Speaker 1: From Marhard where Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: I Med Ludlow in San Francisco. Caroline hides off. This
Speaker 2: is Bloomberg technology coming up. Car dealerships across the US
Speaker 2: Wholt services after a cyber attack. Full coverage ahead class
Speaker 2: Open AI co founder Ilia Sutskiva announces a new AI
Speaker 2: research lab.
Speaker 3: We have that exclusive reporting.
Speaker 2: An AI video startup, hey Jen, hits a half billion
Speaker 2: dollar valuation in its latest funding round. We do discuss
Speaker 2: with the CEO a very quick check in on markets.
Speaker 2: The S and P five hundred very briefly hit the
Speaker 2: fifty five hundred historic mark and then pull back with
Speaker 2: flat on the Nasdaq one hundred. Broadly, we're kind of
Speaker 2: treading water after a US holiday. The story, though, is
Speaker 2: individual names in the AI infrastructure play.
Speaker 3: We are talking about.
Speaker 2: Dell, we are talking about super Micro, and of course
Speaker 2: we're talking about in video. Later in the show, we're
Speaker 2: going to bring you details of what played out twenty
Speaker 2: four hours ago on social media, Michael Dell saying that
Speaker 2: Dell is building an AI factory for groc and Xai
Speaker 2: and Elon Musk. Elon Musk coming back on social media
Speaker 2: and saying super Micro's part of the story as well,
Speaker 2: and you can clearly see super Micro the kind of
Speaker 2: biggest beneficiary of.
Speaker 3: That move that's coming up.
Speaker 2: The top story in terms of newsflow is what we
Speaker 2: were talking about a moment ago. Car dealers across the
Speaker 2: United States were affected by a second cyber attack this
Speaker 2: morning after an initial attack yesterday compromised the CDK software
Speaker 2: platform and halted business. These are some of the publicly
Speaker 2: traded dealerships and auto retailers that are impacted in the
Speaker 2: here and now or moving to the downs. Let's get
Speaker 2: to Bloomberg's Jef Stone on our cyber team. Okay, let's
Speaker 2: start with the latest, because it's moving quite quickly. There
Speaker 2: was a second report of an attack this morning.
Speaker 3: What do we know? That's right.
Speaker 1: This is a big, messy cyber attack. You mentioned there's
Speaker 1: a second incident just reported. That happens as this software
Speaker 1: provider that works with more than fifteen thousand dealerships around
Speaker 1: the country is already trying to recover from what looks
Speaker 1: like is going to be a pretty costly outage. The
Speaker 1: nature of the incident isn't quite clear yet. We know
Speaker 1: that dealers are waiting for more information from the company,
Speaker 1: but we know what looks bad.
Speaker 2: Jesse, as I said, you're kind of a key member
Speaker 2: of our cyber security team. What was the vulnerability here,
Speaker 2: What was the security breach and where did it happen?
Speaker 1: The nature of the breach the point of entry is
Speaker 1: certainly still under investigation, but this incident fits with a
Speaker 1: recent string of attacks, certainly in the healthcare sector that
Speaker 1: our targeting kind of customer service software providers and almost
Speaker 1: innocuous companies that a lot of your viewers won't think
Speaker 1: about on a daily basis. These companies sit at a
Speaker 1: key point in various supply chains, and when they are hit,
Speaker 1: there are ripple effects, costly ripple effects that have major
Speaker 1: impact throughout their supply chain.
Speaker 2: Jeff, as you know, I've covered the automotive industry for
Speaker 2: quite a long time, and I've learned so much about
Speaker 2: CDK fifteen thousand customers, front office, back office. But also
Speaker 2: like the names that have been impacted here on the
Speaker 2: name brand side are big ones like Subaru Toyota. What
Speaker 2: have the responses from the company's been and what have
Speaker 2: they actually been telling customers as well.
Speaker 1: Please give us time and some patients. We know that dealerships,
Speaker 1: like I said, are waiting for more instructions from their
Speaker 1: parent companies from CDK as this continues to unfold. For now,
Speaker 1: a lot of dealers are slower to make sales. We
Speaker 1: know that sales representatives are increasingly working with paper transactions
Speaker 1: rather than the quick automatic stuff that we've all become
Speaker 1: used to, so.
Speaker 3: It's very challenging.
Speaker 1: They're waiting for more information.
Speaker 3: Jeff.
Speaker 2: This is one hack in a series of hacks over
Speaker 2: years that you and I have discussed on the show.
Speaker 2: In terms of its scale, where does it sit in
Speaker 2: those that you've covered in recent years?
Speaker 1: Growing the healthcare sector, like I said, has been the
Speaker 1: main focus over the past year eighteen months or so.
Speaker 1: The cost of this, based on the number of dealerships
Speaker 1: certainly affected, seems to be high.
Speaker 3: We're waiting to see.
Speaker 1: If there will be any government action on this, or
Speaker 1: any guidance from the Department of Homeland Security, for instance,
Speaker 1: in terms of understanding the full scope of the incident,
Speaker 1: But for now it's still.
Speaker 2: Calculating blimbergs Jeffstone on a developing story.
Speaker 3: Thank you.
Speaker 2: Another big story we're tracking is over in China, where
Speaker 2: e commerce giants have been slashing prices and using celebrity
Speaker 2: endorsements to boost enthusiasm for the six one eight shopping festival.
Speaker 2: Bloomberg's Henry Wren joins us for more out of London.
Speaker 2: This is a new one for me, Henry. I've been
Speaker 2: reading about six one eight, But if you were to summarize,
Speaker 2: you'd basically say that the consumer in China is getting
Speaker 2: an unprecedented level of incentive this week from the big
Speaker 2: e commerce names.
