I'M CAROLINE HYDE. ED: TECHNOLOGY EARNINGS : OUR EXCLUSIVE INTERVIEW ABOUT HOW A NATIONWIDE TIKTOK BRAND WOULD WORK. CAROLINE: AND WE ASK CHAT DPD TO COME UP WITH THE MARKET BEATING ETF. LET'S CHECK THE MARKETS. THERE WAS A RISK ON ATTITUDE TO TRADE ACROSS THURSDAY. NASDAQ UP 1.8%, THE HIGHEST SINCE SEPTEMBER 2020 THROUGH --
2022. RISK ON ATTITUDE IN EUROPE AND ASIA AS WELL. THE SEVEN YEAR YIELD IS HIGHER. EQUITIES GET A BID. A BONDS SELLOFF. A SUCCESSFUL AUCTION, SEVEN DEBT BEING SOLD ON TRACK FOR A GOOD QUARTER IN TERMS OF OVERALL SALES FOR U.S. DEBT. YIELDS UP BY SIX BASIS POINTS. LET'S LOOK AT CRYPTO.
AN INTERESTING CORRELATION. USUALLY ONE RISK ASSETS PUSH HIGHER KRYST -- CRYPTO DOES AS WELL. TODAY ON THE ACTUAL DAY, THURSDAY, WE SAW A BIT OF UNDERPERFORMANCE IN BITCOIN VERSUS THE U.S. DOLLAR.
THAT IS AN INTERESTING CHANGE IN TONE. IT IS OF ABOUT 40% SINCE THE END, LIKE THE END OF LAST YEAR. ED: RISK ON NOW. A LOT OF THAT IS TECHNOLOGY MOVING TO THE UPSIDE. TESLA IS THE BIG NAME. THE S&P 500, THE NASDAQ, THAT'S MOVING MARKETS THIS THURSDAY.
TESLA JUMPING BY THE MOST IN ALMOST ONE YEAR, UP 11%. BEATING FOURTH-QUARTER GUIDANCE, 1.8 MILLION UNITS IN 2023, FIGHTING TALK FROM ELON MUSK. SALESFORCE IS LOOKING AT ADDING NEW DIRECTORS. THAT PUSHED UP THE STOCK BY ABOUT 6%, THE MOST SINCE NOVEMBER. MOVERS TO THE DOWNSIDE.
IBM CONFIRMING IT WILL CUT AROUND 1.5% OF STAFF IN VERY SPECIFIC ROLES THAT WE WILL GET INTO LATER IN THE SHOW. STRONG FREE CASH FLOW GUIDANCE FOR THE YEAR, SLIGHTLY ABOVE EXPECTATIONS. THE STOCK IS DOWN 4.5%. LET'S GET AFTER HOURS EARNINGS WAS INTEL. SIGNIFICANTLY LOWER ON THAT STOCK. 10.5 BILLION TO $11.5 BILLION IN SALES.
THE STREET WAS LOOKING FOR $14 BILLION. THE TURNAROUND STORY AT INTEL IS NOT QUITE THERE. LET'S GET TO IT WITH ANGELO ZINO, AN ANALYST AT CFRA. I BROUGHT YOU TOPLINE FORECAST FOR THE CURRENT PERIOD. WHAT WERE YOUR TAKEAWAYS FROM THE INTEL PRINT? ANGELO: YOU NAILED IT IN TERMS OF WHAT IS DRIVING THE DOWNSIDE. I THINK WE FOUND ABOUT 24% OR SO. THAT WASN'T THE BIG MESS ON
THAT SIDE. -- MS. ON THAT SIDE. THINK ABOUT THE SALES SIDE, TWO FACTORS. THE WEAKNESS ON THE PC SIDE. BUT, THINGS ARE SIGNIFICANTLY WEAKER THAN MOST PEOPLE ANTICIPATED. LOOK AT THE Q4 NUMBERS.
PC SALES DOWN 25% TO 30% IN THE FOURTH QUARTER. I THINK YOU NEED FURTHER SALE IN DECLINES TO SAIL THROUGH BEFORE WE FULLY GET THROUGH THE BOTTOM. I THINK THE GOOD SIGN IS A SHARP DECLINE IN SALES THAT IS HOPEFULLY A GOOD INDICATION THAT MAYBE WE GET PASSES BY THE SECOND QUARTER. THEN ON THE BACK IN TERMS OF SALES, THE DATA CENTER SIDE. IT WILL BE INTERESTING TO SEE HOW WEAK THINGS ARE THERE.
