Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: All Right, well, the biggest headline, of course, out of
Speaker 2: the WWDC was Tim Cook talking about artificial intelligence.
Speaker 3: Recent developments and generative intelligence and large language models offer
Speaker 3: powerful capabilities that provide the opportunity to take the experience
Speaker 3: of using Apple products to new heights. Introducing Apple Intelligence,
Speaker 3: the new personal intelligence system that makes your most personal
Speaker 3: products even more useful and delightful.
Speaker 2: Here in the studio with more is Sam Palmisano. He's
Speaker 2: former CEO of IBM. He is also currently the board
Speaker 2: chair of America's Frontier Fund, and nonprofit developed to support
Speaker 2: critical tech to ensure US competitiveness. Sam, it's so great
Speaker 2: to get you on set, your first guest on set for.
Speaker 4: The new show. I'm honor, thank you so much.
Speaker 2: We're going to get you a hatter ache show that
Speaker 2: it's something okay, perfect, We're gonna work my hair, little do,
Speaker 2: We're gonna work with shoot someone.
Speaker 1: Okay.
Speaker 2: So let's take a broader view. Then when it comes
Speaker 2: to AI, how does the US take the appropriate amount
Speaker 2: of risk to make sure that it can stay ahead.
Speaker 5: That's a great question, quite honestly, and I'll step back
Speaker 5: and say, look, at the models today and why we
Speaker 5: created the American Frontier Fund. The models today are heavily
Speaker 5: oriented around software. You heard that today or the Apple announcements.
Speaker 4: To stay ahead in tech, it has to.
Speaker 5: Be much more than just software, So you need long
Speaker 5: term investments in science and research. US is far ahead
Speaker 5: in science and research, but we're losing track on commercialization
Speaker 5: that builds the new technologies that changes the future, and
Speaker 5: not just consumer convenience. I mean how healthcare is done,
Speaker 5: how banking and our financial systems are run, how the
Speaker 5: national security, national defense occurs. All those types of things
Speaker 5: require much longer cycles of investment, and that's why we
Speaker 5: created this thing called the American Frontier Fund.
Speaker 4: We want to keep the West ahead of the East.
Speaker 3: So we have the Chips Act.
Speaker 2: Right, Yes, we clearly have big tech innovating. Like where
Speaker 2: are we falling short? Like where do you think the money,
Speaker 2: in the talent and the time needs to go into That's.
Speaker 5: A great question because obviously the issues telling me that, Well, okay,
Speaker 5: then I'll tell you that's an okay question.
Speaker 4: I asked Roman for a good question.
Speaker 5: But seriously, what it is that the point that the
Speaker 5: cycles that we're talking about for these very advanced applications
Speaker 5: to require I'll say, let's say ten to fifteen years,
Speaker 5: we call it the value of death. To take it
Speaker 5: from science and research through the value death to get
Speaker 5: it to commercialization takes a long time. So to do
Speaker 5: that you have to create a partnerships or an ecosystem
Speaker 5: with the research laboratories, with the academic institutions, with the
Speaker 5: private sector as well, and you need government involved because
Speaker 5: of the risk associated of getting through the value of death.
Speaker 4: And that's what we are about.
Speaker 5: And what we've created is a new model for commercialization
Speaker 5: of this tech that it's required to keep the US
Speaker 5: ahead of the rest of the world, but also the
Speaker 5: funding models that make it attractive for private investment to
Speaker 5: come in to these opportunities.
Speaker 1: Do we have that right now? I mean, when you
Speaker 1: look at sort of all the movement we see seen
Speaker 1: an AI as of lately, so much of it seems
Speaker 1: to be driven by the private sector. And even when
Speaker 1: the government got involved, who do they turn to first?
Speaker 1: They said, basically they brought the private sector and it
Speaker 1: said give us a solution to regulating this, which I
Speaker 1: think caused everyone to kind of scratch their heads.
Speaker 5: Well, they're t two different questions regulations different than actually
Speaker 5: the creation of the tech and the creation of the tech.
Speaker 5: The reason why go back to the early days of
Speaker 5: your INCU tell the CEO of the organization's give them
Speaker 5: who created incutel.
Speaker 4: That was for national security and defense.
Speaker 5: But it was the same sorts of things that what
Speaker 5: could you do long term in technology to make the
Speaker 5: country more secure? And sometimes you need governments involvement because
Speaker 5: of their risk factors, no different than the Chips Act.
Speaker 5: As far as you're talking about billions of dollars to
Speaker 5: create these facilities which are necessary that we control the
Speaker 5: resilience of the supply chain.
Speaker 4: But who's going to take the risk of forty or
Speaker 4: fifty billion in the private sector?
Speaker 5: I mean, Intel might invest twenty billion, but you're doubling
Speaker 5: it up now for these kinds of technologies going into
Speaker 5: the future.
Speaker 4: So this is why we've come up with this.
