WEBVTT - Richard Branson Is Taking Space-Tourism Unit Public 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.880 at Bloomberg dot com. But we are awaiting a conversation 0:00:21.960 --> 0:00:26.560 with Virgin Atlantic CEO Richard Branson and Social Capital CEO 0:00:27.280 --> 0:00:31.000 Chamas Polly Hapat and he is coming to speak with 0:00:31.040 --> 0:00:34.120 the Bloomberg's Body Queen and Guy Johnson to talk about 0:00:34.200 --> 0:00:39.080 a new venture to take space tourism public. That is, 0:00:39.159 --> 0:00:42.400 a Virgin Galactics effort to bring people to space who 0:00:42.400 --> 0:00:45.480 want to just experiencing it, experience it. How there could 0:00:45.520 --> 0:00:49.120 be an initial public offering and raise equity in it. 0:00:49.120 --> 0:00:51.480 It'll be interesting to see whether there is a big 0:00:51.520 --> 0:00:54.280 profit to be made here, as well as what the 0:00:54.360 --> 0:00:59.720 links will be between the public venture and the private 0:01:00.120 --> 0:01:02.480 in the private endeavor to try to go to space 0:01:02.920 --> 0:01:07.840 and the NASAs type of agents in the government. In 0:01:07.880 --> 0:01:10.640 other words, how much will the US sort of lean 0:01:10.880 --> 0:01:14.399 on private companies or in this case, public companies, to 0:01:14.959 --> 0:01:19.640 influence their decisions with respect to UH with with respected 0:01:19.800 --> 0:01:23.560 decisions with respect to space exploration. Joining us now to 0:01:23.600 --> 0:01:27.039 talk about that, as Christopher Jasper, transport aviation reporter for 0:01:27.280 --> 0:01:30.000 Bloomberg News. Christopher, what are we expecting to hear and 0:01:30.040 --> 0:01:32.959 what have we learned so far about Richard Branson's Virgin 0:01:33.160 --> 0:01:39.160 Galactic space tourism venture going public? UM? Well, it's using 0:01:39.200 --> 0:01:42.399 a somewhat unorthodox method to do this. Rather than going 0:01:42.440 --> 0:01:46.560 down an I p O route, He's going to accomplish 0:01:46.560 --> 0:01:51.040 a listing through a merger with a listed shell company 0:01:51.040 --> 0:01:56.880 in New York UH, which will hand over stake in 0:01:56.920 --> 0:02:00.440 the enlarged group and raise about eight hundred million dollars 0:02:00.960 --> 0:02:04.840 to take the project further. That seems to suggest that 0:02:05.880 --> 0:02:07.560 maybe an I p O might not have been a 0:02:07.560 --> 0:02:11.600 good idea. There's still quite a lot of skepticism out there, 0:02:11.639 --> 0:02:16.720 perhaps about whether UM space tourism really can work. We 0:02:16.800 --> 0:02:19.959 know that he's got about six people signed up, having 0:02:20.720 --> 0:02:27.320 paid eighty million dollars in deposits to travel, but the 0:02:27.360 --> 0:02:32.120 whole plan suggests, by his reckoning, that there may be 0:02:32.800 --> 0:02:37.360 millions of people who would be interested in flying to 0:02:37.400 --> 0:02:39.400 the edge of space if the price can be brought 0:02:39.440 --> 0:02:42.880 down enough, and if you're going to invest in Virgin 0:02:43.240 --> 0:02:45.920 Galactic long term, then that's really about that you're taking. 0:02:47.160 --> 0:02:50.040 Would you want to go to space, Well, I would 0:02:50.080 --> 0:02:52.640 like to go to space, absolutely, But I think people 0:02:52.680 --> 0:02:54.840 need to understand that this isn't a trip to the Moon. 0:02:55.240 --> 0:02:57.280 It's not it's not even a trip into higher Earth 0:02:57.400 --> 0:03:00.519 orbit where you can see the entire planet beneath few. 0:03:00.680 --> 0:03:03.840 This is essentially to the edge of space, where you 0:03:03.840 --> 0:03:05.639 get to see the curvature of the Earth and your 0:03:05.680 --> 0:03:09.560 experience weightlessness for a limited time. But you know you're 0:03:09.680 --> 0:03:11.320 you're you're not sort of going to feel like you're 0:03:11.320 --> 0:03:14.960 in Apollo eleven all the all the International Space Station, 0:03:15.040 --> 0:03:17.280 which perhaps is what people are looking for. Christopher Jasper, 0:03:17.320 --> 0:03:19.280 thank you so much for being