CLEARLY, A LOT OF INVENTORY IS BUILT OUT THERE. I THINK THAT IS WHAT IS REALLY DRIVING THE WEAKNESS ON THE GUIDANCE. CAROLINE: A LOT OF SELF-HELP IS NEEDED. OTHERWISE DEPENDING ON ORDERING AND COMPONENTS THEY ARE PENDING ON PEOPLE WORKING THEIR OWN INVENTORY. ARE THEY DOING ENOUGH SELF-HELP, PARTICULARLY ON THE COST SIDE? ANGELO: WHEN YOU LOOK AT THE MARGINS, ESPECIALLY THE GROSS MARGIN GUIDANCE AT 39%, I THINK THE ANSWER THERE IS THERE IS PROBABLY MORE THEY NEED TO DO. IT WILL BE INTERESTING TO FIGURE OUT WHAT IS REALLY GOING ON IN THE MARGINS THERE. 39% BY FAR, AT THIS POINT IN TIME, THE LOWEST AMONG COVERAGE IN THE SEMICONDUCTOR INDUSTRY. THAT IN ITSELF IS SAYING A LOT.
THE BIG PROBLEM IS THEY ARE LOOKING TO DO A MASSIVE UNDERTAKING IN TERMS OF TECHNOLOGY AND TRANSITIONS FOR TECHNOLOGY. A TRANSITION IN FIVE YEARS THAT HAS NEVER BEEN DONE IN THE SEMICONDUCTOR INDUSTRY. THEY NEED TO GET THIS RIGHT. THE MANAGEMENT TEAM NEEDS TO GET IT RIGHT FIRST AND FOREMOST EVEN IF IT MEANS LOSING MONEY NEAR TERM, WHICH IS WHAT WILL HAPPEN IN THE FIRST QUARTER. AT THIS POINT, THAT'S THE MOST IMPORTANT FACTOR FOR THEM.
I -- THEY DID NOT PROVIDE ANY GUIDANCE HERE FOR 2023. MY GUESS IS THE CAPEX GUIDE PROBABLY HAS TO GO DOWN RELATIVE TO WHAT WE SAW IN 2022. THEY WILL LOOK TO DO SOME THINGS HERE. THEY ANNOUNCED COST CUTS IN THE THIRD QUARTER A COUPLE MONTHS AGO. THEY WILL EXECUTE THAT.
AT THIS POINT, IT'S HARD TO CUT GIVEN WHAT THEY HAVE IN FRONT OF THEM. ED: GOT IT. YOU MENTIONED NO 23 GUIDANCE IN THE EARNINGS STATEMENT. I CANNOT CONFIRM THE EARNINGS CALL HAS STARTED AND THE COMPANY SAYS IT WILL NOT GIVE FOUR YEAR GUIDANCE FOR 2023. THEY ARE TALKING ABOUT MACRO DIFFICULTIES LASTING THROUGH THE FIRST HALF OF THIS YEAR, GUIDING TO THE LONG-TERM PC MARKET 300 MILLION UNITS. BREAK IT DOWN IN SIMPLE TERMS. WHAT IS THE PROBLEM FOR INTEL? ANGELO: I MEAN, FIRST AND FOREMOST, I THINK THE COMPETITIVE ENVIRONMENT HAS BEEN BY FAR THEIR BIGGEST ISSUE IN RECENT YEARS, RIGHT? DESPITE THE FACT THAT THEY MAY ELUDE OTHERWISE, AMD HAS DEFINITELY BEEN CHIPPING AWAY IN TERMS OF MARKET SHARE. SPECIFICALLY, ON THE DATA CENTER SERVICE SIDE OF THINGS. THAT HAS HISTORICALLY BEEN A
VERY GOOD KIND OF PROFITABLE BUSINESS FOR THE COMPANY. IT NO LONGER IS. AT LEAST AT THIS POINT. I THINK A COMPETITIVE ENVIRONMENT IS CLEARLY A PROBLEM FOR THEM. THE CYCLE IS THE OTHER ISSUE. BEING OVERLY EXPOSED TO TWO KEY AREAS OF THE MARKET. ONE BEING PC'S. WHICH WAS A 350 MILLION UNITS MARKET IN 2021.
