Speaker 1: From Marhard where Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed lud Love.
Speaker 3: I'm Caroline heind A Bloomberg's Weld headquarters in New York,
Speaker 3: and I'm d Ludlow side by side this week.
Speaker 4: This is Bloomberg Technology.
Speaker 3: Coming up full ev coverage ahead. Tesla drops after deliveries
Speaker 3: fell way short of expectations. Meanwhile, Rivian beats production estimates.
Speaker 3: We'll discuss.
Speaker 4: Plus we'll get the outlook for technology stocks after Apple
Speaker 4: posted one of its worst quarters relative to the S
Speaker 4: and P in over a decade.
Speaker 3: And we'll take the pulse of the IPO market. That's
Speaker 3: is Microsoft bat Rubrics IPO filing shows growing revenue, still losses.
Speaker 3: Details to come, but first that's checking on these public markets.
Speaker 3: And we're having the worst day in about a month
Speaker 3: the moment on the key benchmarks. We're seeing tech in
Speaker 3: particular under pressure, off by one and a half percent
Speaker 3: on the NASDAC. This as we see once again a
Speaker 3: fear of the fact that US economy is just too strong.
Speaker 3: The Federal Reserve is not going to be cutting rates
Speaker 3: at the market anticipated rate, and Therefore, we're likely to
Speaker 3: see just a pullback and some of these more frothier
Speaker 3: names Tenure Yield though also pushing higher on the back
Speaker 3: of the fact that we're going to see rates staying
Speaker 3: higher for longer potentially. And Bitcoin of course riscassett under
Speaker 3: pressure as we see the rest sell off we're of
Speaker 3: by more than five percent. Also we see the inflows
Speaker 3: perhaps style back from those crucial spot bitcoin ets. But ed,
Speaker 3: there is one stock that you.
Speaker 4: Are watching, yeah, and that is Tesla and Tesla deliveries
Speaker 4: missed expectations. In fact, that's an understatement. Tesla's deliveries three
Speaker 4: hundred and eighty eight thousand or so in the core
Speaker 4: to gone was the biggest miss against Bloomberg consensus on record.
Speaker 4: Where did we get this analysis wrong? The stock is
Speaker 4: down around five percent in the session in pre marketed
Speaker 4: fallen as much as seven percent. What are the factors
Speaker 4: that are happening here? I want to bring in Stephanie
Speaker 4: Bauder's Streaty, director of industry Insights at Coxa Automotive and
Speaker 4: Stephanie Tesla said this is supply side related. Three factors.
Speaker 4: They diverted shipments because of the situation in the red Sea.
Speaker 4: They pause production in Berlin because of what they call
Speaker 4: an arson attack, and they relaunched a refresh Model three
Speaker 4: in Fremont, which impacted the production rum ramp. Why has
Speaker 4: that impacted deliveries to this extent?
Speaker 5: Yeah, good afftering you, thank you so much. Yeah, Tesla's
Speaker 5: definitely the news today. We had forecasted that we're going
Speaker 5: to see decline in Q one for Tesla, And if
Speaker 5: you look at just as you mentioned, you know, they
Speaker 5: have the two models, the why you know and the
Speaker 5: US that are really like carrying them forward, but they
Speaker 5: don't have any new product recently, and hopefully with the
Speaker 5: Roadster two coming in twenty twenty six, that's going to
Speaker 5: help them. But if you look like any automotive, new
Speaker 5: product really drives sales, and so I think for Tesla
Speaker 5: they're in that in between waves. If they've mentioned on
Speaker 5: their last call of where they had, you know, high
Speaker 5: volume products and now they're waiting to launch this new
Speaker 5: one that's going to be more affordable, which the industry
Speaker 5: really needs. So I think Tesla has a lot of
Speaker 5: word ahead of it, and I think when they have
Speaker 5: their earnings car, I think it's going to be important
Speaker 5: for them to really lay out what that plan is
Speaker 5: to execute on that.
Speaker 3: Stephanie Love, how you're going there on the demand side
Speaker 3: of the equation, I know you focus predominantly on the
Speaker 3: United States, and interesting we talk a lot about well
Speaker 3: some of the competition coming from Chinese makers BID in particular,
Speaker 3: and you see also show me, for example, launching a
Speaker 3: new EV where on the first day of sales online
Speaker 3: it looks as though bookings a northern ninety thousand. When
Speaker 3: you're looking at the US demand side, how much is
Speaker 3: the competition an issue for it or is it really
Speaker 3: the supply side a lack of a new product that's
Speaker 3: the driver here.
Speaker 5: I think it's the competition. You know, if you look
Speaker 5: at last year, it was a record year one point
Speaker 5: two pure battery electric vehicles. This year this quarter, we're
Speaker 5: expecting fifteen percent year of year. But with that, you know,
Speaker 5: Tesla as you saw is you know, we are expecting
Speaker 5: like a three point two percent year over year growth. Meanwhile,
Speaker 5: there's some other brands are going to see significant increase
Speaker 5: Q one. The results are going to come in the
Speaker 5: next week or so, will happen or even report. But
Speaker 5: some of the other products that are going to become popular.
Speaker 5: I think are really creating more competition for Tesla, and
Speaker 5: I think that's going to continue. You know, Tesla's finally
Speaker 5: having to compete with these other brands are offering different
Speaker 5: styling product range that are competing with the Tesla models.
Speaker 5: So I think definitely that's going to be a driving
Speaker 5: factor for Tesla going forward.
Speaker 4: Caroline, I'm just going to recap the numbers because I
Speaker 4: slightly misspoke at the top. So Tesla's first quarter deliveries
Speaker 4: were three hundred eighty six thousand, eight hundred and ten.
Speaker 4: The estimate was for four hundred and forty nine thousand.
Speaker 4: As Caroline knows, Stephanie, I was one of the people
Speaker 4: that leased a model. Why in the penultimate day of
Speaker 4: the quarter. I did so because the incentives on offer,
Speaker 4: both those from the federal tax credit and those that
Speaker 4: Tesla did of its own accord, were just too good
Speaker 4: to pass up. Then on April the first Tesla raised
Speaker 4: prices again and they said they were going to do that.