Speaker 4: Yes, indeed, so we're seeing scenes that we have been expecting.
Speaker 4: For example, the price cuts. You know, PDD, which is
Speaker 4: known for its budget shopping site pindor Door, has been
Speaker 4: keen to let its customers know that it has been
Speaker 4: putting forward the steeper than ever price discounts. But also
Speaker 4: we've been seeing something that's very unexpected. Let's say, for example,
Speaker 4: JD dot COM's funder Richard Devil is appearing on live
Speaker 4: streaming e commerce and it's not humans actually it's a
Speaker 4: digital avatar of him. But also in the meantime, a
Speaker 4: pop star Rihanna, which is who is pretty famous and
Speaker 4: popular in mainland China, as wells since setting a Chinese
Speaker 4: style off pancakes in front of camera. So basically we've
Speaker 4: been seeing everything here with all sorts of promotions.
Speaker 2: We're talking about the names that we always discussed on
Speaker 2: this program, Baba, Pinduoduo, JD. That's the company side of
Speaker 2: the story, but there's also the Chinese consumer side of
Speaker 2: the story that we track so closely here on Bloomberg Technology.
Speaker 2: Is the idea that they're needing to discount so heavily,
Speaker 2: get so creative, I suppose in their incentive a sign
Speaker 2: that the Chinese consumer needs a bit of help.
Speaker 5: Yes.
Speaker 4: Indeed, so the story that we have been reporting what
Speaker 4: over is the Chinese consumers are still quite cautious in
Speaker 4: terms of picking deals, and this has been a trend
Speaker 4: that has been confirmed by this six to one eight
Speaker 4: event as well. The main messa across the merchants has
Speaker 4: been price cuts, which has been seen across those live
Speaker 4: streaming platforms as well as these three big companies. But
Speaker 4: also in the meantime we see local media reporting that
Speaker 4: some categories, for example, women's superos or luxury goods have
Speaker 4: been seen very high return and cancelation rates rates as
Speaker 4: high as seventy five percent to eighty percent, which really
Speaker 4: shows that consumers aren't quite cautious. Yes, they probably are
Speaker 4: spending because of those price cuts, those promotions, but they're
Speaker 4: pretty keen in terms of picking the cheapest deals, not
Speaker 4: necessarily the best in terms of quality.
Speaker 2: Blynd begs Henry Wren, who is all across the China
Speaker 2: tech beat, thank you so much. It's time now for
Speaker 2: talking tech and first up Masayoshi's Sun maybe on the cusps,
Speaker 2: but making a major investment in AI selling shareholders at
Speaker 2: the annual meeting, the SoftBank says they're looking for their
Speaker 2: quote next big move in tech. The comments come after
Speaker 2: the company saw a string of losses through the startup
Speaker 2: bets plus. Open Ai co founder Ilia Sutskova has announced
Speaker 2: a new venture called Safe super Intelligence. The company aims
Speaker 2: to create a secure, powerful AI system with no intentions
Speaker 2: to sell AI products or services like rivals Open Ai
Speaker 2: and Google currently doing. Satskova left open Ai in May,
Speaker 2: just shortly after the return of Sam Autman and the
Speaker 2: ouster he was involved in. And finally, Dell announced that
Speaker 2: it's building out an AI factory with the help of
Speaker 2: Nvidia to power Elon Musk's XAI with super Microcomputer also
Speaker 2: providing servers. The two companies have been adding server capacity
Speaker 2: in recent months in an effort to win more businesses
Speaker 2: making AI expansions.
Speaker 3: Remember that I sat down with.
Speaker 2: Michael Dell last month, who defined an AI factory as
Speaker 2: the following you.
Speaker 6: Get into the ecosystem of all the software and the
Speaker 6: models that you're hearing about, the small and large models,
Speaker 6: the retrieval augmented generation. Of course, it's not just GPUs,
Speaker 6: it's also the networking by storage and the memory that
Speaker 6: come together.
Speaker 3: So let's be honest. That was a lot of buzzwords.
Speaker 2: But we're about to have a conversation where I think
Speaker 2: we can get to the root of what we're talking about,
Speaker 2: and that's with Nancy Tangler of Laffa Tengler Investments. And
Speaker 2: it's interesting, Nantie, because you actually got into Dell following
Speaker 2: earnings May thirtieth, and there was kind of a mixed
Speaker 2: reception to earnings. You know, there's a growth story there
Speaker 2: about AI infrastructure, and there were some near Turk concerns.
Speaker 2: But let's start with why you looked at Dell and thought, Okay,
Speaker 2: this is the move I'm going to make.
Speaker 7: Well, and thank you for having me a couple of reasons.
Speaker 7: I mean, we were late to the party, and that
Speaker 7: will happen from time to time. We've been late to
Speaker 7: other parties. But the point is that you get there.
Speaker 7: And we saw it as an opportunity to step in
Speaker 7: not just on the data center side of the business,
Speaker 7: but the PC upgrade cycle part of the business. And
Speaker 7: so if you look at the hyperscalers they are they
Speaker 7: are spending or spent about two hundred million dollars two
Speaker 7: hundred billion, sorry dollars on AI in their budgets, and
Speaker 7: so we think the use cases are real, the technology
Speaker 7: is real, the monetization is real, and so this was
Speaker 7: an area we were underweight hardware in our tech exposure,
Speaker 7: and this was an area where we could jump in.
Speaker 2: So you do not hold in Nvidia, which is really interesting.
Speaker 2: The big story we're talking about this morning is what
Speaker 2: played out on social media Wednesday that Michael Dell posted
Speaker 2: they're building an AI factory for Xai to power groc
Speaker 2: and Musk responds and says, well, actually super Micro's involved
Speaker 2: as well, So let's do some math, which actually my
Speaker 2: colleagues are Bloomberg Intelligence kindly walked me through this morning.