IT WAS DOWN ABOUT 50% TO 20% LAST YEAR. PROBABLY LOOKING AT THIS POINT IN TIME, GIVEN THE GUIDANCE, DOWN AT LEAST 10% HERE IN 2023. THE CYCLE IS ANOTHER ISSUE ON THE PC SIDE. NOW ALSO ON THE DATA SIDE. AT THE START OF THE SECOND HALF OF LAST YEAR. CAROLINE:
ANGELO ZINO, GREAT TO YOUR ANALYSIS. LET'S GET TO ANOTHER KEY STORY ABOUT SALESFORCE. SOURCES ARE SAYING THEY MAY APPOINT NEW BOARD MEMBERS AMID PRESSURE FROM ACTIVIST INVESTORS. THE LIST OF POSSIBLE
APPOINTMENTS INCLUDES THE FORMER CARNIVAL SEE EO, MASCOTS CURRENT CFO. SALESFORCE HAD BEEN WORKING ON REFRESHING ITS BOARD FOR SEVERAL MONTHS AS PRESSURE MOUNTS TO BOOST PROFIT AND SHAREHOLDER RETURNS. ED HAMMOND BROKE THE NEWS. WHAT WOULD THESE INDIVIDUALS BRING TO THE BOARD? ED: FIRST, PROBABLY A PROPHYLACTIC AGAINST OTHER ACTIVISTS CIRCLING THE COMPANY STARBOARD, ELLIOTT, JEFF HUBBARD WITH HIS INTRUSIVE CAPITAL FIRM. YOU SEE THIS FAIRLY OFTEN IN
BIGGER COMPANIES THAT MIGHT HAVE SEVERAL DISTANT SHAREHOLDERS. THEY WILL STRIKE A DEAL WITH ONE GROUP AND BRING THEM TO THE BOARD. IT IS OFTEN A WAY OF DEFENDING AGAINST OTHER ACTIVISTS AND WHAT THEY MIGHT SEE AS LESS SAVORY CLAIMS AGAINST THE COMPANY. ED:
ED, IT IS SAID, GOOD TO SEE YOU -- IT IS ED, GOOD TO SEE YOU. WHY IS SALESFORCE UNDER ATTACK FROM SO MANY DIFFERENT ACTIVISTS NOW? ED H.: A COUPLE REASONS. FIRST, IT'S LESS EXCITING. IT IS JUST A SAFE BET. IT IS DOWN I THINK 50% FROM HIGHS IN 2021. UNLIKE SOME SMALLER COMPANIES, THAT THEY MIGHT NORMALLY TARGET, IT'S UNLIKELY TO GET WIPED OUT SO YOU HAVE A SAFE PLACE TO PARK YOUR MONEY ONE WAY OR ANOTHER. THE OTHER REASON, THAT APPLIES TO A LOT OF BIG TECH COMPANIES, IS IT DOES NOT HAVE GREAT CORPORATE GOVERNANCE HISTORICALLY. THAT HAS BEEN OK WHEN THE
MARKET WAS RISING AND EVERYTHING WAS LOOKING GREAT. AS SOON AS THINGS LOOK BAD, THESE TEND TO BE THE FIRST COMPANIES THAT GET RAKED OVER BY ACTIVISTS. YOU WILL SEE THAT IN OTHER BIG TECH COMPANIES AS WELL. I ALSO THINK THERE HAS BEEN A SERIES OF ACQUISITIONS THAT HAVE BEEN QUITE LARGE AND NOT NECESSARILY THAT SUCCESSFUL.
DESPITE SAYING HE WOULDN'T SLOW DOWN ON THAT, HE HAS OBVIOUSLY CONTINUED TO DO IT. I THINK THAT IS A RED RAG TO AN ACTIVIST BECAUSE THEY KNOW THAT THERE WILL BE LONG EARNING INVESTORS AND POTENTIALLY RETAIL INVESTORS THAT HAVE SIMILAR DISCONTENT. CAROLINE: WHEN IT COMES TO TABLEAU, TO SLAT, WE -- WILL WE SEE NAMES SUCH AS HIS PUSH FOR DISPOSALS, COST-CUTTING, WHAT SORT OF DISCIPLINE DO THEY WANT? ED H.: GOOD QUESTION. AT THIS POINT, WE DO NOT KNOW THE ANSWER. ELLIOTT HAS BEEN MOST PUBLIC IN RECENT STATEMENTS SAYING THEY LIKE ANY OFF AND LIKE THAT HAPPENING. THAT IS USUALLY ACTIVIST CODE
FOR, LET US INTO THE BOARDROOM AND WE WILL GIVE YOU COVERAGE TO MAKE SOME JOB CUTS THAT WOULD BE PERHAPS HARDER TO MAKE ON YOUR OWN. IN TERMS OF SEPARATING ASSETS, I THINK THERE IS A CASE TO BE MADE FOR BOTH SUMMED INVESTITURE IS HERE. SOME DEALS STRUCK AT A FAIRLY HIGH POINT IN THE MARKET, IT IS DIFFICULT TO SEE SALESFORCE EXITING AND GETTING ANYTHING OTHER THAN A DISCOUNT. ED:
ED HAMMOND, TERRIFIC REPORTING, MOVING THE STOCK TO ITS BIGGEST GAIN SINCE NOVEMBER, THANK YOU. COMING UP, FCC COMMISSIONER BRENDAN THOMAS CARR JOINS CAROLINE AND I TO TALK ALL THINGS TIKTOK IN A VERY IMPORTANT EXCLUSIVE INTERVIEW. THIS IS BLOOMBERG.