with us. Christopher Jasper 0:03:19.280 --> 0:03:23.000 as Transport and aviation reporter for Bloomberg News. We are 0:03:23.080 --> 0:03:27.600 going to hear from Virgin Atlantic CEO himself, Richard Branson, 0:03:27.960 --> 0:03:31.200 as well as Social Capitals CEO. They're going to be 0:03:31.280 --> 0:03:35.920 talking about this joint venture space tourism going public with 0:03:36.000 --> 0:03:39.600 an I p O. Take a listen. We'd like to 0:03:39.600 --> 0:03:43.000 welcome now our Boomberg Radio and TV audience, as billionaire 0:03:43.080 --> 0:03:46.680 Richard Branson's Virgin Galactic is becoming the first ever space 0:03:46.680 --> 0:03:49.840 tourism venture to hit public markets. This after receiving an 0:03:49.840 --> 0:03:54.400 eight hundred million dollar investment from the publicly traded Social Capital. 0:03:54.520 --> 0:03:57.680 We joined now by Richard Branson and Social Capital co 0:03:57.800 --> 0:04:03.320 founder tell us. How are you happy, dear gentlemen, Thank 0:04:03.320 --> 0:04:06.080 you so much for joining. Richard? How did this meeting 0:04:06.120 --> 0:04:08.080 come about? I know that you had been in talks 0:04:08.120 --> 0:04:11.480 with the likes of Saudi Arabia and possibly other players 0:04:11.560 --> 0:04:13.520 as well. You pulled out of those after the death 0:04:13.520 --> 0:04:16.719 of journalists Kahog, for example, and that brought you to 0:04:16.800 --> 0:04:21.760 this meeting. Explain the origins of this investment. Well, when 0:04:21.800 --> 0:04:25.360 we sadly couldn't go ahead with the studies, um, I 0:04:25.400 --> 0:04:29.240 decided that I would found Virgin Galactic to profitability myself 0:04:29.400 --> 0:04:33.560 through through the Virgin group. And then we got a 0:04:33.560 --> 0:04:37.640 call from Shamath who said that he was keen to 0:04:37.720 --> 0:04:41.240 have a look and he went to see our space 0:04:41.279 --> 0:04:47.040 people spent some months looking into it and let why 0:04:47.040 --> 0:04:49.080 didn't you carry on from there? Well, I mean I've 0:04:49.120 --> 0:04:52.320 been an admirer of the business from afar Um and 0:04:52.360 --> 0:04:54.120 then we had a bunch of mutual friends who were 0:04:54.160 --> 0:04:57.040 early customers. Um. So I was always wondering what's really 0:04:57.120 --> 0:04:59.000 under the hood, And when I got to see the business, 0:04:59.040 --> 0:05:01.960 I was floored, quite honestly about what they built and 0:05:02.720 --> 0:05:04.440 the quality of the business that it would become. And 0:05:04.480 --> 0:05:06.479 so it took us nine months, but we got here 0:05:06.640 --> 0:05:08.239 and you were going to be chairman of the board 0:05:08.279 --> 0:05:11.640 with one million dollar personal investment as well. So Richard, 0:05:11.920 --> 0:05:14.160 did you talk with other funds? Did you look for 0:05:14.200 --> 0:05:17.919 other backers in Asia, for example, or in the Middle East? No? 0:05:18.480 --> 0:05:22.600 Um we we um. Yeah, as I said, I mean 0:05:22.880 --> 0:05:25.360 that that we did have the deal from the studies 0:05:25.440 --> 0:05:30.120 that that was not possible um and uh. And you know, 0:05:30.160 --> 0:05:33.120 if we were to actually take this public ourselves, it 0:05:33.160 --> 0:05:37.719 would take a long time. So I think that the 0:05:37.800 --> 0:05:42.520 Chamas approach seemed to work very well for us. Shamas, 0:05:42.839 --> 0:05:44.599 was this the last roll of the dice for you? 0:05:44.680 --> 0:05:46.359 My understanding is that the fund would have had to 0:05:46.400 --> 0:05:51.360 return investment money in September m Richard talked about the 0:05:51.360 --> 0:05:53.320 fact that this has been nine months. In the jest 0:05:53.320 --> 0:05:55.760 station it was it was you were kind of get 0:05:55.800 --> 0:05:58.360 a bit fine, weren't you. I don't think so. Um. 0:05:58.400 --> 0:06:02.040 You know, we've met more than two under companies over 0:06:02.160 --> 0:06:05.400 many many countries over the last two years. Um. It 0:06:06.000 --> 0:06:08.800 did take us nine months to do the diligence required 0:06:08.920 --> 0:06:11.120 to really get under the hood and understand what they've 0:06:11.120 --> 0:06:13.880 built and to feel comfortable across all aspects of the business. 