Speaker 3: If this deal is for Grock three has.
Speaker 2: Said in the past he'll need one hundred thousand, h
Speaker 2: one hundreds for that. And if you assume the average
Speaker 2: price of a rack a server racks about a million dollars,
Speaker 2: there are thirty six in Vida GPUs in each rack.
Speaker 2: You'll need twenty seven hundred racks. That could mean one
Speaker 2: point five billion dollars in bookings for both Dell and
Speaker 2: sm or super Micro. If BI is right about the
Speaker 2: three billion dollar deal value. So you don't hold in Nvidia,
Speaker 2: but you kind of do indirectly through Dell.
Speaker 3: Is that fair?
Speaker 7: Yes, I'm going to take that because you know, it
Speaker 7: seems silly to not be in Nvidia. We have very
Speaker 7: strict valuation metrics, and so I'm waiting for the hedgies
Speaker 7: to go to the Hamptons and then hoping we'll get
Speaker 7: a pullback an Nvidia. But yeah, I think I think
Speaker 7: that is the important thing to be thinking about. That
Speaker 7: that the investment cycle, as the large language models become larger,
Speaker 7: the power needed to generate the metrics around that that
Speaker 7: is going to augur well, not just for in Video,
Speaker 7: but for Dell and for Broadcom, which is we own
Speaker 7: the poor man's in video, which is which is broad Coom,
Speaker 7: and I'm pretty happy with that holding it's up sixty
Speaker 7: five percent year to date or seventy. But you know
Speaker 7: that's that pales in comparison to in Vidia one hundred
Speaker 7: and seventy percent.
Speaker 2: On the valuation question when last I checked. I don't
Speaker 2: have it in front of me now, but I think
Speaker 2: in video trades is something like forty five times, yes,
Speaker 2: twelve month forward earning something like that. And so so
Speaker 2: it's a rules based issue for you. You just called
Speaker 2: Broadcom the poor man's in video because you just extrapolate
Speaker 2: a bit.
Speaker 3: Why you'd say that.
Speaker 7: Well, it's I mean, it's certainly not as much in
Speaker 7: the sweet spot. But Hoktan, who by the way, is
Speaker 7: the highest paid CEO in corporate America. He is a
Speaker 7: master operator of the business. So they've already made you know,
Speaker 7: VMware has been on the books for a quarter. It's
Speaker 7: a creative It smooths out the hardware cycle, and they
Speaker 7: will be facing some competitions, certainly from in Nvidia in
Speaker 7: the networking side of their business. But we just think
Speaker 7: it's a company that it has paid. I mean, we've
Speaker 7: owned it for a long time. It's a member of
Speaker 7: our twelve Best Ideas portfolio, and we continue to like
Speaker 7: it here it's the cheapest of the group. And I
Speaker 7: love these old economy or old technology names like Broadcom, Oracle, Dell,
Speaker 7: who have remade themselves. And that's thanks to strong management
Speaker 7: teams who pivoted when they should have pivoted, just like
Speaker 7: Satya Nadella did at Microsoft, which is another twelve Best
Speaker 7: Ideas named for us.
Speaker 2: One of the other top top stories on Bloomberg today
Speaker 2: is this research note from City and they argue that
Speaker 2: AI is going to displace more jobs in the banking
Speaker 2: sector than any other sector. And I was looking across
Speaker 2: your portfolio, and you have this twelve Best Ideas portfolio.
Speaker 3: Which includes Goldman Sachs.
Speaker 2: So if we stick with the AI theme, what do
Speaker 2: you make of that City call that it's going to
Speaker 2: be in banking where an impact of the world forces
Speaker 2: most felt from AI.
Speaker 7: Yeah, I don't think it's going to be the Goldman
Speaker 7: side of banking. You know, I've been in this business
Speaker 7: for forty years at and I've heard all sorts of
Speaker 7: prognostications about what will happen that never happens.
Speaker 5: I think.
Speaker 7: Artificial intelligence will augment workers, and particularly the kind of workers,
Speaker 7: professional workers that Goldman employs. So I don't think it's
Speaker 7: a bank teller, robo call, you know, side of the
Speaker 7: business that that will be potentially impacted. But that's not Goldman,
Speaker 7: at least not anymore. When sin Save exited retail banking,
Speaker 7: and we think the M and A activity is certainly
Speaker 7: going to accelerate, So.
Speaker 3: We still like it here.
Speaker 7: It's still very cheap based on our work, and so
Speaker 7: you know, I'm not worried about that.
Speaker 2: Henry Wren, who covers China tech for US, was just
Speaker 2: on talking about the Chinese consumer and how many of
Speaker 2: the big Chinese technology names are doing heavy incentive this
Speaker 2: weight week. If there's one thing that keeps Nancy Tangler
Speaker 2: up at night, I think I'm right in saying that
Speaker 2: it's the consumer broadly. But I guess principally in this country.
Speaker 2: Why is it such a concern to you the state
Speaker 2: of the consumer.
Speaker 7: Well, so I think there's two consumers. There's the baby
Speaker 7: boom consumer, which I'm a member of, who has half
Speaker 7: of the country's net worth, and so they're spending. They're
Speaker 7: retired generally speaking, and they're not being impacted by this.
Speaker 7: They have big stock portfolios, but it's the low end
Speaker 7: consumer that's just getting crushed by you know, sticky inflation,
Speaker 7: which is still with us. You know, only on Wall
Speaker 7: Street do we say, oh, inflation is declining because the
Speaker 7: rate of rate of change is going up less fast
Speaker 7: than it was previously. So I think it's wearing on them.