X NATIONAL CONCERT HE -- SECURITY CONCERNS WE TAKE EXTREMELY SERIOUSLY. WE HAVE HAD DISCUSSIONS WITH THE U.S. GOVERNMENT. I AM VERY CONFIDENT THAT THROUGH THE DISCUSSIONS WE WILL HAVE WE WILL COME UP WITH A SOLUTION THAT WILL REASONABLY ADDRESS THE NATIONAL SECURITY CONCERNS THAT POLICYMAKERS HAVE. CAROLINE: THE TIKTOK CEO AT THE BLOOMBERG NEW KIND OF REFORM IN SINGAPORE IN NOVEMBER ADDRESSING NATIONAL SECURITY CONCERNS FROM THE U.S..
SINCE THEN, CONCERNS HAVE BEEN BUILDING. NO ACTION FROM THE ADMINISTRATION. SOME STATES HAVE STARTED TO TAKE IT UPON THEMSELVES TO CREATE CURBS ON THE POPULAR APP.
IN TEXAS SOME UNIVERSITIES HAVE BANNED THE APP ON CAMPUS NETWORKS. WILL THAT HELP? WHAT MORE SHOULD BE DONE? LET'S BRING IN SOMEBODY VOCAL ON ALL OF THIS, FCC COMMISSIONER BRENDAN THOMAS CARR. IT IS GREAT TO HAVE TIME WITH YOU. YOU HAVE BEEN OUTSPOKEN ABOUT CONCERNS AROUND TIKTOK.
WHAT FROM YOUR PERSPECTIVE CAN YOU AS AN FCC COMMISSIONER DO? IS IT ABOUT SPEAKING OUT? WHAT ACTION CAN YOU TAKE? COMMISSIONER CARR: AT THE SEC WE HAVE DEALT WITH WHILE WAY, CHINA MOBILE, COMPANIES WITH TIES TO COMMUNIST CHINA. HERE THE MAIN ACTION WILL COME FROM THE BIDEN ADMINISTRATION. THE TREASURY DEPARTMENT AND COMMITTEE ON FOREIGN INVESTMENT HAS BEEN REVIEWING THIS FOR ALMOST TWO YEARS NOW. THE TIDE HAS BEEN MOVING OUT ON TIKTOK. I THINK IT HAS SHIFTED FROM A QUESTION OF WHETHER THERE WILL BE SOME SORT OF BAN OR DECOUPLING OF TIKTOK FROM BEIJING, TO A QUESTION OF WHEN THAT TAKES PLACE. TIKTOK IS STILL SPENDING A LOT OF MONEY, MILLIONS OF DOLLARS, TO AVOID THAT.
I THINK THINGS ARE MOVING IN THE WRONG DIRECTION FOR TIKTOK. CAROLINE: WHAT ABOUT THE DIRECTION FROM THE ADMINISTRATION? IT WILL ULTIMATELY BE THEM AND SIFY IS, THE FOCUS AIR, OR WILL IT BE CONGRESS? WE SEE ACROSS THE AISLE AGREEMENT THERE? COMMISSIONER CARR: IT COULD BE BOTH. THERE IS BIPARTISAN ACTION IN THE HOUSE. REPUBLICAN GALLAGHER DEMOCRAT CHRISTIAN MORE BE HAVE A BILL THAT WOULD BAN TIKTOK NATIONWIDE. BIPARTISAN AGREEMENT TO BAN TIKTOK NATIONWIDE ON FEDERAL DEVICES, ALMOST 30 STATES NOW HAVE DONE THAT.
IT COULD BE THE BIDEN ADMINISTRATION ALL BELIEVE THAT TAKES FINAL ACTION. IT SHOULD BE. THERE IS PRECEDENT FOR THIS. WE HAVE USED CPS BEFORE FOR UNWINDING THE PURPOSE -- PURCHASE OF GRIND FOR HAVING CONNECTIONS TO A BEIJING ENTITY. INDIA BAD TIKTOK ACROSS THEIR COUNTRY AND I THINK THAT'S THE RIGHT DIRECTION TO GO HERE. ED: THE FCC DOES NOT HAVE THE POWER OR A REMIT TO TAKE ACTION ON THIS. WHO ARE YOU BACKING TAKE ACTION? WHO DO YOU THINK AT A FEDERAL OR STATE LEVEL SEES A MATERIAL CHANGE WHEN IT COMES TO REGULATING TIKTOK? COMMISSIONER CARR: SEC OFFICIALS HAVE AN ISSUE THAT THE TREASURY DEPARTMENT SHOULD TAKE A LOOK AT. REALLY I THINK THE BIGGEST
LEADER ON THIS HAS BEEN THE DEMOCRAT CHAIRMAN OF THE SENATE UNTIL COMMITTEE MARK ORNER THAT SAID TO TALK SCARES -- MARK WARNER THAT SAYS TIKTOK SCARES THE DICKENS OUT OF HIM. HE HAS BEEN WORKING WITH SENATOR RUBIO SEND OTHERS. THERE HAS BEEN BIPARTISAN INTEREST IN TAKING ACTION. I THINK IT WILL COME FROM SEVERAL FRONTS, STATES INCLUDED. I DO NOT THINK THIS WILL BE AN FCC ISSUE ITSELF THOUGH. ED:
YOU MENTIONED INDIA. WE WENT TO OUR AUDIENCE AND ASKED THEM IF THEY FELT THE ACTION TAKEN IN INDIA COULD BE REPLICATED HERE IN THE U.S.. 77% OF RESPONDENTS SAID YES. THAT TAKES AN IMPORTANT PRECEDENT. DOES THE ACTION TAKEN IN INDIA SET AN IMPORTANT PRECEDENT? COMMISSIONER CARR: I THINK IT IS A REALLY STRONG PRECEDENT. INDIA IS THE WORLD'S LARGEST DEMOCRACY SO TAKING ACTION IN THAT DEPARTMENT IS INSTRUCTIVE.