0:06:14.240 --> 0:06:16.960 Could we have done another one, sure, Could we have 0:06:17.040 --> 0:06:20.320 invested in something else, yeah, Um, but I think that 0:06:20.400 --> 0:06:23.400 we found the absolute best company, something that will thrive 0:06:23.400 --> 0:06:26.040 in the public markets and frankly, something that's going to 0:06:26.160 --> 0:06:30.080 capture an enormous amount of consumer interest, giving the average 0:06:30.080 --> 0:06:31.839 person a chance to own a bit of space. And 0:06:31.880 --> 0:06:36.120 I think there's frankly nothing more exciting than that, Richard. 0:06:36.160 --> 0:06:37.919 The average person is going to own a bit of space. 0:06:38.000 --> 0:06:40.160 When is the first flight gonna be? Let's try and 0:06:40.240 --> 0:06:44.120 nail that down. Um. Now that we're a public company, 0:06:44.120 --> 0:06:47.680 I'm gonna have to be very circumspect on what I say. Um, So, 0:06:47.800 --> 0:06:50.640 what's happened. What's happening at the moment is we're moving 0:06:50.640 --> 0:06:55.560 the whole operation to New Mexico and uh, that's where 0:06:55.600 --> 0:07:00.560 the space sport is. We're moving our rockets there, We're 0:07:00.600 --> 0:07:03.960 moving our spaceships there. We're moving up mother ships there. 0:07:05.040 --> 0:07:09.080 Then we'll do a few final test flights from New 0:07:09.120 --> 0:07:12.760 Mexico in the new in the new situation um and 0:07:12.800 --> 0:07:15.520 then I'll go up and then and then we'll the 0:07:15.600 --> 0:07:17.680 public will go up. I'm not going to give us 0:07:17.680 --> 0:07:21.120 specific date because I'm told I'm not allowed to. But 0:07:21.400 --> 0:07:24.280 we're we're, you know, we've had two very successful flights 0:07:24.280 --> 0:07:28.960 into space recently. We've made five astronauts, the first five 0:07:29.000 --> 0:07:31.880 astronauts to being made in America since two thousand and nine. 0:07:32.400 --> 0:07:35.880 And so we're, you know, after fourteen years of hard 0:07:35.960 --> 0:07:39.000 work getting this far, we feel we're on on the 0:07:39.080 --> 0:07:42.239 verge of something very special. Now. It's very exciting because 0:07:42.280 --> 0:07:46.040 you specialize in sub orbital flights slightly different from Jeff 0:07:46.040 --> 0:07:49.240 bezos outfit and also Elon Mosque's outfit. They're looking at 0:07:49.480 --> 0:07:52.040 slightly other segments of space. If you like, fifty six 0:07:52.080 --> 0:07:54.560 miles above the Earth and three times the speed of 0:07:54.600 --> 0:07:57.000 sound which you have now hit. You did say that 0:07:57.120 --> 0:08:02.160 you will go up in will you uh if the 0:08:02.480 --> 0:08:04.880 if if our brave test pilots are ready to say 0:08:04.920 --> 0:08:08.400 to me, they've now tested the craft through and through, 0:08:08.840 --> 0:08:10.680 I will I will go up when they tell me 0:08:10.720 --> 0:08:13.880 to go up. But whether it's whether it's by the 0:08:13.960 --> 0:08:16.200 end of this year or slips into next year, we'll 0:08:16.200 --> 0:08:19.760 see how many customers have paid what a quarter of 0:08:19.760 --> 0:08:22.000 a million dollars? What's it up to now? So we 0:08:22.000 --> 0:08:26.480 we closed out booking people five years ago because we 0:08:26.560 --> 0:08:29.880 had six hundred customers. We've got eighty million dollars on 0:08:30.000 --> 0:08:33.719 deposits since the flot test flight, We've had two and 0:08:33.760 --> 0:08:37.439 a half thousand more people saying they want to come in. 0:08:37.800 --> 0:08:43.000 And you know, our research indicates that there's a very 0:08:43.080 --> 0:08:45.120 large number of people. This is a this is an 0:08:45.160 --> 0:08:50.360 incredibly capacity constrained market. Um. Just servicing the customers we 0:08:50.440 --> 0:08:53.160 have will take two two and a half years. Once 0:08:53.160 --> 0:08:55.720 you convert some of these people. The first three or 0:08:55.720 --> 0:09:02.200 four years of operation is already mostly spoken for. Okay, 0:09:02.679 --> 0:09:04.720 But to math, let me just kind of I'm gonna 0:09:04.720 --> 0:09:07.360 try and kind of after what you just said, what 0:09:07.520 --> 0:09:09.640 Richard said, I'm gonna try and nail down a little 0:09:09.640 --> 0:09:11.440 bit more detail and when this is all going to happen. 