Speaker 7: The interest expense, the access to credit, all of this
Speaker 7: is declined. And then we know that, you know, full
Speaker 7: time jobs declined in March year over year by two
Speaker 7: hundred and seventy five thousand hours work declined, wages in
Speaker 7: terms of our average hour, the earnings declined. So this
Speaker 7: is a problem spot for the economy. And the low
Speaker 7: end of the consumer is end mass much greater in
Speaker 7: numbers than the baby boomers. So I think we have
Speaker 7: to watch this. And the retail sales numbers that they're
Speaker 7: not comprehensive, we're disappointing, and the revisions down we're also disappointing.
Speaker 2: Earning season is once again around the corner. It's silly
Speaker 2: to say, take that concern and give me your expectations
Speaker 2: to technology earnings in particular.
Speaker 7: Oh, I think tech's going to continue to shine and
Speaker 7: Just for the record, we've been advocating overweighting tech since
Speaker 7: the fall of twenty twenty two, when everyone rode it
Speaker 7: off once again as not the place you wanted to be,
Speaker 7: that the tech trade was over, that higher interest rates
Speaker 7: were going to hurt technology companies, because that was an old,
Speaker 7: old school view of the world. But in fact, most
Speaker 7: of the megacap tech names have benefited from higher interest rates.
Speaker 7: So we think earnings is going to continue to be
Speaker 7: a bright spot through this year and into next. And
Speaker 7: so we want to own, you know, the hyperscalers, We
Speaker 7: want to own the hardware companies. And you know they
Speaker 7: wrote off software a few weeks ago, but just wait
Speaker 7: a few weeks and I think the hedge fund guys
Speaker 7: will be back in buying software. So there's my cynical
Speaker 7: view of the way this world works.
Speaker 3: Cynical.
Speaker 2: Maybe I appreciate the omission that you elate to the
Speaker 2: party on Dell, but in the end, you made it
Speaker 2: to the party, and that is what matters. Nancy Tengler
Speaker 2: of Lappetengler Investments, thank you so much. Stick with us,
Speaker 2: We'll be right back. This is Blimberg Technology. Eight former
Speaker 2: employees of SpaceX who were fired in twenty twenty two
Speaker 2: after writing an open letter criticizing Elon Musk. Have now
Speaker 2: filed a lawsuit against SpaceX and CEO mask edging sexual
Speaker 2: harassment and retaliation. We spoke with one of the plaintiffs
Speaker 2: in the suit, Paige Holland Feelin.
Speaker 8: SpaceX employees are encouraged to follow SpaceX and to follow
Speaker 8: Elon Musk on Twitter, and in my orientation, we were
Speaker 8: encouraged to follow him on Twitter. In the employee handbook,
Speaker 8: it mentions that his Twitter feed is a source of
Speaker 8: official company news that's allowed to be shared with the public.
Speaker 8: So if you if you're not following him on Twitter,
Speaker 8: then you're missing things, and actual delivery dates and deadlines
Speaker 8: and functions of entire teams and departments are impacted day
Speaker 8: to day by what he decides to tweet. In the
Speaker 8: middle of the night, he decided to, you know, put
Speaker 8: out a return to office order and talk about it
Speaker 8: on his Twitter, and that became the law. And you know,
Speaker 8: a friend of mine had a Starship delivery date changed
Speaker 8: overnight because it was on Twitter. So now it's now
Speaker 8: it's law. So it's not just the nonsense, but the
Speaker 8: stuff that impacts people's actual day to day work functionality
Speaker 8: is tweeted about, and then since he's already said it
Speaker 8: and it's public, it's now written into the official plan.
Speaker 9: It was interesting that you said you felt like an
Speaker 9: outside another because that you're female. But many would say, look,
Speaker 9: the person actually running the show, the CEO, Gwyn shotwell,
Speaker 9: female too. How is her voice not allowing your voice.
Speaker 10: To be heard?
Speaker 8: She is very much part of the problem. I think
Speaker 8: that she comes from a generation of just a different
Speaker 8: perspective maybe, but she's so ingrained in the culture there
Speaker 8: and the lifestyle that she's not willing to.
Speaker 11: Rock the boat at all at this point.
Speaker 8: She's very much not the adult in the room that
Speaker 8: the rest of the world kind of makes her out
Speaker 8: to be. She is a huge part of the problem.
Speaker 8: I think it's this brand of kind of I want
Speaker 8: to say, like girl boss feminism that doesn't really uplift
Speaker 8: those around you. Doesn't feel the need to open your
Speaker 8: eyes to the very real concerns of people around you.
Speaker 8: She likes when people have conversations you pay. She will
Speaker 8: focus on a one counterpoint to a valid argument as
Speaker 8: a means of dismissing the entire argument, which is disingenuous
Speaker 8: and really in bad face.
Speaker 9: You have that full suit, and I'm interested to know
Speaker 9: what you hope to get out of this page.
Speaker 8: Accountability most of all. But I think I think accountability
Speaker 8: because the leadership forms the culture so much, and because
Speaker 8: it's such a painful place to work, and having being
Speaker 8: working at SpaceX and open doors for you elsewhere, and
Speaker 8: so it's really amazing opportunity, and I don't think that
Speaker 8: that opportunity should be constrained to the people who are,
Speaker 8: you know, the typical engineering demographic. There are voices and
Speaker 8: perspectives to be heard that can contribute in a meaningful
Speaker 8: way that don't you know, look like the status quo.