THERE IS NATIONAL SECURITY AND MENTAL HEALTH. ON NATIONAL SECURITY TIKTOK CAME CLEAN LAST MONTH AND SAID YES THEY HAD BEEN SURVEILLING THE LOCATIONS OF SPECIFIC U.S. REPORTERS WRITING NEGATIVE STORIES ABOUT TIKTOK. THAT'S A NIGHTMARE SCENARIO. WE ARE AT A POINT IN TIME WHERE
TIKTOK HAS BEEN ENGAGED IN NEGOTIATIONS WHERE THEY HAVE EVERY REASON TO BE ON THEIR BEST BEHAVIOR AND YET WERE ENGAGED IN NEFARIOUS CONTENT. TRUST IS THE MOST IMPORTANT THING WHEN YOU ARE TRY TO NEGOTIATE WITH THE GOVERNMENT. IF I WAS IN THE BIDEN ADMINISTRATION I WOULD BE DISAPPOINTED IF I HAD A DRAFT AGREEMENT WITH TIKTOK IN PLACE OVER THE SUMMER AND YOU SEE THIS SUBSEQUENT CONDUCT. I THINK THAT IT SHOWS THAT I DO NOT SEE A PATH FORWARD WHERE YOU COULD CUT A DEAL THAT WOULD PUT AIRTIGHT PROTECTIONS IN PLACE. CAROLINE: ULTIMATELY, YOU FEEL A BAND
IT'S THE ONLY WAY. THE EU BEFORE IS NOT TALKING AS TOUGH AND NOW IN THE LEXICON THE WORD BAN IS ON THE TIP OF THEIR TONGUE. WE HAVE ALSO SEEN IT FROM INDIA. IS THERE NO WAY A DEAL COULD BE DONE WITH ORACLE? NO WAY TIKTOK COULD CONVINCE THAT THERE IS A SAFE WAY OF CONTINUING TO OPERATE IN THE U.S.? COMMISSIONER CARR: I DON'T SEE IT. EUROPE IS STARTING TO RAMP UP ACTIVITY. THIS WEEK GOVERNMENT OFFICIALS
IN THE NETHERLANDS BAND TIKTOK FROM FEDERAL DEVICES THERE. IT COMES DOWN TO TRUST. THERE WERE LEAKED INTERNAL COMMUNICATIONS FORBES GOT OVER THE SUMMER THAT SHOWED A TIKTOK OFFICIAL SAID EVEN IF ALL OF THE PROTECTIONS ARE IN PLACE, THE PROJECT TEXAS THEY TALK ABOUT A LOT THAT INVOLVES ORACLE, ACCORDING TO THEM, IT REMAINS TO BE SEEN WHETHER PROJECT AND ENGINEERING REMAIN IN BEIJING AND COULD STILL GET ACCESS TO THE STATE OR WHETHER OFFICIALS IN TIKTOK ARE SURE THE PROTECTIONS WILL BE AIRTIGHT. ONE ANALYST HAD THE ODDS OF A TIKTOK BAN AROUND 10% THE SUMMER AND TOWARDS THE END OF LAST FALL, 40% BEFORE THE BIPARTISAN BILL WAS INTRODUCED. THAT WAS BEFORE USE OUR RECENT
REVELATIONS. I THINK THINGS ARE MOVING THE WRONG WAY. THEY ARE SPENDING A LOT OF MONEY TO TRY TO STOP THE BAN OR DECOUPLING. ED:
ONE PART OF THE EQUATION WE HAVE NOT DISCUSSED, THE TO ACCUSER IN THE U.S.. LOTS OF PEOPLE LOVE USING THE APP. MANY HAVE TOLD US THEY DO NOT UNDERSTAND THE RISK. THEY ARE NOT WELL EXPLAINED. WHY SHOULD TIKTOK BE BANNED? HOW WOULD YOU JUSTIFY IT TO THEM? THE MILLION PLUS USERS SAYING WE WANT THIS? COMMISSIONER CARR: IT'S TWOFOLD. IT'S NATIONAL SECURITY AND MENTAL HEALTH.