0:09:11.920 --> 0:09:14.480 Is are there any closes in the deal that you 0:09:14.640 --> 0:09:17.840 struck with Richard about when that first flight has to 0:09:17.880 --> 0:09:21.360 happen no. UM. The model that we are operating from, 0:09:21.360 --> 0:09:24.320 the operating model around which we're building the business, shows 0:09:24.360 --> 0:09:26.800 that we're going to be in commercial operations within a year. 0:09:26.840 --> 0:09:29.079 In the first half of next year is when we'll 0:09:29.120 --> 0:09:32.320 start to see the really ramping of of customer flights, 0:09:32.360 --> 0:09:37.120 of revenue generating flights. We expect profitability in mid UH 0:09:37.240 --> 0:09:39.920 two thousand and twenty one UM, and it's a business 0:09:39.920 --> 0:09:46.800 that frankly UH should achieve real scale by math. We 0:09:46.840 --> 0:09:50.000 will leave it there. Thank you very much, indeed math Richard, gentlemen, 0:09:50.040 --> 0:09:53.280 thank you very much, indeed, good luck. We've been listening 0:09:53.559 --> 0:09:56.920 to a conversation with Virgin Atlantic CEO Richard Branson as 0:09:56.920 --> 0:10:01.200 well as CEO of Social Capital about venture to take 0:10:01.400 --> 0:10:05.679 the space tourism business of Virgin Galactic public. As an 0:10:05.679 --> 0:10:09.079 increasing number of people seek to pay tons of money 0:10:09.120 --> 0:10:11.880 to just get a glimpse of the edges of space. 0:10:26.440 --> 0:10:30.240 There is a big question today how best to adapt 0:10:30.320 --> 0:10:35.079 to the radical changes currently that are happening in technology 0:10:35.120 --> 0:10:38.640 and frankly every single field, whether it's the consumer goods industry. 0:10:38.679 --> 0:10:42.560 When we see with Amazon, healthcare or beyond joining me now, 0:10:42.600 --> 0:10:45.120 I'm so pleased to say as Thomas Siebel. He is founder, 0:10:45.480 --> 0:10:49.440 chairman and CEO of C three, A long time innovator 0:10:49.520 --> 0:10:52.760 in the technology space. He's also the author of a 0:10:52.840 --> 0:10:57.280 new book, Digital Transformation, Survive and Thrive in an Era 0:10:57.440 --> 0:11:01.560 of Mass Extinction. Hydro Mamma, thank you so much for 0:11:01.600 --> 0:11:04.080 being with us, Tom, I want to start with why 0:11:04.080 --> 0:11:06.880 did you write this book? Well, it I've been in 0:11:06.880 --> 0:11:10.200 the information technology industry for four decades, and in the 0:11:10.280 --> 0:11:14.520 last decade I've seen as I go from boardrooms in Shanghai, Paris, Rome, 0:11:14.600 --> 0:11:17.679 New York, the CEOs and the chairman are all talking 0:11:17.679 --> 0:11:22.160 about this mandate for digital transformation, and candidly I couldn't 0:11:22.160 --> 0:11:24.760 figure out what they were talking about, and like as 0:11:24.800 --> 0:11:29.040 opposed to what analog transformation and uh so I spent 0:11:29.080 --> 0:11:32.120 about years thinking about it and and talking with these 0:11:32.160 --> 0:11:34.560 executives about what they were thinking about, and then the 0:11:34.640 --> 0:11:38.320 last two years writing about it to distill what the 0:11:38.440 --> 0:11:42.760 essence of digital transformation is all about. And the answer well, 0:11:42.800 --> 0:11:45.520 as we power into the twenty one century, we have 0:11:45.600 --> 0:11:49.480 a new step function of information technologies that are becoming available, 0:11:49.559 --> 0:11:53.400 including elastic cloud computing, big data, the Internet of Things, 0:11:53.440 --> 0:11:57.560 and artificial intelligence, and these technically. At the convergence of 0:11:57.640 --> 0:12:01.400 this technology. Of these technologies, we find this phenomenon called 0:12:01.440 --> 0:12:06.080 digital transformation that changes everything