Speaker 4: And what it's got me thinking about now that we
Speaker 4: have the first quarter number print, is there a market anymore,
Speaker 4: particularly in this country, for a forty thousand dollars to
Speaker 4: fifty thousand dollars EV. It seems like that's gone and
Speaker 4: everyone is waiting for the twenty five thousand dollars EV
Speaker 4: to finally materialize.
Speaker 5: Yeah, you hit on it. If you think about EV adoption,
Speaker 5: like our research consistently shows that price is one of
Speaker 5: the major barriers, along with infrastructure. And at the end
Speaker 5: of February, the average EV was fifty two thousand. If
Speaker 5: you look back two years ago, the price premium and
Speaker 5: EV was about seventeen thousand, So in February that gap
Speaker 5: narrative about fifty five hundred. But still it's expensive, right,
Speaker 5: And so I think portability is key to adoption, and
Speaker 5: I think we're going to need some more of those
Speaker 5: vehicles that are that different price point. And I think
Speaker 5: as we start to see more used evs enter the market,
Speaker 5: that might be able to compate some of that price
Speaker 5: point barriers.
Speaker 4: Rivian is another interesting one. They beat expectations on both
Speaker 4: production and deliveries, though they'd kind of set the bar low,
Speaker 4: which is being kind for the quarter. What you make
Speaker 4: of a name like Rivian where they offer the big,
Speaker 4: BOXYEV that Americans love. They like light truck category, they
Speaker 4: like big cars, but they seem still like a niche player.
Speaker 5: Well, you know, any of these new entry entrants into
Speaker 5: the EV market, you know, they'struggling with you know, cash,
Speaker 5: trying to build up their brand. They don't have any
Speaker 5: ice vehicle revenue to support that. But with Rivian, I
Speaker 5: think the unveiling of the R two created a lot
Speaker 5: of energy for that brand, and I think it's going
Speaker 5: to be key if they're able to execute on that.
Speaker 5: But that R two is going to be critical in
Speaker 5: terms of giving them entry into this high volume segment
Speaker 5: and more affordable volumes and hopefully being able to turn
Speaker 5: a profit over long term. So I think Rivian's on
Speaker 5: a good path and I think definitely that R two
Speaker 5: and veiling helped ignite some of that excitement about the brand.
Speaker 3: Stephanie, we talk about the incentives offered from a federal
Speaker 3: perspective at the moment, is the biggest competition to an
Speaker 3: EV A hybrid, just because we're still so worried about
Speaker 3: infrastruct great question.
Speaker 5: Yeah, I think we're going to continue to see gas
Speaker 5: hybrids increase in sale because if you think about a
Speaker 5: gas hybrid, there's nothing different. Like you said, it's the
Speaker 5: same experience as driving an ice vehicle, you don't have
Speaker 5: to worry about charging infrastructure any of that. So I
Speaker 5: think we're going to see that because it's a good
Speaker 5: gateway as we try to navigate to full electrification. Hybrid's
Speaker 5: definitely a good option, and we'll probably start to see
Speaker 5: more plug in hybrids as well since that's a good
Speaker 5: gateway as well.
Speaker 4: Stephanie, is policy support working in this country.
Speaker 5: I definitely think it is. If you think about the incentives,
Speaker 5: I think that seventy five hundred dollars, as we know,
Speaker 5: with the changes in the regulation, some of them become uneligible.
Speaker 5: But I think that definitely has helped with adoption. And
Speaker 5: I think one of the things that change with the
Speaker 5: point of purchase. Now that you get that seventy five
Speaker 5: hundred a point of purchase, I think that is also attractive.
Speaker 5: But I will say that I think the incentives are
Speaker 5: very confusing and consumers some consumers aren't aware of them
Speaker 5: and confusing what is eligible what isn't. So I think
Speaker 5: there needs to be more education around just EV's in general,
Speaker 5: around the incentives, the value of an EV, what's it
Speaker 5: like to drive an EV? That total cost of operation
Speaker 5: is going to be important as well, So I think
Speaker 5: we have a lot of work ahead. In January, one
Speaker 5: of our key messages was for EV it's going to
Speaker 5: be the year and more so, We're going to see
Speaker 5: more sales, but we're going to see more bumps. We're
Speaker 5: going to see more incentives or price cuts. But also
Speaker 5: I think we're going to see the industry build more
Speaker 5: sales muscle and really selling these evs to that next
Speaker 5: wave of adoption.
Speaker 3: More transparency, please, Stephanie valdezstri we thank you so much
Speaker 3: of Cox Automotive. Mean, while coming up, Erka KLA's going
Speaker 3: to be joining us PA Jim Jennison Technology FUM portfolio manager.
Speaker 3: We've got a deep dive on what's happening in the
Speaker 3: broader markets today with a big chip sell off, and
Speaker 3: she's got a keen eye on some of those names.
Speaker 4: Ed, what are you watching, Well, let's go back to
Speaker 4: Shaomi for a second. You mentioned it. By close of
Speaker 4: play Friday, having unveiled this new EV a surprise entrance
Speaker 4: to the EV market, they had eighty nine thousand orders
Speaker 4: ninety thousan I'm sure bigger. Now see the reaction when
Speaker 4: Asia markets opened after the holiday weekend, Really curiously there's
Speaker 4: a lot of evidence that in the Chinese market, consumers
Speaker 4: were putting down the refundable deposit and then canceling just
Speaker 4: for the prestige of saying I ordered a Gaomi and
Speaker 4: then didn't follow through with it. Interesting if it actually
Speaker 4: haven't materializes. This is bluebog technology. We took another bite
Speaker 4: out of the Apple in the first quarter. Shares are
Speaker 4: coming off the worst quarterly performance relative to the S
Speaker 4: and P five hundred index in over a decade, with
Speaker 4: the company raising more than three hundred billion dollars of
Speaker 4: market value in twenty twenty four. The twelve percent dropped
Speaker 4: since the start of the year's paying off for short sellers,
Speaker 4: giving them an incentive to unwind their bets. Now it
Speaker 4: could be the time to buy. That's according to technical
Speaker 4: analysts who argue Apple's flirting with levels where bottom feeding
Speaker 4: could come soon. Apple looking cheap to some of the
Speaker 4: ever megacap tech names on a relative term. The key
Speaker 4: support level to watch for one hundred and sixty five
Speaker 4: dollars a share. Will that be enough to entice you
Speaker 4: dip buyers? If you're one of them, hit me up
Speaker 4: on X, LinkedIn, Instagram, wherever social media you know where
Speaker 4: to find me, Caroline.