Speaker 8: But aside from that, I think speaking up and telling
Speaker 8: my story hopefully will help other people who you know,
Speaker 8: look around them and don't see anyone else that looks
Speaker 8: like them and don't know that their experiences aren't isolated
Speaker 8: to their own experiences, can speak up and share the
Speaker 8: stories around them. I'm hoping to kind of open up
Speaker 8: the platform to let people of all marginalized groups have
Speaker 8: these conversations and feel safe, because I think it's fundamentally
Speaker 8: it should be a human right to feel safe in
Speaker 8: the workplace.
Speaker 2: Bloomberg Technology reached out to SpaceX and Elon Musk for
Speaker 2: comment on the suit and the allegations made by Holland Feelen,
Speaker 2: but they did not respond. SpaceX has previously denied any
Speaker 2: wrongdoing and said that the fired employees involved in the
Speaker 2: case violated policy. It also said Musk himself was not
Speaker 2: involved in those terminations. Gwinshortwell also didn't comment. We continue
Speaker 2: to track the story and if SpaceX want to talk,
Speaker 2: they're always welcome on the show. This is Bloomberg. Welcome
Speaker 2: back to Boomberg Technology. Ed Ludlow in San Francisco. A
Speaker 2: quick check in on the market, So I always go
Speaker 2: to the NAZE one hundred. It's kind of this tech
Speaker 2: heavy index, a lot of higher multiple names AI as
Speaker 2: a story plays out, but we are essentially flat as
Speaker 2: a pancake. Remember it was a market's holiday in the
Speaker 2: US and Wednesday.
Speaker 3: But one real clear mover to the upside is in Vidia.
Speaker 3: In Vidia continuing to push.
Speaker 2: Higher and Nvidia is now the world's most valuable company
Speaker 2: by market cap. A big part of the story in
Speaker 2: Thursday session was something that played out in social media.
Speaker 2: Talked about it earlier in the program. Michael Dell, the
Speaker 2: Dell CEO, taking to x saying that they're making an
Speaker 2: AI factory for Xai to power grock Mask, in response
Speaker 2: to some other user comments, said super Micro is also
Speaker 2: going to be providing server rack and server design to Xai,
Speaker 2: and you can see that actually, in truth, super Micro
Speaker 2: the bigger beneficiary of the two, but both getting a
Speaker 2: push to the upside what they have in common. They
Speaker 2: just provide the integration of that server rack, but it's
Speaker 2: the Nvidia GPU at the heart of it that powers
Speaker 2: it interesting in public markets, we continue to cover what's
Speaker 2: happening in AI and private companies as well. Open ai
Speaker 2: co founder Ilia Sutskova, who took part in the twenty
Speaker 2: twenty three board ouster of Sam Outman, has disclosed plans
Speaker 2: to continue his work at a new research lab focused
Speaker 2: on artificial general intelligence. For more, let's bringing in an
Speaker 2: our AI editor Bloomberg Seffagen and in New York City,
Speaker 2: we have a new startup. The startup has a clear
Speaker 2: mission and remit give us the details.
Speaker 10: Yeah, you know, we actually don't know too many details here.
Speaker 10: For the last six months, everyone has been wondering where
Speaker 10: is Ilia and what is the next thing going to
Speaker 10: be And at this point we seem to have an
Speaker 10: idea he'll have a research lab that is building a
Speaker 10: future theoretical version of a super intelligent AI that would
Speaker 10: be smarter than and outperform humans if it ever comes
Speaker 10: to exist. What they're not doing is trying to commercialize
Speaker 10: those products, at least not yet. So it's a very
Speaker 10: different path than his prior company, open AI, And I
Speaker 10: think that the biggest question is why when when we
Speaker 10: start to see any progress on that front, and two,
Speaker 10: who's going to ultimately end up staffing that company? Will
Speaker 10: we see him and his new company start to hire
Speaker 10: disaffected former colleagues from open ai and other startups in
Speaker 10: the industry.
Speaker 2: The venture is called Safe super Intelligence, And the main
Speaker 2: pledge that I see is is exactly.
Speaker 3: That no commercial product.
Speaker 2: They won't sell anything until they have the definitive I
Speaker 2: don't even want to say product, they have definitive artificial
Speaker 2: general intelligence.
Speaker 3: But the inference is that.
Speaker 2: Ilia didn't share and we've talked so much about this
Speaker 2: seth you know, Sharene's coming up on the show in
Speaker 2: a moment, and she's been on this show talking about
Speaker 2: it a lot. The inference is that Ilia did not
Speaker 2: agree with Sam Autman prioritizing the commercialization of AI technology.
Speaker 2: He's kind of going back to the R and D
Speaker 2: and academic side of this.
Speaker 3: I think that's right.
Speaker 10: There's so much unspoken here, and Ilia has been very
Speaker 10: quiet on how he actually feels about Sam Aulman's leadership
Speaker 10: and the company broadly, but just in the way this
Speaker 10: has been structured. It feels like a repuviation of the
Speaker 10: way that OBAMIAI has been upbreaing of the last year
Speaker 10: or so.
Speaker 2: This was a story that Bloomberg's actually vance broken. Business
Speaker 2: Week highly recommend you go and read the very long
Speaker 2: and detailed, sort of unveiled but Bloomberg seth agmen, we
Speaker 2: really appreciate having you on the program.
Speaker 3: Stick with AI.
Speaker 2: Artificial intelligence startup Anthropic is releasing a new AI model
Speaker 2: that it calls its fastest and most capable yet in
Speaker 2: its rivalry against open ai. A Bloomberg shuring Gafari is
Speaker 2: here on set. You know, we track Anthropic so closely
Speaker 2: because it's so well funded. It is believed by industry
Speaker 2: to be as sort of near incompetence to open AI.