about the way that companies operate, 0:12:06.160 --> 0:12:09.360 the way that they manage themselves, the way they produce products, 0:12:09.360 --> 0:12:13.239 in the way they serve customers. And we see innovators 0:12:13.280 --> 0:12:16.880 in this field like Amazon is using ai IoT and 0:12:17.000 --> 0:12:22.440 cloud computing into completely revolutionized retailing, or Tesla ai IoT 0:12:22.800 --> 0:12:28.080 on wheels revolutionizing the automotive industry, or Airbnb doing the 0:12:28.120 --> 0:12:31.439 same thing to the hospitality industry, or you know, Uber 0:12:31.520 --> 0:12:35.880 no cars, no drivers, and yet they're you know, dramatically 0:12:35.960 --> 0:12:40.960 changing transportation, and so um companies that seem to be 0:12:40.960 --> 0:12:43.640 adopting these technologies are going to be in a position 0:12:43.720 --> 0:12:47.680 to thrive in this century, and those that don't will 0:12:47.720 --> 0:12:52.240 go the way of General Electric and Westinghouse and treasure Us. 0:12:52.240 --> 0:12:54.320 It seems like in a lot of conversations that we've 0:12:54.320 --> 0:12:58.040 had on this show, a lot of executives understand this 0:12:58.280 --> 0:13:02.960 and are highly focused on artificial intelligence cloud computing that 0:13:03.080 --> 0:13:05.360 is where their energies are going. But do you think 0:13:05.360 --> 0:13:09.240 that people are thinking abstractly enough about it, In other words, 0:13:09.400 --> 0:13:12.880 how to deploy some of this information or or do 0:13:12.920 --> 0:13:15.480 you think that they're not applying it enough. I think 0:13:15.480 --> 0:13:19.480 there's a recognition that it's urgent and whether and then 0:13:19.520 --> 0:13:23.280 we see leaders at companies like World dout Shell or 0:13:23.320 --> 0:13:27.560 a NOL in Europe, or CAT or three M or 0:13:27.559 --> 0:13:30.559 even the United States Air Force that seemed to understand it, 0:13:30.720 --> 0:13:35.000 get it or taking very concrete steps to realize this future. 0:13:35.360 --> 0:13:37.440 And then there are nine out of ten companies that 0:13:37.480 --> 0:13:39.480 are still floundering with it and haven't quite figured it 0:13:39.520 --> 0:13:42.520 out yet. And that's the mass extinction part UM. I 0:13:42.559 --> 0:13:45.120 think out of those nine out of ten companies, probably 0:13:45.520 --> 0:13:47.600 UM six or seven out of ten will figure it 0:13:47.600 --> 0:13:49.440 out and three or four will go out of business. 0:13:49.679 --> 0:13:53.320 So your company C three dot AI is working with 0:13:53.400 --> 0:13:56.559 Baker Hughes, which is a GE company, on a venture 0:13:56.679 --> 0:13:59.679 to use artificial intelligence in the energy space. Can you 0:13:59.720 --> 0:14:01.439 talk a little bit about that. Yes, we formed a 0:14:01.520 --> 0:14:03.880 joint venture with Baker Hughes, which one was one of 0:14:03.880 --> 0:14:07.840 the world's largest oil service providers, to bring an entire 0:14:08.320 --> 0:14:13.320 to bring AI and IoT to the entire value chain upstream, midstream, 0:14:13.400 --> 0:14:21.280 downstream of UM petrochemical UH and chemical UM exploration, production 0:14:21.320 --> 0:14:25.320 and delivery in a way to increase safety lower cost, 0:14:25.680 --> 0:14:30.080 increase liability, and decrease environmental impact. So one thing that 0:14:30.240 --> 0:14:33.320 I was struck by that you highlight in your book 0:14:33.360 --> 0:14:36.120 is that you actually think that big companies have a 0:14:36.240 --> 0:14:38.640 leg up when it comes to innovation in this space 0:14:38.720 --> 0:14:41.000 because they have access to the money that they need 0:14:41.040 --> 0:14:44.680 to put into it as well as the data. And 0:14:44.720 --> 0:14:47.480 I'm wondering how you think that will skew things going 0:14:47.560 --> 0:14:50.640 forward if sort of the small startups don't have as 0:14:50.720 --> 0:14:53.080 much of a chance to succeed. Oh, I think the 0:14:53.120 --> 0:14:57.200 small startups are very well positioned to really prosper by 0:14:57.240 --> 0:15:01.880 providing the enabling technologies for these big