Speaker 3: Meanwhile, let's just go a little bit broader than Apple
Speaker 3: and see what's been helping me the charge on the
Speaker 3: border benchmarks, and what's pulling away a little bit. P
Speaker 3: Jim Jennison, Technology Fun Portfolio Manager Erica Klaas with us.
Speaker 3: We're so pleased to welcome you back to the show.
Speaker 3: And while Apple's been having a few tough times, as
Speaker 3: has Tesla, let's just focus on where it still dines
Speaker 3: out and super microcomputer up more than two and forty
Speaker 3: eight percent, Video is still up seventy nine percent. You're
Speaker 3: a holder of chip names. People are questioned how far
Speaker 3: they've run? Do they still have further to go?
Speaker 6: You know, at Jennison, we always take a longer term view,
Speaker 6: and our view remains very constructive. When we look out
Speaker 6: over three five years, we still see extraordinary opportunities for
Speaker 6: penetration of AI and that is really broadening out in
Speaker 6: its applicability in industries. So we still are very constructive.
Speaker 3: When you say broadening out, does that mean you take
Speaker 3: money off the table from the winners that we've seen
Speaker 3: the in videos that I mentioned and put it into
Speaker 3: industry groups that now benefit from AI. Or do you
Speaker 3: have to do both, our viewers, you have to do both.
Speaker 6: There are the core experts in compute, led of course
Speaker 6: by Nvidia, which I believe is a core holding to
Speaker 6: own for a long, long period of time, and also
Speaker 6: advanced micro devices. But the very existence of parallel computer
Speaker 6: or accelerated compute is creating opportunities throughout various industries, whether
Speaker 6: it be energy, whether it be for other semiconductor companies,
Speaker 6: whether it be for healthcare. So we're really looking at
Speaker 6: a broad base of opportunities for these companies to address.
Speaker 4: It's been really interesting in the show for probably almost
Speaker 4: two years speaking with investors who are basically ripping off
Speaker 4: the paneling of a server design and learning what's going
Speaker 4: into it. Now a name like Micron is starting to
Speaker 4: get credit at GtC, we can get into GCC and
Speaker 4: all the fantastical things that Jensen said, But he was
Speaker 4: slapping Michael Dell on the back and saying, Oh, if
Speaker 4: you need a server, this is the guy. Is that
Speaker 4: you'll kind of approach how the compute gets built in
Speaker 4: its entirety and then work out the component providers and
Speaker 4: invest in those.
Speaker 6: So this is such a great question because on one hand,
Speaker 6: the very essence of compute, how compute is done has
Speaker 6: changed the demand for memory. As you talk about the
Speaker 6: demand to be the demand created for distributing power, generating power,
Speaker 6: dealing with power thermal envelopes for example, are all changing
Speaker 6: and that's creating extraordinary opportunities on the infrastructure side of
Speaker 6: the business that we're very interested in. On the other side,
Speaker 6: the actual advent of accelerated compute has applicability to everyone
Speaker 6: from smart cities to healthcare apptions. We're looking at things
Speaker 6: like drug discovery, medical imaging sequencing as being enabled by
Speaker 6: the event of accelerated compute.
Speaker 4: Here we are and we led you to it. But
Speaker 4: we're talking about markets and the tailwind that is AI that'
Speaker 4: stop of mind. We're not talking about rates, we're not
Speaker 4: talking about concerns of global economic strength, We're not talking
Speaker 4: about geopolitical headwinds.
Speaker 6: Why I think the interesting thing to think about is
Speaker 6: that this technology is disruptive to literally every single industry.
Speaker 6: So while there are always going to be cyclical concerns,
Speaker 6: whether it be one specific geographic region is slowing down,
Speaker 6: or perhaps pressure of inflation or interest rates, at the
Speaker 6: end of the day, what we're seeing right now is
Speaker 6: literally every single industry being disrupted by the advent of AI,
Speaker 6: and so I think that that discussion happens not in
Speaker 6: a vacuum, but it probably drowns out to a certain
Speaker 6: extent some of the more macro concerns I want to talk.
Speaker 3: We just mentioned that we're not talking about geopolitical tensions.
Speaker 3: I want to weave in the ongoing geopolitics that is
Speaker 3: China and US because it does affect a lot of
Speaker 3: the chip names that you hold. We're actually just getting
Speaker 3: breaking news that Hi Jinping, leader of China, and indeed
Speaker 3: Biden and President Biden have whole held phone talks. Shinoa,
Speaker 3: which is a local news organization over in China, has
Speaker 3: been reporting this. No real details on the phone talks,
Speaker 3: and one indeed was discussed, but China's official news agency
Speaker 3: reporting that President she has spoken with President Biden of late.
Speaker 3: Now we know within that context is the fact that
Speaker 3: US has been limiting sales of US chips to China
Speaker 3: worried about the application of such technology in China. Has
Speaker 3: that worried or in any way changed your opinion on
Speaker 3: how much to go into these some names that are
Speaker 3: exposed to China and video being one of them.
Speaker 6: So from a semiconductor equipment perspective, those US companies that
Speaker 6: sell equipment to make chips, they've also been banned from
Speaker 6: selling their most advanced equipment into China. I think that
Speaker 6: the end of the day, what that does is it
Speaker 6: forces semiconductor companies to look for locations outside of Taiwan,
Speaker 6: outside of China to build. And what we've seen is
Speaker 6: an unprecedented amount of government support around the world to
Speaker 6: build more semiconductor plants. That's a great tailwind for semiconductor
Speaker 6: equipment for years and years to come. Later, on top
Speaker 6: of that that these semiconductor chips themselves are becoming more
Speaker 6: semiconductor equipment intensive. This is a long time tailwind for
Speaker 6: the industry going forward. On the semiconductor side, as you say,
Speaker 6: what we're finding is that where there's a will, there's
Speaker 6: a way people want to have the compute. So it
Speaker 6: may take place in different geographic regions, but the ultimate
Speaker 6: necessity is there and driving the demand for Nvidia beyond
Speaker 6: even what we had thought three months ago.
