have a lot of 411 00:23:55,440 --> 00:23:58,520 Speaker 1: visibility into them. The boutiques tend to fall into a 412 00:23:58,560 --> 00:24:02,560 Speaker 1: couple of different disciplines. Just pure investment banking with no execution, 413 00:24:03,000 --> 00:24:06,480 Speaker 1: because that's a relatively easy broker dealer to run. Once 414 00:24:06,520 --> 00:24:09,600 Speaker 1: you start touching money and you have customer accounts and 415 00:24:09,640 --> 00:24:12,720 Speaker 1: you do sales trading, it's a much more complicated business 416 00:24:12,960 --> 00:24:16,120 Speaker 1: and it requires capital. So it really depends where you're 417 00:24:16,119 --> 00:24:18,840 Speaker 1: going to focus. I think the advisory business is going 418 00:24:18,920 --> 00:24:21,600 Speaker 1: to remain a boutique because you know, people like myself. 419 00:24:21,880 --> 00:24:24,720 Speaker 1: I'm affiliated with a little broker dealer in New York 420 00:24:24,720 --> 00:24:28,320 Speaker 1: called jvb uh Securities. It's part of Cone and Company, 421 00:24:28,720 --> 00:24:32,240 Speaker 1: and I focus on the mortgage market. That's just my specialization. 422 00:24:32,480 --> 00:24:34,560 Speaker 1: There are a lot of other boutiques in the in 423 00:24:34,600 --> 00:24:37,080 Speaker 1: the market to do the same sort of thing, but 424 00:24:37,160 --> 00:24:40,679 Speaker 1: the execution side is hard because it's not particularly profitably. 425 00:24:40,800 --> 00:24:43,280 Speaker 1: So you've covered this, you know, is anybody out there 426 00:24:43,320 --> 00:24:47,520 Speaker 1: trading uh, you know, fixed income? And that's and that's 427 00:24:47,520 --> 00:24:49,359 Speaker 1: actually what I want to ask you. I mean, given 428 00:24:49,359 --> 00:24:52,719 Speaker 1: the fact that we have pretty narrow spreads uh in credit, 429 00:24:52,720 --> 00:24:56,320 Speaker 1: when you're talking about potential for profitability, and then you're 430 00:24:56,359 --> 00:24:59,480 Speaker 1: also talking about increasing use of electronic platforms and and 431 00:24:59,760 --> 00:25:04,840 Speaker 1: other sorts of services, what's left Well, that's exactly right. 432 00:25:04,880 --> 00:25:08,560 Speaker 1: The boutiques and even some of the larger independence both 433 00:25:08,600 --> 00:25:12,160 Speaker 1: equity and fixed income, have been getting their market share 434 00:25:12,200 --> 00:25:15,800 Speaker 1: taken away by the platforms. But you know, platforms can't 435 00:25:15,800 --> 00:25:19,080 Speaker 1: make markets. Platforms don't sell. And I can't tell you 436 00:25:19,080 --> 00:25:21,760 Speaker 1: how many times I've had clients who've been trying to 437 00:25:21,880 --> 00:25:24,119 Speaker 1: use a platform come to us and say, hey, can 438 00:25:24,160 --> 00:25:26,480 Speaker 1: you help us sell this? Because there's no one they're 439 00:25:26,520 --> 00:25:29,720 Speaker 1: acting as their agent. That's the difference. So I think 440 00:25:29,800 --> 00:25:32,600 Speaker 1: there is a role for the street. But the technology 441 00:25:32,760 --> 00:25:35,080 Speaker 1: is changing rapidly and a lot of people get lured 442 00:25:35,119 --> 00:25:38,520 Speaker 1: away with the illusion that they're going to get liquidity 443 00:25:38,560 --> 00:25:41,320 Speaker 1: off of a passive platform that's just a bunch of 444 00:25:41,359 --> 00:25:44,439 Speaker 1: investors facing one another. And I think the reality is 445 00:25:44,480 --> 00:25:46,760 Speaker 1: you need help. If you want to sell a concept, 446 00:25:46,800 --> 00:25:48,920 Speaker 1: sell a security, you have to have somebody to make 447 