companies to realize 0:15:01.880 --> 0:15:05.000 their vision. When we get into AI. You know, data 0:15:05.160 --> 0:15:08.080 is the lifeblood of AI. Okay, and the more data 0:15:08.120 --> 0:15:10.800 they have, the more the more the more powerful you 0:15:10.840 --> 0:15:13.840 can be, and more precise you can be in using 0:15:13.880 --> 0:15:17.440 AI to customers advantage, to society's advantage, and to the 0:15:17.520 --> 0:15:20.200 environment's advantage. So I think there's a win win here. 0:15:20.200 --> 0:15:24.600 There's a win for small companies to develop the enabling technologies, 0:15:24.800 --> 0:15:27.400 and the big companies have the data and the CEO 0:15:27.640 --> 0:15:29.960 of the management teams with the will and the vision. 0:15:30.320 --> 0:15:32.880 I think everybody wins So it's one thing when we 0:15:32.920 --> 0:15:36.600 talk about corporations, but what about governments? What where are 0:15:37.360 --> 0:15:40.600 say where what's the government of the United States doing 0:15:40.680 --> 0:15:43.920 in terms of trying to adopt artificial intelligence and how 0:15:43.920 --> 0:15:47.680 that's going to shape their policies and uh surveillance. Well, 0:15:47.760 --> 0:15:50.440 I think the most extreme case, in the most important 0:15:50.440 --> 0:15:53.840 cases probably defense, and there is I mean, we are 0:15:54.080 --> 0:15:57.400 candidly at war today with China, and the first front 0:15:57.520 --> 0:16:01.840 is a I okay, and alex sorry Vladiman Putin said, 0:16:01.880 --> 0:16:04.720 whoever wins the battle in AI dominates the world. And 0:16:04.760 --> 0:16:07.160 it's true, and it won't be Russia. And so there 0:16:07.240 --> 0:16:10.880 is a dramatic acceleration going on between China that's spending 0:16:10.880 --> 0:16:14.040 between twenty billion dollars a year now and sixty billion 0:16:14.040 --> 0:16:17.240 dollars a year soon in this kind of top down 0:16:17.360 --> 0:16:23.280 to talitarian command and control state to um really advanced 0:16:23.320 --> 0:16:26.600 AI for events purposes. In the United States, we're doing 0:16:26.600 --> 0:16:29.440 the same thing in a much more messier way because 0:16:29.440 --> 0:16:31.680 we have a free market economy. So this is happening 0:16:31.680 --> 0:16:35.480 in garages in Silicon Valley and storefronts and Bronx. But 0:16:35.760 --> 0:16:38.200 you know, leaders like Heather Wilson, the Secretary of the 0:16:38.240 --> 0:16:41.240 Air Force or Ryan McCarthy, the Secretary of the Army. 0:16:41.400 --> 0:16:43.600 I mean these people get it. I mean they know 0:16:44.080 --> 0:16:47.920 John Murray, the head of the Army Futures Command. They 0:16:48.000 --> 0:16:50.800 get it. They know exactly what they're doing, and they're 0:16:50.800 --> 0:16:55.200 applying AI in UM in very effective ways to increase 0:16:55.200 --> 0:17:02.080 of efficiency, lower cost um uh, more efficient uh logistics, 0:17:02.160 --> 0:17:04.600 to be able to engage in cyber defense and in 0:17:04.640 --> 0:17:06.919 fact cyber war if they have to. One that I'm 0:17:06.920 --> 0:17:10.840 struggling to understand is what sort of the next iteration 0:17:10.920 --> 0:17:14.119 of transformation or disruption is to happen. I mean, we 0:17:14.119 --> 0:17:16.880 talk about Amazon, and we talk about the retail apocalypse 0:17:16.920 --> 0:17:20.040 that ensued based on the fact that they became less 0:17:20.080 --> 0:17:23.440 relevant because of the online marketplace. Is there some other 0:17:23.520 --> 0:17:26.600 industry that you think is next to be disrupted at 0:17:26.640 --> 0:17:31.399 a similar level due to the increasing use of artificial intelligence. 