Speaker 4: Caroline and I have no problem talking about semi conductors
Speaker 4: all day long, but there are other things out there.
Speaker 4: I mean, we're going to talk about the rubric IPO
Speaker 4: later in the program, how do you feel about software cybersecurity.
Speaker 4: You know, there must be more opportunity out there in
Speaker 4: the world than beyond a GPU or a combination of
Speaker 4: CPU and GPE.
Speaker 6: You know, right now, I think that there's extraordinary opportunity
Speaker 6: for apps to be developed to take advantage of this compute.
Speaker 6: And so basically what we're seeing is a scramble an
Speaker 6: incredible innovation on the software side to be able to
Speaker 6: analyze big data, being able to sort through huge amounts
Speaker 6: of data and then make sense of it so that
Speaker 6: companies can understand consumer patterns, the progression of certain of
Speaker 6: certain diseases, even modeling out how drugs may behave as
Speaker 6: they're developing them. So the software is very, very critical
Speaker 6: in this process. Not to mention the cybersecurity is an
Speaker 6: absolutely essential part of this too, because this is at
Speaker 6: the core the companies. Whatever company is best assets, that
Speaker 6: intellectual property must be protected, and that's why cybersecurity is
Speaker 6: also seeing such a strong backdrop of demand.
Speaker 4: Tech the data at all costs. PGM Jennison Technology Fund
Speaker 4: Portfolio Manager, Erica Cloud. It's great to have you back
Speaker 4: on the program. Thank you.
Speaker 3: Time now for talking tech first up email musks starlink
Speaker 3: well it claims that it's rolled out of high speed
Speaker 3: internet in Italy, is being obstructed by Telecometalia, is the
Speaker 3: country's largest phone carry over There, it's possible repercussions for
Speaker 3: its services across Southern Europe and North Africa. Meanwhile, while
Speaker 3: the US is asking South Korea to adopt restrictions on
Speaker 3: semiconductor technology exports to China similar to those that Washington
Speaker 3: has already implemented. It's another sign, of course, that the
Speaker 3: Biden administration is stepping up its efforts to thwart Beijing's
Speaker 3: chip ambitions. Meanwhile, Japan it's approved as much as three
Speaker 3: point nine billion dollars in subsidies to chip venture Rapidness.
Speaker 3: It's committing more money to it's ambition to catch up
Speaker 3: in semiconductive manufacturing and the economy. Mister quin Salto said
Speaker 3: that the additional funding will help rapidus by chip making
Speaker 3: equipment and also develop advanced back end chip making processes.
Speaker 7: Ed.
Speaker 4: What if you got what a name? Catching up in
Speaker 4: chips and it's called Rapidness. Let's turn to the IPO
Speaker 4: market with Rubric, the cloud and data security startup backed
Speaker 4: by Microsoft, filing for an IPO, with size and price
Speaker 4: of the company's plan share sale to be disclosed in
Speaker 4: a later filing. But the person that broke the story
Speaker 4: first time around, Bloomber's Katie Roof, joins us. Now, I
Speaker 4: think this is an IPO in the technology space based
Speaker 4: in Palo Alto, well known back by Microsoft. We care
Speaker 4: about it to us, the banks tell us the size
Speaker 4: and scope of this one.
Speaker 8: Sure, yeah, no, we've been We've been looking into this
Speaker 8: one for a while. They were supposed to go public
Speaker 8: last fall and then they delayed it. And I broke
Speaker 8: last week that the filing was coming any day now
Speaker 8: and it came. So yeah, this is one that's backed
Speaker 8: by light Speed in Greylock. They have both were the
Speaker 8: top shareholders and the filing, as you mentioned, they're also
Speaker 8: backed by Microsoft.
Speaker 9: There's a lot of interest in this one.
Speaker 8: It's only the second enterprise software company to go public
Speaker 8: since twenty twenty one. We had Klavo last fall and
Speaker 8: now we have Rubric. This one is of course very different.
Speaker 8: This is data security, but they have you know, large
Speaker 8: enterprise clients. They have clients like Goldman Sachs, and then
Speaker 8: they also have you know, public sector clients like the
Speaker 8: State of Utah, they have a pretty wide list of clients,
Speaker 8: and you know, they're going to be testing the market
Speaker 8: to see how things are.
Speaker 3: And the market has to digest the fact that it's
Speaker 3: still lost.
Speaker 9: Making right, it is losing money.
Speaker 8: But as Jason Lempkin, a top software enterprise software venture
Speaker 8: capitalists pointed out on Twitter, it's ARR is growing significantly
Speaker 8: the annual recurring revenue. This is a metric that enterprise
Speaker 8: software investors care a lot about because it suggests that
Speaker 8: that the customers are, you know, renewing their contracts and
Speaker 8: that they're going to continue to get more customers, that
Speaker 8: they have a high retention rate.
Speaker 9: So you know, depending on what you look at.
Speaker 8: You know, if you care about profitability, no, Rubric is
Speaker 8: not profitable and their revenue overall revenue is actually growing
Speaker 8: pretty slowly, but you know ARR is up significantly.
Speaker 3: Well okay too, We thank you for some of the
Speaker 3: devil in the detail that got released last night. Welcome
Speaker 3: back to me in my Technology.
Speaker 4: I'm Caroline High and I'm ed Lovelow. This week in
Speaker 4: New York City, the story of the markets, at least
Speaker 4: in this session is strong economic data around the world,
Speaker 4: pushing us to believe that central banks all around the
Speaker 4: world will keep rates elevated for longer. That's kind of
Speaker 4: the story. You see Bitcoin participating in this risk off
Speaker 4: mode alongside the Nasdaq one hundred. The kind of individual
Speaker 4: story we've been talking about all day is Tesla. It's
Speaker 4: down five point five percent. That will have a big
Speaker 4: points drag on the major indices, including the S and
Speaker 4: P five hundred and Frankly, this was the worst deliveries
Speaker 4: missed for Tesla on record relative to the consensus. You've
Speaker 4: got to go all the way back to the end
Speaker 4: of twenty twenty two for the last time they delivered
Speaker 4: vehicles at that kind of three hundred and fifty thousand mark.