ON THE NATIONAL SECURED HE SAID, IT IS PULLING ALL SORTS OF SENSITIVE DATA -- NATIONAL SECURITY SIDE, IT IS PULLING SENSITIVE DATA, KEYSTROKES, BIOMETRICS. FOR YEARS THEY MISREPRESENTED WHERE THIS WAS GOING. INTERNAL COMMUNICATIONS SHOWED EVERYTHING IS VIEWED INSIDE. THAT IS WHY THE FBI DIRECTOR AND OTHERS ARE RAISING THE ALARM. THE MENTAL HEALTH SIDE IS INTERESTING AS WELL.
A RECENT REPORT BY THE NEW YORK TIMES SET UP AN ACCOUNT FOR A 13-YEAR-OLD GIRL THAT WITHIN A MATTER OF MINUTES WAS SHOWING EATING DISORDER AND SELF-HARM CONTENT. THE VERSION OF TIKTOK AVAILABLE IN CHINA IS NOT SHOWING THAT. IT IS SHOWING EDUCATIONAL MATERIALS, MUSEUMS, SCIENCE EXPERIENCE -- EXPERIMENT. CAROLINE: MENTAL HEALTH ISSUES HAVE BEEN LEVELED NOT JUST A TIKTOK, BUT AT HOME GROWN SOCIAL MEDIA PLATFORMS, INSTAGRAM IS HAVING TO OFTEN RESPOND TO SUCH CONCERNS. IF WE BAN TIKTOK END-USERS MOVED FROM -- TO YOUTUBE SHORTS AND INSTAGRAM, HOW DO WE PREVENT THAT ELEMENT? COMMISSIONER CARR: THERE IS A BASELINE OF PRIVACY PROTECTIONS WE NEED TO PUT IN PLACE. I AM OPEN TO INCREASED AGE RESTRICTIONS FOR SOCIAL MEDIA GENERALLY, BEYOND TIKTOK. THERE IS SOMETHING VERY UNIQUE
ABOUT TIKTOK EXPOSED BY THE FACT YOU CAN COMPARE WHAT IT SHOWS TO KIDS IN THE U.S. VERSUS KIDS IN CHINA. A BROADER ISSUE WE HAVE TO DEAL WITH IS HOW DO YOU EAT AN ELEPHANT? ONE BITE AT A TIME. THERE ARE BROADER DATA CONCERNS THAT GO BACK TO CHINA WITH ALL SORTS OF ABERRANT -- APPLICATIONS AND DATA BROKERS. WE HAVE BEEN LOOKING AT TIKTOK FOR TWO YEARS. WE HAVE A BIG CASE DEVELOPED ON THAT. WE SHOULD TAKE THAT ACTION.
IT MAKES IT EASIER TO DEAL WITH KNOCK ON CASES SAYING, THIS IS LIKE TIKTOK AND WE SHOULD DEAL WITH IT. WHILE WAY AT THE SEC, THEN CHINA MOBILE. THAT IS HOW WE APPROACH THE BROADER ISSUE. ED: COMMISSIONER, WE KEEP HEARING THAT WE HAVE BEEN LOOKING AT THIS FOR TWO YEARS. THESE THINGS DO NOT WORK. WHAT I DO NOT THINK CAROLINE AND I ARE HEARING FROM PEOPLE IN YOUR POSITION, FROM COMPANIES, IS AN ACTUAL SOLUTION. WILL YOU SUGGEST THAT APPLE OR
ALPHABET, THROUGH GOOGLE, JUST DO NOT MAKE THE APP AVAILABLE THROUGH THEIR STORES? HOW WILL YOU ACTUALLY MAKE THIS HAPPEN? COMMISSIONER CARR: I HAVE THROWN OUT THE IDEA THAT APPLE AND GOOGLE COULD REMOVE IT FROM THE APP STORE. INDIA IS AN EXAMPLE. GRINDER IS A PRECEDENT AND AT THE U.S. WHERE WE BANNED AN APP OR AT LEAST REQUIRED THE SALE. THOSE ARE POTENTIAL ACTIONS. TIKTOK IS UNIQUELY REPLACEABLE. A LOT OF PARENTS LOOK AT TIKTOK AND IT THINK IT IS LIKE FACEBOOK, INSTAGRAM, OR ANOTHER SOCIAL MEDIA WHERE YOU ARE ALL OWING -- FOLLOWING A NETWORK OF PEOPLE YOU KNOW.