00:25:48,960 --> 00:25:52,200 Speaker 1: the case for it who's knowledgeable enough to convince an 448 00:25:52,200 --> 00:25:54,840 Speaker 1: investor to say yes. And that's a role that I 449 00:25:54,840 --> 00:25:57,359 Speaker 1: think is going to remain. Thank you so much for 450 00:25:57,440 --> 00:26:00,280 Speaker 1: joining us today, Chris Whale and as chairman of Alien 451 00:26:00,480 --> 00:26:17,679 Speaker 1: Global Advisors. Earlier in the show, we were speaking with 452 00:26:17,720 --> 00:26:21,000 Speaker 1: Thomas Siebel, the author of a new book Digital Transformation, 453 00:26:21,040 --> 00:26:23,800 Speaker 1: Survive and Thrive in an Era of Mass Extinction, which 454 00:26:23,840 --> 00:26:28,080 Speaker 1: raised a question how does one invest in the upcoming 455 00:26:28,280 --> 00:26:32,360 Speaker 1: wave of transformation stemming from artificial intelligence and cloud computing. 456 00:26:32,680 --> 00:26:35,400 Speaker 1: Here to give us a sense, at least from one perspective, 457 00:26:35,480 --> 00:26:38,280 Speaker 1: is Bill Studebaker. He has President and Chief Investment Officer 458 00:26:38,400 --> 00:26:43,320 Speaker 1: of Robo Global, with its flagship Robo et F, investing 459 00:26:43,480 --> 00:26:46,919 Speaker 1: in UH some of the companies behind robotics and some 460 00:26:47,040 --> 00:26:51,200 Speaker 1: of the technological advancements that are increasingly popular. So Bill, 461 00:26:51,240 --> 00:26:53,800 Speaker 1: I just want you to first describe what it is 462 00:26:53,840 --> 00:26:56,719 Speaker 1: that you're trying to identify in companies in terms of 463 00:26:56,760 --> 00:27:00,520 Speaker 1: how to decide what to invest in. Okay, good morning, UM. 464 00:27:00,760 --> 00:27:03,280 Speaker 1: Simply put, we're trying to identify the companies of the 465 00:27:03,359 --> 00:27:07,119 Speaker 1: highest revenue threshold. The corresponds directly to selling technologies and 466 00:27:07,200 --> 00:27:10,520 Speaker 1: robotics and AI. So we're going basically to the gold rush. 467 00:27:10,600 --> 00:27:13,040 Speaker 1: These are the picks and shovels is either are the 468 00:27:13,040 --> 00:27:16,359 Speaker 1: technologies that are enabling this revolution to happen. We're looking 469 00:27:16,359 --> 00:27:19,960 Speaker 1: for companies that we think have high revenue purity. Importantly, 470 00:27:20,040 --> 00:27:23,200 Speaker 1: also have you know, a high technological sort of moat 471 00:27:23,280 --> 00:27:26,760 Speaker 1: around their business. And in doing this we employ a 472 00:27:26,960 --> 00:27:30,080 Speaker 1: specific industry focus on robotics and AI. We have a 473 00:27:30,119 --> 00:27:33,760 Speaker 1: team that's focused exclusively on this. We also have seven 474 00:27:33,800 --> 00:27:35,680 Speaker 1: pH d s and our team that the who's who 475 00:27:35,720 --> 00:27:38,560 Speaker 1: in robotics and AI. Please look at our website robo 476 00:27:38,560 --> 00:27:41,120 Speaker 1: global dot com to get more insight, UM. But these 477 00:27:41,119 --> 00:27:44,400 Speaker 1: are people that have created technologies, that have done research 478 00:27:44,800 --> 00:27:47,760 Speaker 1: in academia for the better part of decades, that have 479 00:27:47,840 --> 00:27:50,520 Speaker 1: an amazing perspective on the history. This gives us a 480 00:27:50,600 --> 00:27:53,879 Speaker 1: real competitive mode around our business. We apply in E 481 00:27:54,080 --> 00:27:57,600 Speaker 1: s G filters to the process after that. So this 482 00:27:57,760 --> 00:28:02,840 Speaker 1: part of the index constitution is very industry, research driven, 483 00:28:02,920 --> 00:28:06,760 Speaker 1: fundamentally focused. Okay, then we pass on to our calculation 484 00:28:06,800 --> 00:28:09,840 Speaker 1: agent that that looks at for more you know, passive filters, 485 00:28:09,920 --> 00:28:13,280 Speaker 1: minimum market gap, exchange rate eligibility, and we can own 486 00:28:13,280 --> 00:28:16,040 Speaker 1: no more than five percent the Free Flow OUTPOPS Index 487 00:28:16,119 --> 00:28:20,240 Speaker 1: now of eight eight companies, they're domiciles and fifteen different geographies. 