Speaker 4: It was three eight six this time. Rivian also lower,
Speaker 4: even though it beat expectations. All in all, higher rates
Speaker 4: seems to be the story around the world of technology
Speaker 4: right now.
Speaker 3: Meanwhile, we would just want to return to some of
Speaker 3: that breaking news we had earlier. Bloomberg has indeed confirmed
Speaker 3: with the White House that President she of China and
Speaker 3: President Biden of the United States had a phone call.
Speaker 3: It has indeed concluded, and indeed it's the first time
Speaker 3: that they've been talking directly since November when they met
Speaker 3: in California. Remember, now there's a whole laundry list of
Speaker 3: things they could be talking about. We understand from our
Speaker 3: perspective here on the Technology show, there's going to be
Speaker 3: a lot about cyber a lot about AI. There's also
Speaker 3: going to be, of course, from what we understand's being
Speaker 3: made on discussions around fentanyl and particular, yes, President was
Speaker 3: expected to urge more efforts to combat fentanyl and of
Speaker 3: course its approach here into the United States. China's corporation
Speaker 3: is also being sought on a multitude of geopolitical concerns
Speaker 3: Ukrainian war, of course, Middle East thermol in particular. So
Speaker 3: we understand after these particular communications, these are what are
Speaker 3: being discussed and being in particular focused on. But we'll
Speaker 3: have a lot more for you in a moment as
Speaker 3: to what exactly was being discussed on the AI and
Speaker 3: cyberfront as well, not to mention chips, But for now,
Speaker 3: let's return to an interesting story for an investor perspective,
Speaker 3: because Do Not Pay as an artificial intelligence company that
Speaker 3: offers online legal services, to become one of the first
Speaker 3: private venture backed companies to pay dividend to those shareholders.
Speaker 3: It's all because basically it's profitable. What else is going
Speaker 3: to be doing with its money. It's actually got more
Speaker 3: money than it raised from these VC names. Let's talk
Speaker 3: about it. Which Joshua Browder do not pay CEO and
Speaker 3: Joshua why give money back to investors? I feel that's
Speaker 3: a very unknown thing to do in the world of
Speaker 3: VC backed companies.
Speaker 2: I think investors and employee is are tired of money
Speaker 2: losing companies. And we're in a really interesting time right
Speaker 2: now where AI means you can build big businesses with
Speaker 2: very few staff. So in our case, we only have
Speaker 2: seven employees and seven contractors, but hundreds of thousands of
Speaker 2: paying customers, and so we want to build a big business.
Speaker 2: But we also realize that the purpose of a company
Speaker 2: is to do well by at stakeholders, and it's nice
Speaker 2: to give some money back to our earliest believers.
Speaker 4: What does that look like? Give me size and scope
Speaker 4: on the divv and if you have more money in
Speaker 4: the bank and profit then you raise from vcs, give
Speaker 4: me those numbers as well.
Speaker 2: Yes, so the dividend, our Q one dividend was in
Speaker 2: the middle seven figure range. Do not pay as a
Speaker 2: whole has raised twenty four million in total, so it's
Speaker 2: quite a sizable portion of what we raised that we
Speaker 2: have in profits every year, and we're not resting on
Speaker 2: our laurels. We're thinking big. Sam Altman said that there
Speaker 2: can be a billion dollar company with just one employee,
Speaker 2: and we don't think we're close to being there yet.
Speaker 2: We as I mentioned, we have seven employees. But with AI,
Speaker 2: you see companies like Klana where they've replaced sixty percent
Speaker 2: of their customer service workload with AI, companies like mid
Speaker 2: Journey where they have hundreds of millions of revenue and
Speaker 2: only under twenty employees. So that's really what we're inspiring
Speaker 2: to be too.
Speaker 3: Let's just talk about the models you mentioned sam Altman. There,
Speaker 3: how is do not pay built ultimately? When you're using
Speaker 3: AI to negotiate some of these contracts and money off
Speaker 3: for users? Are you underpinned by open AI or you agnostic?
Speaker 2: We use open AI. I started the company seven years
Speaker 2: ago when I got a bunch of parking tickets and
Speaker 2: I realized, if you know the right things to say,
Speaker 2: you can use templates to get out of them. But
Speaker 2: in the AI era, it feels like we can build
Speaker 2: much more exciting products. One thing I'm really excited about
Speaker 2: is AI build and gootiation, which we just launched right.
Speaker 2: We have robots log into people's utility accounts and start
Speaker 2: chatting with the big companies. And what's interesting is the
Speaker 2: big companies that use AI. We use AI and the
Speaker 2: two ais are chatting to negotiate.
Speaker 4: Hey, Josh, you've been coming on the show for a
Speaker 4: little while now. As we always point out to our audience,
Speaker 4: you are not a lawyer. But basically the original premise
Speaker 4: of Do Not Pay was to use an automated service
Speaker 4: to challenge everything from sort of parking fines to build disputes.
Speaker 4: How is the business growing? Give me kind of volumes
Speaker 4: numbers around bills that have been successfully negotiated on do
Speaker 4: not Pay? How many of your proceedings have gone onwards
Speaker 4: to court? For example?
Speaker 2: So do not Pay us all about helping people jump
Speaker 2: through hoops that they don't have time to jump through.
Speaker 2: So no one has time to wait on hold for
Speaker 2: four hours to save twelve dollars. So a lot of
Speaker 2: these cases, the squeaky will gets the grease and they
Speaker 2: don't go to court. We just send these letters to
Speaker 2: these companies and you get the refund one over a
Speaker 2: million tasks and cases for our customers over the past
Speaker 2: seven years, do not pay CEO Joshua Browder, great to
Speaker 2: catch up on the program. Let's get right back to
Speaker 2: that breaking news. President g of China, President Biden of
Speaker 2: the United States, we've had a phone call. The calls concluded,
Speaker 2: according to the White House, they spoke Tuesday, the first
Speaker 2: one on one communication since meeting in California last November.