Speaker 5: Model that says, Okay, we're going to collaborate in the
Speaker 5: science with the national laboratories and everybody else, and then
Speaker 5: when you have commercialization, we'll take it to the private sector.
Speaker 5: But whether there's high risk involved, we're going to ask
Speaker 5: for We're going to try to seek which we've done
Speaker 5: in our first fund, there's government involvement, there's private sector
Speaker 5: involvement as well. The combined are going to create the
Speaker 5: first fund we're about to announce in two or three.
Speaker 1: Are there parallels between what you're trying to do and
Speaker 1: what we're seeing now and maybe what we saw coming
Speaker 1: out of the sixties seventies with some of the Defense
Speaker 1: Department projects and now there's some of the science based
Speaker 1: projects that were government based that eventually created the foundations
Speaker 1: for what really is our tech industry.
Speaker 5: Well, you go through a dark both, right, is the
Speaker 5: in there? I mean, you go through those initials. I'm
Speaker 5: so old I was involved with these things. I mean,
Speaker 5: so I can take you through the history of hell
Speaker 5: was all was done. But fundamentally, it's those kinds of
Speaker 5: core technologies. Did you ever think of when you were
Speaker 5: exchanging technical documents it would lead to what you do
Speaker 5: today on your Apple phone, which you just heard about. No,
Speaker 5: of course not now, this is like what thirty forty
Speaker 5: years later, But nonetheless it's the same sort of thing here.
Speaker 5: But a lot of this stuff does originate quite honestly,
Speaker 5: in the science organizations within the government and the academics
Speaker 5: research organizations. But you still need the private sector to commercialize,
Speaker 5: not just the fund but also to commercialize because the
Speaker 5: talent and the skills that are required to build these
Speaker 5: companies don't exist in government. In fact, I would never
Speaker 5: let government do it if I had an opinion on
Speaker 5: that subject, because that's not what they do. So we
Speaker 5: created these things we call road weather laboratories that actually
Speaker 5: will take what we're not talking about and drive the
Speaker 5: commercialization phase.
Speaker 2: So to that point, I've been wondering what the cycle,
Speaker 2: I don't know what to call it, like the cycle
Speaker 2: of AI or the cycle of AI chips, Like, what
Speaker 2: what does that look like?
Speaker 4: Is it short? Is a long?
Speaker 2: How does that affect the private the private money coming in?
Speaker 4: Well, give you a sense.
Speaker 5: Historically, that's technology cycle. If I take you back fifty
Speaker 5: years is fifteen to twenty years. So go back to
Speaker 5: the mainframe mainframe, to the client server PC. Any clients
Speaker 5: ever precede the cloud, they were fifteen to twenty year cycles.
Speaker 5: They started slower, Televisions, phones all started slower. Today with
Speaker 5: Jenner the AI, it is like on steroids relative to
Speaker 5: the pace of it. However, a lot of people argue
Speaker 5: that it's at the peak, even there's research out there
Speaker 5: that says we're peaking.
Speaker 4: In the cycle.
Speaker 5: So then what happens next and you hear it in
Speaker 5: the enterprise talking about we can't use the stuff it hallucinates.
Speaker 4: That's an indication that this thing is peaking.
Speaker 5: And maybe it's okay for music and poetry or marketing material,
Speaker 5: but you're not going to go defend the United States
Speaker 5: infrastructure with that kind of technology, or you're not going
Speaker 5: to have a bank and not deal a deal with
Speaker 5: fraud or cyber with that kind of technology. So my
Speaker 5: point being is this is where we are, but it's
Speaker 5: going really really fast. Now the key, and we believe
Speaker 5: the key for it to really be adopted in enterprise,
Speaker 5: it's basically you have to deal with we will call
Speaker 5: them guardrails versus regulations room and we would argue that,
Speaker 5: and we do argue this that the right source for
Speaker 5: the regular is not the tech industry itself, because there
Speaker 5: are leaders in the tech industry and they're going to
Speaker 5: show up with an opinion which is a valid opinion,
Speaker 5: but also it serves the hyperscalers. We would say that
Speaker 5: you really need to do who the users of the
Speaker 5: technology are to take the businesses the CEOs of these
Speaker 5: companies in healthcare, banking, government, whatever it happens to be,
Speaker 5: and let them come up with let them innovative the technology,
Speaker 5: but regulate the use cases the application, regulate the use
Speaker 5: of the data, regulate the privacy, establish the guard rails
Speaker 5: so that people are protected in their privacy and their
Speaker 5: data is protected, both the consumer as well as the enterprise.
Speaker 4: That should be done by the enterprises.
Speaker 5: Look, I was in the tech industry for forty years,
Speaker 5: not by me or my counterparts.
Speaker 4: All right, Sam, great conversation. I really appreciate you being
Speaker 4: here today.
Speaker 1: Sam pal Masano, former CEO over at IBM, and of
Speaker 1: course now helping to shepherd that effort of that public
Speaker 1: private partnership to further our technological advancement here in the US.