Speaker 2: The specifics of this models, please, its name, what it's
Speaker 2: for sure.
Speaker 5: So the new model is called Claude three point five Sonnet.
Speaker 5: It's coming only three months after Anthropic release its last
Speaker 5: most powerful model, right, Claude three point five, And what
Speaker 5: they're claiming is that it's actually ahead of open ai
Speaker 5: on several key evaluations around reasoning, around things like coding
Speaker 5: and math, and you know, it just shows how quickly
Speaker 5: these companies are really on the heels of each other
Speaker 5: trying to come out with the latest and greatest models.
Speaker 2: How does Anthropic operate in a way that is different
Speaker 2: or similar to open Ai? When I was on social
Speaker 2: media and I saw lots of people say, oh, I
Speaker 2: was involved in early beta access to three point five,
Speaker 2: so on it and I have the following opinions. So
Speaker 2: they appear to do a careful rollout, but it also
Speaker 2: seems very quick to make a product that they I
Speaker 2: assume they can sell.
Speaker 3: That's right.
Speaker 5: So Anthropic has been focusing much more on enterprise customers
Speaker 5: as a number one priority as compared to OpenAI. I
Speaker 5: talked to co founder and president Danielle Amadai have a
Speaker 5: company who told me that they're not distracted quote unquote
Speaker 5: by things like coming up with image generation of a
Speaker 5: cat on a snowboard, and she said that sort of jokingly,
Speaker 5: but it's true that if you compare the two companies,
Speaker 5: Anthropic is a lot more focused on they say, use
Speaker 5: cases that are specific to the business enterprise customer.
Speaker 2: Do we have any sort of case studies of how
Speaker 2: clawed three point fives on it will be used or
Speaker 2: like how it's any different or capable to prior models.
Speaker 5: Yeah, So the company has talked about how it's being
Speaker 5: used more for things like financial analysis. They've also talked
Speaker 5: about partnering with drug companies like Pfizer to help with
Speaker 5: research and discovery, which is also something that open ai
Speaker 5: is starting to do. So we're starting to see more
Speaker 5: kind of close integrations of these tools in the enterprise.
Speaker 2: Bloomberg Shrien Gafari one of the absolute rock stars of
Speaker 2: art Official Intelligence Coverage.
Speaker 3: It's great to have you on set.
Speaker 2: Okay, coming up on the show, we're going to be
Speaker 2: joined by Devon Kirk, a partner at Portage, for a
Speaker 2: look at the global fintech industry. This is something we've
Speaker 2: covered a lot on the show of late the battle
Speaker 2: for talent and the impact of AI on fintech. Stay
Speaker 2: with us they're going to take a short break. We'll
Speaker 2: be right back with you. This is Bloomberg and Technology. Okay,
Speaker 2: We're going to take a look at the world of
Speaker 2: fintech with Devon Kirk, partner at the global fintech focus
Speaker 2: firm Portage, which has two point five billion dollars in
Speaker 2: assets under management. It's also the co head of the
Speaker 2: Portage Capital Solution strategy, where they focus on growth equity,
Speaker 2: structured equity, and special situations investments in financial technology, financial
Speaker 2: services companies that operate globally.
Speaker 3: And I'm really interested had this conversation.
Speaker 2: We've had all kinds of fintech names on the show
Speaker 2: from around the world, actually just in the last few weeks.
Speaker 2: And the sense I get is this kind of a
Speaker 2: bifurcation of how companies are moving in Europe and how
Speaker 2: they're moving in the United States, particularly those that might
Speaker 2: have been venture backed grown rapidly, but now they're trying
Speaker 2: to scale around the world. Would you say that's a
Speaker 2: fair thesis.
Speaker 11: I think that's right.
Speaker 12: Certainly, we're seeing in the US the activity is picking
Speaker 12: up and the fintech space valuations are starting to recover,
Speaker 12: especially in the B two C segment and there's more
Speaker 12: optimism around the IPO markets reopening, but in Europe.
Speaker 11: Things continue to be slower.
Speaker 12: From a growth equity perspective, We're starting to see a
Speaker 12: bit more and activity in Europe, so that's you know,
Speaker 12: one path to liquidity for growth equity investors that helps
Speaker 12: to support that market, but overall it is a more
Speaker 12: viewted environment in Europe right now.
Speaker 3: What are the reasons why?
Speaker 2: You know, I've covered all kinds of industries and sectors
Speaker 2: over the last six years or so that I've been
Speaker 2: in Silicon Valley in the Bay Area in particular, where
Speaker 2: growth equity has been very active and you actually get
Speaker 2: sort of legacy finance names that come in and support
Speaker 2: what we would regard as being technology companies, particularly, you know,
Speaker 2: just prior to IPO. Why is that that activity and
Speaker 2: interest not happening in Europe.
Speaker 11: Well, I think there's a few dynamics.
Speaker 12: As you know, European markets have always been a little
Speaker 12: more fickle in their appetite for growth opportunities within the
Speaker 12: IPO markets.
Speaker 11: But I think there's a.
Speaker 12: Dynamic specific to fintech where there's a much higher prevalence
Speaker 12: of FinTechs with bank charters in Europe.
Speaker 11: Than you see in the US, and that does tie.
Speaker 12: Their hands a little bit in terms of the options
Speaker 12: available for them to raise capital in this market environment
Speaker 12: where valuations have been.
Speaker 11: A bit Whipsod.
Speaker 3: Devin.
Speaker 2: One of the most read stories on Bloomberg this morning
Speaker 2: is about a research note from City who say that
Speaker 2: artificial intelligence will displace the most jobs or in terms
Speaker 2: of displacement, be most felt in banking versus other sectors.
Speaker 3: Is that something that you see happening.