Speaker 2: Bloomberg's end of Current in Washington, DC with the details.
Speaker 2: This is Bloomberg Technology, so there was an element of
Speaker 2: this conversation about the technology sector. What is the must
Speaker 2: know about the conversation between President Biden and President G.
Speaker 1: Well, as you say, first of all, the first time
Speaker 1: they've had a one on one since November. The White
Speaker 1: House briefing suggesting it's kind of a progress check in
Speaker 1: in terms of where things have gone since then. The
Speaker 1: main points coming from our colleagues at the White House
Speaker 1: is that they spoke about the counter and narcotics trade.
Speaker 1: Of course, that's the topic of fentanyl, which is central
Speaker 1: to what both presidents have been discussing. And then there
Speaker 1: was a broader discussion around China's role in playing for
Speaker 1: stability in the Middle East using its leverage there, and
Speaker 1: of course Chinna's role when it comes to the war
Speaker 1: in Ukraine. Now, the whole broader point of this call
Speaker 1: speaks to the idea that both sides are continuing to
Speaker 1: try and stabilize relations. There are areas of cooperation, for
Speaker 1: example in AI as you mentioned there, but the focus
Speaker 1: of the call in terms of the details so far
Speaker 1: seems to have been both on security and on the
Speaker 1: counter narcotics trade.
Speaker 3: And there's a whole list of things that they could
Speaker 3: have talked about that perhaps would have more ramifications on
Speaker 3: the economies as well. I mean, you say that they're
Speaker 3: working to try and find at least well security and
Speaker 3: guard rails around AI. But at the moment we were
Speaker 3: just talking how at the moment that the US is leaning
Speaker 3: on South Korea to stop them exporting so much of
Speaker 3: their chip equipment and technology to China. How much is
Speaker 3: technology at the heart of a conversation here or not.
Speaker 1: Oh, it's very much the elephant in the room. As
Speaker 1: you say, the coal is about stabilizing relations, but that
Speaker 1: does not mean the competitive strategic ages has gone away.
Speaker 1: And of course the point being there, export controls, investment controls,
Speaker 1: the race for the US to get back in the
Speaker 1: game in terms of chip production and EV production and
Speaker 1: everything else. None of that has been changed or will
Speaker 1: be changed by this phone call or any other. This
Speaker 1: is about basic communications. Remember it was only a year ago. Actually,
Speaker 1: there were no communications between the two governments after the
Speaker 1: balloon incident. So it's just all about getting the basic
Speaker 1: guard rails in place. Don't forget Treasure sector Yellen of
Speaker 1: course among the officials going to Beijing. So no major
Speaker 1: progress from this. The technology race story hasn't changed. It's
Speaker 1: just about keeping things on an even keel.
Speaker 3: Diplomacy at the heart of it. And to Karen, thank
Speaker 3: you so much for bringing us the latest on that
Speaker 3: She Biden conversation coming up. That we're going to go
Speaker 3: back to the private sector world for a moment. Atomico
Speaker 3: partner Laura Cannell's going to be joining us. What Atomico's
Speaker 3: investment outlook is whether they've been pacing their bets. She's
Speaker 3: got real expertise in artificial intelligence. This is bloomg technology.
Speaker 4: Tiger Global gathered about two point two billion for its
Speaker 4: latest VC fund. But here's the thing. It was well
Speaker 4: short of its six billion dollar target, and it's the
Speaker 4: smallest fundraising hall in roughly a decade. That's according to
Speaker 4: Bloomberg sources. Let's bring in Bloomberg Tamapalma, who broke that story.
Speaker 4: When I think about the raises they've done, the affectionately
Speaker 4: known pips, they've had no problem in the past, they
Speaker 4: had a problem this time.
Speaker 10: They had a problem this time. And admittedly it's a
Speaker 10: very difficult fundraising environment. But this is certainly a pivot
Speaker 10: from the way we think of Tiger Global and their
Speaker 10: epic fundraisers in the past. Their last fundrais was thirteen billion,
Speaker 10: nearly thirteen billion dollars big. Every fund has been essentially
Speaker 10: bigger than the one before, So this is the first
Speaker 10: time that a Tiger fund has not raised more than
Speaker 10: its predecessor.
Speaker 3: This comes in the context of some bets that went bad.
Speaker 10: Yes, a number of things. Some of the bets haven't
Speaker 10: been working well. They've been marking stuff down the environment.
Speaker 10: A lot of funds, venture funds have been feeling marked downs.
Speaker 10: A lot you're seeing when it comes to allocators to
Speaker 10: these funds, in some ways their hands are tied because
Speaker 10: private equity has been slow to give back distributions, so
Speaker 10: they have fewer dollars to put to work. And then
Speaker 10: venture has been challenging, as you're well aware, so it's
Speaker 10: been a tougher space.
Speaker 4: You mean, the fundraising environment generally for all firms. I mean,
Speaker 4: this story was incredibly well read, and one reason it's
Speaker 4: cool is you kind of get some insight into what's
Speaker 4: happening at Tiger Global. There's insider money, there's the LPs
Speaker 4: that are external, there's pressure from all sides. Just give
Speaker 4: us the juicy gos.
Speaker 10: Yes, so the juicy gos. So essentially, when we look
Speaker 10: at the history the past few funds that Tiger has raised,
Speaker 10: insiders have given about ten percent of the assets. We're
Speaker 10: seeing with this fund is that insiders are actually forking
Speaker 10: up about twenty percent of internal assets for this fund,
Speaker 10: so twenty.
Speaker 9: Percent of fund raised assets.
Speaker 10: So what that means is the money they've raised from
Speaker 10: outside investors is less than two billion dollars and they're
Speaker 10: putting up more of their own cash.
Speaker 3: Typically.
Speaker 10: I will say though, that Tiger insiders do make up
Speaker 10: the biggest investors and traditionally most of their funds.
Speaker 3: Well, it's about aligning in terms of your end goals.