488 00:28:20,400 --> 00:28:22,520 Speaker 1: And the fun thing about this is less than two 489 00:28:22,560 --> 00:28:25,439 Speaker 1: percent of these companies are in the SMP and in 490 00:28:25,440 --> 00:28:29,879 Speaker 1: most critialencies. So these are, you know, investments that investors 491 00:28:29,920 --> 00:28:32,119 Speaker 1: don't own yet, but I think they're gonna want to 492 00:28:32,160 --> 00:28:35,200 Speaker 1: have a stake in as we go forward. So you're 493 00:28:35,200 --> 00:28:37,000 Speaker 1: making a pitch, and you're making it strong. I'm sure 494 00:28:37,000 --> 00:28:40,640 Speaker 1: a lot of people listen because right now, artificial intelligence 495 00:28:40,720 --> 00:28:44,120 Speaker 1: and robotics certainly some of the biggest buzzwords out there. 496 00:28:44,120 --> 00:28:48,120 Speaker 1: I'm trying to figure out how some of the trade 497 00:28:48,120 --> 00:28:51,000 Speaker 1: war landscape and they tech war between the US and 498 00:28:51,080 --> 00:28:53,680 Speaker 1: China affects US. I'm looking right now at your biggest holdings. 499 00:28:53,920 --> 00:28:57,840 Speaker 1: Oceaneering International is a Houston based energy company, and then 500 00:28:57,880 --> 00:29:02,840 Speaker 1: you have uh human to Tchnology, which is based in Taiwan. 501 00:29:03,920 --> 00:29:07,880 Speaker 1: That is a company that I don't even know ball screws. 502 00:29:08,160 --> 00:29:10,920 Speaker 1: Maintains ball screws in linear guideways. Is the description here 503 00:29:10,960 --> 00:29:14,200 Speaker 1: I'm trying to figure out, I mean, does it affect anything, Well, 504 00:29:14,360 --> 00:29:16,680 Speaker 1: clearly it does. I think there's a short term impact 505 00:29:16,760 --> 00:29:20,720 Speaker 1: that there was an adjustment as we were exiting the 506 00:29:20,840 --> 00:29:23,800 Speaker 1: end of two thousand eighteen early nineteen, and there was 507 00:29:23,840 --> 00:29:27,920 Speaker 1: an impact there. Clearly this produced some slower economic activity. 508 00:29:28,520 --> 00:29:31,920 Speaker 1: Roughly sixteen percent of index is industrial, so there was 509 00:29:32,320 --> 00:29:35,040 Speaker 1: UM clearly slowed down in some capital spending there. You know. 510 00:29:35,120 --> 00:29:38,840 Speaker 1: Having said that, we think the focus here must be 511 00:29:38,960 --> 00:29:42,480 Speaker 1: on the long term. Okay, I'm sort of indifferent to 512 00:29:42,880 --> 00:29:46,000 Speaker 1: what's happening in the market on any given day. If 513 00:29:46,040 --> 00:29:48,640 Speaker 1: we go down the world where there's a resolution here, 514 00:29:48,720 --> 00:29:51,560 Speaker 1: these companies are really gonna take off. However, you know, 515 00:29:51,560 --> 00:29:55,000 Speaker 1: if the situation where there's more isolationism that goes on, UM, 516 00:29:55,040 --> 00:29:58,240 Speaker 1: countries are going to have to employ more automation to 517 00:29:58,360 --> 00:30:01,800 Speaker 1: supplant you know, what they would have been importing from before. 