Speaker 12: Yeah, we absolutely see a huge opportunity for AI within
Speaker 12: financial services.
Speaker 11: The volume of activity.
Speaker 12: That is happening in that space, the more repeat nature
Speaker 12: of many interactions and forms of analysis allow for really
Speaker 12: nice use cases for machine learning as well as generative
Speaker 12: at AI. What we are seeing though, is that that
Speaker 12: within the sector we expect, you know, data sets will
Speaker 12: really drive the winners for how AI gets applied and
Speaker 12: AI itself. You know, the strength of your AI capabilities
Speaker 12: is going to be less of a differentiator.
Speaker 2: I like having you on because you are sizable, firm
Speaker 2: at scale and you operate in multiple jurisdictions. So where
Speaker 2: are are you putting money to work and writing checks
Speaker 2: right now?
Speaker 12: So to your point around AI RegTech is an area
Speaker 12: that we're really excited about. We see lots of opportunities
Speaker 12: for technology disruption there. We're also spending you know, increasing
Speaker 12: time around consumer finance. You know, that's an area that's
Speaker 12: been hit hard over the last few years, but we
Speaker 12: think we're at a point now where there's some stronger
Speaker 12: business models that we're excited to back. We're also continuing
Speaker 12: to spend time around vertical SaaS and the opportunities for
Speaker 12: embedded financial services, particularly payments in many more traditional software businesses.
Speaker 11: So, you know, those are some of the themes that
Speaker 11: we're playing with.
Speaker 12: But from a geographic perspective, as you mentioned, we're active
Speaker 12: across North America and Europe.
Speaker 2: I like the idea of reg tech, you know reg
Speaker 2: tech or regulatory tech, but my understanding is that those
Speaker 2: are largely software companies that are focused on process right,
Speaker 2: helping companies make sure they're either compliant or they're adhering
Speaker 2: to whatever sector specific regulatory requirement is in front of them.
Speaker 3: How do you be innovative in a space like that, Well.
Speaker 12: I think the innovation comes from, you know, how you
Speaker 12: drive efficiencies right. Everyone across North America and Europe and
Speaker 12: the traditional financial services world is looking for.
Speaker 11: How they can take out cost.
Speaker 12: And really grow their businesses with fewer regulatory inhibitants. But
Speaker 12: I would also say, you know, regulatory change is one
Speaker 12: of the toughest strategic challenges for financial services businesses to manage,
Speaker 12: and so tools that allow them to do that more
Speaker 12: efficiently are ultimately tools that enable them to be more
Speaker 12: innovative in various elements of their business. And so we
Speaker 12: see reg tech and managing reg elatory environments effectively as
Speaker 12: really an important enabler for innovation for the sector.
Speaker 2: Devin, you join us from Toronto. You've cast your eye
Speaker 2: over Europe. We've talked about the United States. Which jurisdiction
Speaker 2: do you think is the best environment from a regulatory
Speaker 2: standpoint right now that allows for innovation, that allows for
Speaker 2: a market where sort of technology progress is rewarded.
Speaker 12: We can continue to see the US as a leader
Speaker 12: in enabling innovation.
Speaker 11: There's pockets, you know, if you think.
Speaker 12: About account to account transactions, open banking, EUROPN regulators have
Speaker 12: really led the way, But overall we see the US
Speaker 12: environment as being.
Speaker 11: A really attractive one.
Speaker 12: There's pockets right now if you think about banking as
Speaker 12: a service, for example, where there's a lot of regulatory
Speaker 12: dynamics for companies to digest, but overall, we see it
Speaker 12: as a constructive environment and most importantly a large environment
Speaker 12: where there's the market opportunity to support investing in innovation.
Speaker 2: Devin Kirk, Portage Partner and Portage Capital Solution Strategy COHED.
Speaker 3: I like that.
Speaker 2: I can't remember the first time we use the frame
Speaker 2: phrase RegTech. But if you're out there and you're work
Speaker 2: in compliance and you have strong fings about it, get
Speaker 2: in touch. We appreciate it, all right, thank you.
Speaker 13: In the early days of computer programming, a significant historical
Speaker 13: anecdote is known as Grace Hopper and.
Speaker 3: The fuck that was not a real person?
Speaker 2: An avatar of Joshua's You the CEO of hey Jen,
Speaker 2: an ai startup that let's users quickly create realistic looking avatars,
Speaker 2: and the companies just announced a sixty million dollars series
Speaker 2: A led by Benchmark, valuing the company at more than
Speaker 2: five hundred million dollars, and Heygen's real life CEO, Joshua
Speaker 2: ju joins me here on set. It was an interesting video.
Speaker 2: We'll bring it back up again, but just explain what
Speaker 2: it was that we were looking at.
Speaker 13: Sure, Yeah, that was the digital tern boris off me.
Speaker 13: You know, I was always wanted to try the ALVHATA
Speaker 13: technology myself, and then I create a toolbrosup for me
Speaker 13: and then enabling that you know, lip same videos within
Speaker 13: the same audio.
Speaker 3: And that's what we.
Speaker 2: See the main point of it is that it requires
Speaker 2: no camera and no crew or a big studio like
Speaker 2: we're sitting in now. So how does it work in practice?
Speaker 2: Just explain the basics of me wanting to create a
Speaker 2: clip just like that one.
Speaker 13: Sure, sure, you know, I think the whole of hagens
Speaker 13: that we want to produce software to really help to
Speaker 13: you know, simplify the traditional video production. And you know,
Speaker 13: nowadays our audience live at the video first row and
Speaker 13: everyone's like watching lottop videos every day. There's more than
Speaker 13: a billion hours of video being watched on YouTube every day. Great,
Speaker 13: but the problem is that videos really you know, expensive
Speaker 13: to make and businesses are shocking to keep up with demand.