YOU GO TO TIKTOK YOU ARE IMMEDIATELY BEING FED CONTENT FROM BEIJING. I THINK IT CAN BE REPLACED WITH EITHER ANOTHER OWNER OR ANOTHER SHORT FORM VIDEO APPLICATION RELATIVELY QUICKLY. ED: FCC COMMISSIONER BRENDAN CARR, THANK YOU FOR YOUR TIME AND ROBUST CONVERSATION. I KNOW TIKTOK IS A STORY WE WILL CONTINUE TO DISCUSS. COMING UP, WHY MORGAN STANLEY FIRED SOME OF ITS OWN -- FIND SOME OF ITS OWN BANKERS AND HOW WHATSAPP IS AT THE HEART OF IT. THIS IS BLOOMBERG.
CAROLINE: MORGAN STANLEY FINED SOME OF ITS OWN BANKERS MORE THAN $1 MILLION EACH FOR CONDUCT BUSINESS ON WHATSAPP AND OTHER MESSAGING PLATFORMS. CLEARLY, THAT THE PAINFUL REMINDER, OF HOW SEEN YOU ARE AND HOW YOU ARE REPRIMANDED AT A POINT SYSTEM. IT IS INTERESTING BANKS ARE PAYING THE FINES THEMSELVES. ED:
LITERALLY, DRAWING BACK BONUSES ALREADY PAID OUT BECAUSE THEY ARE UNDER THAT MUCH PRESSURE FROM REGULATORS TO MAKE SURE COMMUNICATION FOR BUSINESS IS DONE PROPERLY. THAT IS ASTONISHING PROP -- PRESSURE FROM THE SEC AND CFTC. THE OTHER STORY THAT CAUGHT MY EYES, REPORTING AROUND THE NYSE AND WHAT WAS RESPONSIBLE. ACCORDING TO A SOURCE, IT WAS THEY BASICALLY DID NOT TURN IT OFF AND BACK ON AGAIN, THE BACKUP SYSTEM. CAROLINE: HUMAN ERROR, BASICALLY. A DEEPLY TECHNOLOGICAL AREA WHERE YOU ARE TRYING TO ENSURE THERE IS NEVER ANY DISASTERS. AND ONE PERSON AND ONE
PERSONNEL ISSUE, A DISASTER AND SHOOT. ED: IN THE MARKETS, THAT'S RIGHT. CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY. I'M CAROLINE HYDE. ED: I AM ED LUDLOW. BOTH OF US ARE IN SAN FRANCISCO AFTER A GROWING CHORUS OF LAYOFFS ACROSS THE TECH INDUSTRY.
ONE COMPANY IS GLOWING -- GOING AGAINST THE GRAIN, THAT CLOUD SOFTWARE PLATFORM SERVICENOW INC WILL NOT LAY OFF ANYONE IN 2023 ACCORDING TO THE CEO, BILL MCDERMOTT. BILL JOINS US NOW ON THE PROGRAM. THAT'S A PLEDGE, BILL. HOW WILL YOU KEEP IT? BILL: WE ARE THE PLATFORM FOR END TO END DIGITAL TRANSFORMATION. CUSTOMERS TODAY HAVE TWO THINGS ON THEIR MIND. ON ONE HAND, THEY HAVE TO AUTOMATE AND IMPROVE PRODUCTIVITY AND DO A LOT MORE WITH LESS. SO THEY ARE REALLY TRYING TO
TAKE COST OUT OF THE BUSINESS. ON THE OTHER HAND, THEY RECOGNIZE THAT DIGITAL BUSINESS IS SOMETHING THEY HAVE TO DO WELL AT. SO, THEY ARE INVESTING AND THEY ARE INVESTING LONG-TERM. IF YOU ARE INVESTING FOR GROWTH OR YOU ARE TAKING COST OUT OF THE EQUATION WITH SERVICE NOW, YOU CAN DO THAT ON ONE PLATFORM. YOU CAN DO EVERYTHING ON SERVICE NOW'S PLATFORM AND THAT MAKES IT SO COMPELLING. ED: ALL TOLD, THE STOCK GROSSED 3%. WERE INVESTORS CHEERING THE PLEDGE TO NOT DO LAYOFFS OR WERE THEY CHEERING THE FINANCIAL RESULTS? BILL: I THINK THEY ARE CHEERING THE FINANCIAL RESULTS.