518 00:30:01,960 --> 00:30:05,120 Speaker 1: So there's going to be continuing investment in robotics and 519 00:30:05,160 --> 00:30:09,880 Speaker 1: AI regardless of what happens politically. That's my perspective. So 520 00:30:09,920 --> 00:30:12,560 Speaker 1: I'm looking at your robo e T F, which managers 521 00:30:12,600 --> 00:30:14,880 Speaker 1: they believe has one point three billion dollars of assets 522 00:30:14,880 --> 00:30:19,280 Speaker 1: Center Management UM in North North North America. I'm just 523 00:30:19,600 --> 00:30:22,680 Speaker 1: I'm wondering whether an E T F rapper is the 524 00:30:22,680 --> 00:30:28,040 Speaker 1: correct rapper. If your view is the long term, well, 525 00:30:28,080 --> 00:30:31,000 Speaker 1: we definitely think so. I think that active management has 526 00:30:31,000 --> 00:30:35,000 Speaker 1: struggled for the last decade really because people sell what works, 527 00:30:35,400 --> 00:30:39,120 Speaker 1: they sell what doesn't work, and stuck with what's in between. Okay, Um, 528 00:30:39,320 --> 00:30:42,320 Speaker 1: when you look at this evolution that we're seeing, I 529 00:30:42,360 --> 00:30:45,720 Speaker 1: think everyone always looks back in hindsight, look at the Internet, 530 00:30:45,760 --> 00:30:48,800 Speaker 1: how amazing and disruptive that was. People that you know, 531 00:30:49,120 --> 00:30:51,880 Speaker 1: wanted to pick what were the obvious winners. Think back 532 00:30:51,920 --> 00:30:54,240 Speaker 1: in the late nineties two thousand, it was companies like 533 00:30:54,320 --> 00:30:57,040 Speaker 1: AOL and Netscape and into Me and some of these 534 00:30:57,040 --> 00:30:59,600 Speaker 1: companies that aren't even around. We now look at, you know, 535 00:30:59,640 --> 00:31:02,400 Speaker 1: all the bank companies UM with a lot of envy 536 00:31:02,480 --> 00:31:04,920 Speaker 1: going you know how and why wasn't I there? So 537 00:31:04,960 --> 00:31:07,800 Speaker 1: it's easy to sort of recognize the winners after they happen. 538 00:31:08,120 --> 00:31:10,200 Speaker 1: You know. We think, as you look at this indext here, 539 00:31:10,320 --> 00:31:13,760 Speaker 1: we're at the front end of the most transformation period 540 00:31:13,760 --> 00:31:16,920 Speaker 1: of time, probably the history of humanity and to pick 541 00:31:17,000 --> 00:31:19,200 Speaker 1: the obvious winners and losers right now, we think is 542 00:31:19,280 --> 00:31:22,480 Speaker 1: really difficult. I think the key is getting invested and 543 00:31:22,520 --> 00:31:25,400 Speaker 1: staying invested, and looking back in three or five years, 544 00:31:25,440 --> 00:31:28,360 Speaker 1: I think investors are going to be very well rewarded. 545 00:31:28,920 --> 00:31:31,320 Speaker 1: Thank you so much for being here. Thank you. Bill 546 00:31:31,360 --> 00:31:35,520 Speaker 1: Studebaker is President and Chief Investment Officer of Robo Global. 547 00:31:36,000 --> 00:31:39,480 Speaker 1: UH shares up of that fund, particularly fund the Robot. 548 00:31:39,880 --> 00:31:43,080 Speaker 1: The ticker is Robo r O b O, up at 549 00:31:43,120 --> 00:31:47,000 Speaker 1: nearly twenty percent year to date. Thanks for listening to 550 00:31:47,000 --> 00:31:49,680 Speaker 1: the Bloomberg P ANDL podcast. You can subscribe and listen 551 00:31:49,720 --> 00:31:53,080 Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you prefer. 552 00:31:53,440 --> 00:31:56,200 Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa 553 00:31:56,240 --> 00:31:59,360 Speaker 1: abram Woyd's I'm on Twitter at Lisa Abramowit's one before 554 00:31:59,400 --> 00:32:02,560 Speaker 1: the podcast. You can always catch us worldwide on Bloomberg Radio.