Speaker 3: I'm sure Hamma Palmer is a brilliant scoop came out
Speaker 3: late yesterday, Miss Police, she joins us today on it. Meanwhile,
Speaker 3: let's just stick with well the venture funding environment, how
Speaker 3: hard it is when the money's being allocated. If you've
Speaker 3: already raised VC spotlight time with Laura Connells, she's partner
Speaker 3: at Atomico, currently holds four point five billion dollars in
Speaker 3: assets under management, and in fact you've been allocating some
Speaker 3: of that money. You recently led a fifty eight million
Speaker 3: dollars Series C funding for a telehealth company called Plago,
Speaker 3: and this is about cognitive behavioral therapy to help treat addiction.
Speaker 3: It's really interesting you come on this moment, Laura, where
Speaker 3: we've just heard that there's a conversation at the highest
Speaker 3: levels between President she and A and Biden about Fentanel
Speaker 3: so emotive, so high on a political agenda, health agenda
Speaker 3: for many, Why is telehealth the right thing to back? Absolutely?
Speaker 7: Look, as you've said, it's a hugely emotive and hot
Speaker 7: topic going into these US elections. Also, and quite rightly, unfortunately,
Speaker 7: substance use management is an area that continues to be
Speaker 7: poorly served and so one of the things that we
Speaker 7: spent a lot of time figuring out was what the
Speaker 7: right type of solution was, and we found it with
Speaker 7: a Palago team. We were lucky enough to back an
Speaker 7: exceptional team there of initially a clinician led team founded
Speaker 7: in the UK that relocated to the US, which really
Speaker 7: set out to address broad based substance use disorder management,
Speaker 7: so anything from tobacco and alcohol to opioids. And what
Speaker 7: we found is that the optimal solution, and what they
Speaker 7: found was the optimal solution was this combination of CBT
Speaker 7: and digital content together with medication assisted treatment. Now, the
Speaker 7: most important thing about it is for it to be
Speaker 7: clinically validated with clear ROI from an employer perspective, and
Speaker 7: I think, just to throw a couple of stats out,
Speaker 7: you know, it's estimated that at least one individual there's
Speaker 7: one individual in every American family currently suffering from some
Speaker 7: kind of addiction, which is a shocking number. Around seventy
Speaker 7: percent of those individuals are still in the workforce. Around
Speaker 7: ten percent of the total workforce self reports a substance
Speaker 7: use disorder or addiction, and only one percent of the
Speaker 7: total workforce currently has access to clinically validated treatment. So
Speaker 7: you know, the numbers are shocking. The total estimated direct
Speaker 7: cost of substance use disorders is around thirty five billion
Speaker 7: dollars in the US, and that's only the direct cost
Speaker 7: in terms of healthcare incremental healthcare costs. So you know,
Speaker 7: to say that we're in urgent need of better solutions
Speaker 7: is an understatement.
Speaker 3: Now, it's interesting that you are finding this particular case
Speaker 3: to want to back. I mean, you're someone who has
Speaker 3: a lot of expertise in the field of allocating towards
Speaker 3: artificial intelligence, the hot topic, and at the moment, I'm
Speaker 3: sure in many ways this is AI driven, But I'm
Speaker 3: interested as to what the competitive landscape was to allocate
Speaker 3: to a company like Peleego or any company right now.
Speaker 3: Are you finding that there's a tougher time to be
Speaker 3: writing checks? Is it is a too much competition?
Speaker 7: Yes, it's a It's been really interesting to watch this market,
Speaker 7: to be in the market, particularly over the last couple
Speaker 7: of years. You know, what I think we can we
Speaker 7: can say about it safely say is that there's been
Speaker 7: a lot of later stage capital, be it corporate, corporate,
Speaker 7: venture investors, or perhaps a non specialist venture investors, including
Speaker 7: family officers, that were very active in the market in
Speaker 7: twenty twenty one and early twenty twenty two and that
Speaker 7: have cleared out of the market. Now that's not to
Speaker 7: say that competition has decreased. In fact, you know that
Speaker 7: reduction in capital supply has also been met by you know,
Speaker 7: a smaller pool of very high quality companies coming to market.
Speaker 7: You know a lot of companies that perhaps have struggled
Speaker 7: more not coming out to market to avoid getting priced.
Speaker 7: And so for the very high quality opportunities, it's still
Speaker 7: it's still pretty competitive, you know, as it should be,
Speaker 7: and I think it's no bad thing for for investors
Speaker 7: also to be to be forced to kind of show
Speaker 7: their wares and the kind of value aad they can provide.
Speaker 7: I think the last thing to say about that is that,
Speaker 7: you know, given the cost of capital has increased to
Speaker 7: the to which it has in the last couple of years,
Speaker 7: you know firms that can actually help founders avoid mistakes
Speaker 7: and who understand the shortcuts. Eye you have a growth
Speaker 7: acceleration teams or big operating platforms and expertise that has
Speaker 7: very meaningful incremental cost saving or indeed revenue uplift that
Speaker 7: we can provide with less of the burn. So I
Speaker 7: think an all round more discriminating market in principle. Of course,
Speaker 7: there are a few areas where hype is notable, as
Speaker 7: you've already discussed several times in your show today.
Speaker 4: So how do you discern hype from real You know,
Speaker 4: I've been going to a lot of these hackathons where
Speaker 4: venture partners are getting hands on with, even at the
Speaker 4: code level, a piece of software before they're investing. Did
Speaker 4: you do that with play Goo as an example?
Speaker 9: Yeah?
Speaker 7: So, Look, I mean I think Pelago in particular is
Speaker 7: an example of you know, having deep expertise and a
Speaker 7: right to win in a given sector. So here in particular,
Speaker 7: you know this team of ex clinicians who have the
Speaker 7: medical knowledge and expertise and then can combine that with
Speaker 7: commercial new and technical sophistication. But the more general point,
Speaker 7: the more general question you're asking around how we get
Speaker 7: comfortable in AI in a market that's moving this quickly,
Speaker 7: is that we really have a deep pool of technical
Speaker 7: talent and experts that we also lean on to help
Speaker 7: us stay up to date and so that we're moving
Speaker 7: in our understanding at least as quickly, as are the
Speaker 7: best founders. But you know, that's one of the one
Speaker 7: of the tough challenges in this market, that there is
Speaker 7: so much noise, and so I think the best defense
Speaker 7: against this is really just to be you know, to
Speaker 7: have the humility to know that often, you know, people
Speaker 7: and investors can grossly overestimate near term performance and underestimate
Speaker 7: a long term potential value creation. So in summary, I
Speaker 7: would say, take, we're trying to take our time investing,
Speaker 7: we lean on the experts, and we have a big
Speaker 7: dose of humility here as we invest.