0:17:31.560 --> 0:17:35.240 I think there's no industry that isn't disrupted travel, transportation, 0:17:35.320 --> 0:17:41.920 financial services, government services, UM, police services, retail. I mean, 0:17:42.040 --> 0:17:45.320 you name it. There's no sir, there's no industry uh 0:17:45.359 --> 0:17:48.960 that isn't affected. This is a this is a quarter 0:17:49.080 --> 0:17:53.000 of a trillion dollar software market in three It's an 0:17:53.160 --> 0:17:55.920 entire replacement market for everything that's happened in the last 0:17:55.920 --> 0:17:59.320 thirty years and enterprise application software. So there's no industry 0:17:59.320 --> 0:18:02.439 that is an upend. Is there is there any truth 0:18:02.520 --> 0:18:06.320 to the idea that with the increasing use of artificial intelligence, 0:18:06.320 --> 0:18:10.520 it will make human beings less relevant as employees. Oh? No, 0:18:10.640 --> 0:18:14.560 I think there will be more opportunities for for people. 0:18:15.000 --> 0:18:18.560 There will be more interesting jobs. Okay, I think things 0:18:18.640 --> 0:18:21.440 will change. It's just like jobs changed when we move 0:18:21.600 --> 0:18:24.840 from you know, horse drawn carriages to automobiles. But more 0:18:24.920 --> 0:18:28.159 jobs were created, not less. And I think more jobs 0:18:28.200 --> 0:18:30.320 will be created here, but there will be different kinds 0:18:30.320 --> 0:18:32.960 of jobs, and there'll be more interesting jobs. But we're 0:18:33.000 --> 0:18:36.400 not marginalizing humans. There's just I mean the idea that 0:18:36.720 --> 0:18:38.560 you know, that that we're going to have you know, 0:18:38.800 --> 0:18:41.639 these you know, killer robots that are going to be 0:18:41.680 --> 0:18:44.840 embedded in your refrigerator. They're gonna take all over the household. 0:18:45.200 --> 0:18:47.320 You know, I think this is pretty far affected. I 0:18:47.320 --> 0:18:49.000 don't think we need to worry about that anytime. So 0:18:49.080 --> 0:18:51.320 we're not We're not heading to a full doctor who 0:18:51.359 --> 0:18:54.439 type scenario. Um. I do want to wonder what you 0:18:54.480 --> 0:18:56.320 think the government should be doing. So you talked about 0:18:56.320 --> 0:18:59.040 the army in the United States and how they seem 0:18:59.080 --> 0:19:02.320 to be very aware of the AI war that they're 0:19:02.359 --> 0:19:06.240 at with China. I'm wondering whether there is more that 0:19:06.440 --> 0:19:08.439 should be done, whether it's in the United States or 0:19:08.480 --> 0:19:13.800 Europe or in China, to fund different artificial intelligence incubators 0:19:13.960 --> 0:19:18.119 or other other factors that would actually give give people 0:19:18.200 --> 0:19:19.480 like I mean, do you feel like there's enough of 0:19:19.520 --> 0:19:21.280 an investment right now in a government level? Do you 0:19:21.280 --> 0:19:23.240 think they should be more involved? Well, I don't think 0:19:23.240 --> 0:19:26.560 there's any problem of shortage of investment in China. I canna. Shoot, 0:19:26.680 --> 0:19:28.960 they're doing it, and I think that the free market 0:19:29.000 --> 0:19:31.240 can take care of this, Okay, in the United States 0:19:31.240 --> 0:19:34.960 and Europe very well. I think a proper role of government, however, 0:19:35.320 --> 0:19:38.000 relates to social media. I think what's going on in 0:19:38.040 --> 0:19:42.439 social media is very troubling, okay, And these these companies 0:19:42.440 --> 0:19:48.080 are not regulating themselves. They're misusing personal and private data 0:19:48.240 --> 0:19:52.359 in in kind of very nefarious ways. Um, they are, 0:19:52.640 --> 0:19:55.440 you know, controlling the nature of speech and the Internet. 0:19:55.640 --> 0:19:59.480 They're controlling what's news. They're allowing these systems to be 0:19:59.520 --> 0:20:03.080 weapon I used to buy bad actors and you know this, 0:20:03.080 --> 0:20:05.960 This gets to very fundamental issues like whether or not 0:20:06.000 --> 0:20:09.360 we're able to conduct a democracy. So I think this 0:20:09.560 --> 0:20:13.280 is a proper role for government, and government government does 0:20:13.359 --> 0:20:17.120 not regulate, I think we're gonna have a problem. Tom Siebel, 0:20:17.200 --> 0:20:19.800 thank you so much for being here. Tom Siebel is 0:20:19.800 --> 0:20:23.720 founder and chief executive officer of C three dot AI 0:20:24.080 --> 0:20:26.320 based in California, but he joins me here in New York. 0:20:26.320 --> 0:20:30.320 He is the author of Digital Transformation, Survive