Speaker 13: And there's a better way to solve it ar generation.
Speaker 13: And that's what we do. That we are building an
Speaker 13: AR video platform leveraging.
Speaker 3: The AI technology to do that.
Speaker 13: So in short, in order for a customer to real
Speaker 13: their VATA or a digitwen of themselves. You know, they
Speaker 13: need to submit a footage and then submit the live
Speaker 13: video consent and also read out the Dynamo verbal pascal
Speaker 13: and then our AR model will really verify that and
Speaker 13: create our version of that.
Speaker 2: Some of the use cases that you guys discuss are
Speaker 2: quite interesting. So if you take for example a not
Speaker 2: for profit or even a training video inside of a company.
Speaker 2: You know, think about all the trainings that people have
Speaker 2: to do every quarter. We do them here you sit
Speaker 2: through your kind of videos that I get, But what's
Speaker 2: the market for it? Do you find that businesses are
Speaker 2: willing to pay for this as a service as a
Speaker 2: software tool?
Speaker 3: Sure?
Speaker 13: Sure, you know hay Gen's products help more than four
Speaker 13: thousand paying customers. Like to do three things essentially, create,
Speaker 13: localized and personalized. You know, as you see those from
Speaker 13: some of the product screenshot that customers can create a
Speaker 13: video without a camera basically leddy avata from the template,
Speaker 13: or they can create it on their own and the
Speaker 13: template typing the script and create a video that way.
Speaker 13: And this is great for it's beIN the videos how
Speaker 13: tool videos Toutobio videos chaining content that you just mentioned.
Speaker 2: You just said forty thousand paying customers. See, you've just
Speaker 2: raised sixty million dollars. What do you need the money for?
Speaker 3: Great question.
Speaker 13: So so the primary motivation of the Fairer reason was
Speaker 13: to bring in the world class advisors and investor to
Speaker 13: help us scale. You know, we are accelerating the you
Speaker 13: know product roodmap and growing the go to market teams.
Speaker 13: And the business has been profitable since Q two last year.
Speaker 2: Profitable since Q two last year. What's your biggest cost
Speaker 2: compute computer? Yes, and what does that look like? It's manageable, okay,
Speaker 2: But the underlying model that powers the we're talking basically
Speaker 2: both image and text video. That's what we're discussing here.
Speaker 2: But you built it on in Vidia. You built it
Speaker 2: in partnership with you Sure.
Speaker 3: Yeah.
Speaker 13: We we work with a loss of a you know,
Speaker 13: the cloud provider, uh you know Amazon Ezra to you know,
Speaker 13: power our influenced cluster, and we also have a big
Speaker 13: cluster to chain our models. You know, especially when we
Speaker 13: talk about the video model is very heavy lifting. And
Speaker 13: then you know that's one of the biggest cost area.
Speaker 2: So there is also a concern here we'll bring the
Speaker 2: video back up, which is not you it is AI generated,
Speaker 2: but there's a trust and safety component where your platform
Speaker 2: and tool could be used to create content that is
Speaker 2: not what it purports to be.
Speaker 3: How do you overcome that?
Speaker 13: Those are two main areas that speaking about the trusting
Speaker 13: safety and we do at Hagen. You know, I think
Speaker 13: the first question is around how do we protect a
Speaker 13: digital twin And you know, like I mentioned every time,
Speaker 13: for every customer who wants to create a video avatar
Speaker 13: of themselves, we have an advanced user verification includes you know,
Speaker 13: live video consent dynamit, verbal parsical as well as human
Speaker 13: review in the back.
Speaker 3: And the second piece is about you know the count modulation.
Speaker 3: You know it's posted in the public domain.
Speaker 13: Sure yeah, and you know the content relation pieces about
Speaker 13: whether you know whether where you have the albata and
Speaker 13: what are the content, whether the content complied with our policy.
Speaker 13: So we combine you know, automatic system with AI model
Speaker 13: plus human review, the human moderator in the back to
Speaker 13: really make sure you know there's no you know, misinformation, disinformation, harassment,
Speaker 13: child safety, political or elections specific content you know being
Speaker 13: used for this technology.
Speaker 2: Just very quickly, it is an election here here in
Speaker 2: the United States. This exact topic is a big concern.
Speaker 2: Are you being proactive in specifically the context of the election. Sure,
Speaker 2: you know, first of all, we do not allow any
Speaker 2: political or election specific content on the platform today. Our
Speaker 2: policies and products shot the prohibited you know, creation of
Speaker 2: unauthorized content and you know, chess and safety. It is
Speaker 2: critical to our business and we're working very actively across
Speaker 2: the braw to the industry, you know, continue to developing,
Speaker 2: you know, tooling best purpose to combat missed information and misuse. Hey,
Speaker 2: Jen CEO, Josh Reju, we've had you in person, We've
Speaker 2: had an AI generated version of you. That's good value
Speaker 2: for us here on Bloomberg Technology, and we appreciate it.
Speaker 2: That does it for this edition of the show Bloomberg Technology.
Speaker 2: Remember it's been a shorter week here in the United States.
Speaker 2: We had a holiday Wednesday observing Juneteenth, but recap because
Speaker 2: the news cycle came back in force. You know where
Speaker 2: to find the pod on Apple, Spotify, iHeart, and of
Speaker 2: course if you want to pod with us, we're podding
Speaker 2: on all the Bloomberg platforms. One day left in the
Speaker 2: week to go and I'm looking forward to it.
Speaker 3: See you soon. This is Bloomberg Technology
Speaker 11: At it when you don't help it un