Speaker 4: Laura, what's the direction of travel right now? Are you
Speaker 4: chasing after potential portfolio companies or is your desk just
Speaker 4: piled high with pitch decks.
Speaker 7: Yeah. Look, I think the best part of the job
Speaker 7: is speaking to fantastic, exceptional founders who are trying to
Speaker 7: build incredible companies. So look, we still get a huge
Speaker 7: amount of inbound and that really is as I said,
Speaker 7: you know, the best part of my day. So look,
Speaker 7: there are two parts to two parts of the job
Speaker 7: that we stay focused on. One, of course, is staying
Speaker 7: as close as we possibly can to the founders that
Speaker 7: we've backed and to be true partners to them and
Speaker 7: that does require a lot of time and commitment and effort,
Speaker 7: of course, particularly in this trickier macro environment. But of course,
Speaker 7: you know, we're constantly sourcing, constantly speaking, two people we
Speaker 7: think are going to be the next leaders in whatever
Speaker 7: market they're operating in.
Speaker 3: And Tomoko of course borne out of the wealth from
Speaker 3: Skype and a real pin up in the European area.
Speaker 3: I'm interested as to the companies you're backing. Are the
Speaker 3: European based you just mentioned how well the one we're
Speaker 3: just the telehealth company moved to the US.
Speaker 4: Yeah.
Speaker 3: Absolutely.
Speaker 7: You know, one of the things we do as a
Speaker 7: firm is we release every year the State of European
Speaker 7: Tech Report, which is the kind of the industry standard
Speaker 7: report for all the activity in European tech. And what's
Speaker 7: been really interesting is if you take something like AI
Speaker 7: for example, you know that really is a paradigm shift
Speaker 7: in technology. Around thirty three percent of total funding last
Speaker 7: year in AIML went to European based companies, and so
Speaker 7: we really believe in the European opportunity. I mean that
Speaker 7: was really the genesis of our founding. When Nicholas Enstrob
Speaker 7: founded Atomico, it was on the premise the best founders
Speaker 7: can come from anywhere and if the leading indicase that
Speaker 7: is in terms of funding or anything to go by
Speaker 7: at the early stage. You know, we fully expect that
Speaker 7: we're going to have an absolutely extraordinary generation of European
Speaker 7: based founders. So we are focused on you know, Europe
Speaker 7: as the home called advantage, but we also recognize that
Speaker 7: we want to stay. We want to keep the optionality
Speaker 7: to invest on a global basis as well.
Speaker 4: Tom a co partner Laura Connor, is great to have
Speaker 4: some time with you out of London. Appreciate it. Another
Speaker 4: story we're going to bring you real quick. Social commerce
Speaker 4: startup Flip, an online marketplace featuring product review videos made
Speaker 4: by shoppers, has raised one hundred and forty four million
Speaker 4: dollars in fresh funding. Is It seeks to take on
Speaker 4: the likes of Amazon and TikTok. Led by Streamline Ventures,
Speaker 4: the funding round brings flips valuation to one point zero
Speaker 4: five billion dollars, and it includes a fifty million dollar
Speaker 4: investment from advertising software firm at Loving. That's according to
Speaker 4: the companies.
Speaker 3: It has been going viral. Google says it will delete
Speaker 3: millions of records of users browsing activities and as part
Speaker 3: of a settlement of a class action lawsuit. Now. The
Speaker 3: lawsuit alleged it tracked people without their knowledge was filed
Speaker 3: back in twenty twenty, and it says the company tracked
Speaker 3: people using incognito browsing mode. That function basically let's users
Speaker 3: turn off data collection when using the Chrome browser, but
Speaker 3: other Google tools used, like websites, like advertising technologies scoop
Speaker 3: still the data up. Anyhow, It's all according to the
Speaker 3: suit now. A Google spokesperson said that we are pleased
Speaker 3: to settle this lawsuit, which we always believed was meritless
Speaker 3: and some more.
Speaker 4: Yes. So the other story we're tracking is what's happening
Speaker 4: with Disney. Disney looks set to conclude a showdown over
Speaker 4: the composition of its board. The Wall Street Journal reporting
Speaker 4: overnight that the company is leading in its proxy battle
Speaker 4: against billionaire activist investor Nelson Pelts. That's with around half
Speaker 4: of the votes counted. An investor can change their vote
Speaker 4: at any time. But the latest name, having got the
Speaker 4: backing of the force from George Lucas and Jamie Diamond,
Speaker 4: is black Rock. We have a four point two percent
Speaker 4: stake almost ten billion dollars of Disney stock.
Speaker 3: Important, t WRO Price another key name. But look, there's
Speaker 3: not without some key names that are currently betting on
Speaker 3: the other side of things and wanting to see Pelts
Speaker 3: come to the board or indeed the previous CFO. All
Speaker 3: of this really could go to the wire. It feels
Speaker 3: like yes, and ultimately what does that mean for the
Speaker 3: key concern is long term succession planning for Bob byger Well,
Speaker 3: if he does lose this quote unquote battle and we
Speaker 3: do see Pelts join the board, is he going to
Speaker 3: stick around? That's a key question as to how quickly
Speaker 3: they have to consider some succession.
Speaker 4: Again, as I wrote about earlier this week, if Pelts
Speaker 4: is successful, which looks unlikely at this stage, how does
Speaker 4: he change anything. I don't see many proposals.
Speaker 3: We'll see overall, how the votes still add up. And
Speaker 3: if I get any more ads asking me to do so,
Speaker 3: I'm going to go completely stir crazy. But that does
Speaker 3: it for this edition of Bloomog Technology.
Speaker 4: Recap the show on the podcast, it was a pretty
Speaker 4: big show, heavy ev theme chips, global politics, on Apple, Spotify, iHeart,
Speaker 4: and all of the Bloomberg platforms. From New York City,
Speaker 4: this week, this is Bloomberg Technology