and Thrive 0:20:30.400 --> 0:20:34.359 in an Era of Mass Extinction, with a forward by 0:20:34.520 --> 0:20:53.919 the Honorable Condolza Rice. Another slew of companies in the 0:20:53.920 --> 0:20:58.040 news are boutique investment banks Piper Jeffrey saying today it 0:20:58.119 --> 0:21:01.040 was agreeing to buy Sandler on neil and Partners for 0:21:01.040 --> 0:21:03.720 four hundred and eighty five million dollars. What does this 0:21:03.840 --> 0:21:07.119 mean for the boutique broker dealer space joining us now? 0:21:07.200 --> 0:21:09.600 I'm so pleased to say, as Chris Whalen, chairman of 0:21:09.760 --> 0:21:12.960 Whalen Global Advisors, Chris, I just want to start with 0:21:12.960 --> 0:21:15.240 what your first impression was when you saw the news 0:21:15.280 --> 0:21:19.720 that Piper Piper Jaffrey had agreed to buy Sandler O'Neill. Well, 0:21:19.760 --> 0:21:22.920 I think it's a great transaction for both firms. I've 0:21:22.920 --> 0:21:25.520 worked with Sandler for many years, going back to when 0:21:25.560 --> 0:21:29.240 I was at CROWL Bond Ratings. UH. They came in 0:21:29.560 --> 0:21:33.840 and were able to execute multiple transactions I think well 0:21:33.880 --> 0:21:37.280 over a hundred for small to midsize banks that we 0:21:37.280 --> 0:21:39.520 were rating at crow These were banks that it had 0:21:39.640 --> 0:21:42.680 no chance of being rated by the other agencies. And 0:21:42.720 --> 0:21:45.120 once they came in and they actually earned an investment 0:21:45.119 --> 0:21:48.320 grade rating, they could selp that to insurance companies. And 0:21:48.320 --> 0:21:51.280 the guys at Sandler jumped on this opportunity. They had 0:21:51.359 --> 0:21:54.560 historically been really an equity shop, and they came in 0:21:54.640 --> 0:21:58.800 and very effectively pursued that. They have wonderful research in 0:21:58.880 --> 0:22:03.000 that sector, both bank inks reads small non bank financial companies, 0:22:03.359 --> 0:22:06.639 and I think I hope that the guys that Piper 0:22:06.640 --> 0:22:08.920 are going to build that business because it's an area 0:22:08.960 --> 0:22:11.800 of the market that is not well followed. Is virtually 0:22:11.840 --> 0:22:14.920 nobody writing research about small banks, and I think it's 0:22:14.920 --> 0:22:17.600 an opportunity for them. So one thing that I'm struck 0:22:17.640 --> 0:22:20.400 by is back in two thousand twelve, even two thousand thirteen, 0:22:20.480 --> 0:22:23.159 actually two thousand and eleven, going back as far as then, UH, 0:22:23.280 --> 0:22:26.080 there was a wave of consolidation and talk of much 0:22:26.080 --> 0:22:28.879 more to come among smaller broker dealers, and it was 0:22:28.880 --> 0:22:31.040 sort of the which you kill kinds of shops that 0:22:31.119 --> 0:22:34.880 started up outside of the in the aftermath of the crisis, 0:22:34.880 --> 0:22:38.399 And I'm just wondering that kind of tapered down and 0:22:38.800 --> 0:22:40.199 what are we left with here? I mean, do we 0:22:40.280 --> 0:22:43.280 have another wave of M and A that you're expecting 0:22:43.320 --> 0:22:46.280 to see in some of these smaller broker dealers. I 0:22:46.320 --> 0:22:50.280 think the consolidation has to come in part because, as 0:22:50.280 --> 0:22:54.360 you know, the business is extremely competitive, and larger firms 0:22:54.400 --> 0:22:58.359 have been just hammer and tongue in combat over larger 0:22:58.400 --> 0:23:01.119 mandates because that's how they survive. Five they tend not 0:23:01.200 --> 0:23:03.760 to chase the smaller deals. But over the past few 0:23:03.840 --> 0:23:06.320 years you've seen the Goldman's and you've seen the JP 0:23:06.440 --> 0:23:09.639 Morgan's actually chasing deals that five years ago, ten years ago, 0:23:09.680 --> 0:23:12.120 they wouldn't have even looked at. So I think this 0:23:12.440 --> 0:23:15.120 is good because again, if they can take what they've 0:23:15.160 --> 0:23:18.720 built a Sandler, both the research and the execution capability 0:23:18.760 --> 0:23:21.800 and the investment bankers and grow that they have the 0:23:21.840 --> 0:23:25.800