WE ARE ROWING AT THE RULE OF 58.5, MEANING IF YOU COMBINE OUR REVENUE GROWTH AND ARE FREE CASH FLOW MARCH -- OUR FREE CASH FLOW MARGIN WE ARE GROWING 58.5. WORLD-CLASS, 40%. WE ARE DOING SOMETHING NO OTHER ENTERPRISE SOFTWARE COMPANY IN THE WORLD IS DOING, GROWING FASTER THAN ALL THE OTHERS IN A PROFITABLE WAY. WALL STREET LIKES THAT. MORE IMPORTANT, IT IS A REFLECTION OF WHAT WE ARE DOING WELL OUR GREAT CUSTOMERS LIKE THE SHORTS GROUP IN GERMANY GOING FOR NEXT-GENERATION RETAIL -- SCHWARTZ GROUP IN GERMANY GOING FOR NEXT-GENERATION RETAIL, THE U.S. ARMY SERVING ONE MILLION CONSTITUENTS. WE ARE DOING THIS END TO END ON ONE PLATFORM TO RUN ALL THEIR BUSINESS OPERATIONS. CAROLINE:
YOU HIRED PEOPLE IN 2022, A LOT OF THEM. HOW DO YOU MAKE THE MOST OF THE TALENT AVAILABLE? WILL YOU HIRE MORE IN THIS ENVIRONMENT? BILL: WE HIRED 5000 IN THIS YEAR. IT'S FANTASTIC. ON THE SERVICENOW INC PLATFORM YOU CAN RUN ALL BUSINESS OPERATIONS AS A COMPANY OR AN INDIVIDUAL ON ONE PLATFORM. SO, THIS ARGUMENT THAT YOUNG PEOPLE, NEW HIRES ARE UNPRODUCTIVE IS NOT THE CASE HERE AT SERVICENOW INC. BECAUSE THEY DO ALL THEIR WORK ON THE SERVICENOW INC PLATFORM, ITS OWN SENSATION. OUR PRODUCTIVITY IS FANTASTIC WITH EARLY CAREER FOLKS OR SENIOR EXECUTIVES THAT JUST WANT TO WORK FOR THE BEST COMPANY IN THE BUSINESS. WE WILL CONTINUE TO HIRE.
WE ARE ESPECIALLY HIRING IN ENGINEERING AND MARKET PROFESSIONALS TO TAKE COVER CUSTOMERS. CAROLINE: THEY SAY YOU ARE EXECUTING WELL IN A TOUGH ENVIRONMENT. YOU ARE A MAN WHO UNDERSTANDS ACTIVIST INVESTORS. YOU DEALT WITH THEM IN PREVIOUS TIMES AND YOU KNOW HOW TO NAVIGATE THAT. AS OTHER BUSINESSES FACE THIS ENVIRONMENT NOW, HOW ARE YOU LOOKING TO TALK TO YOUR INVESTOR BASE PARTICULARLY WHEN YOU HAVE A STOCK AT PRETTY HIGH MULTIPLES? BILL: YOU ARE RIGHT. IT IS HIGH MULTIPLES. BUT THAT'S BECAUSE THE GROWTH
RATE IS SO HIGH. WHAT I AM SUPER PROUD OF IS -- UNDERSTANDING THIS WAS ALSO REINFORCED TODAY BY OTHER MEDIA AFFECTIONAL'S, THAT THE ACTIVIST INVESTORS WORKING WITH OTHER TECHNOLOGY COMPANIES START THE MEETING OFF WITH, WE NEED YOU TO LOOK AT THE BENCHMARK AND THE BENCHMARK IS SERVICENOW INC. THEN THEY SAY THEIR GROWTH RATE IS 28%.
THEN THEY LOOK AT THEIR MARGIN PROFILE AND IT IS THE HIGHEST IN THE CLOUD BUSINESS. THEN THEY SHOW THEM OUR FREE CASH FLOW MARGIN. THEY ARE LIGHT, WE NEED THAT. THAT IS HOW THE MEETING STARTS. I TAKE THAT WITH A HUNGRY AND HUMBLE ATTITUDE. HUMBLE BECAUSE WE KNOW IT IS ALL ABOUT TAKING CARE OF THE CUSTOMERS SUPER WELL WITH GREAT EMPLOYEES. HUNGRY BECAUSE WE WANT TO GROW EVEN MORE AND FASTER. SO, I DO NOT HAVE AN ISSUE WITH
ACTIVIST INVESTORS. I HAVE WORKED WITH THEM IN THE PAST. I ACTUALLY HAVE A GREAT RELATIONSHIP WITH ELLIOTT MANAGEMENT AND JESSE CAN'T. I THINK THEY ARE TERRIFIC. AT THE TIME WHEN I WAS WITH ANOTHER COMPANY THEY OFFERED VERY GOOD SUGGESTIONS AND WE BUILT TRUST AND IT DID COOL STUFF TOGETHER. HERE I DO NOT THINK THIS IS THE ONLY PLACE THEY WILL STOP BECAUSE IT IS SO SUCCESSFUL. ED:
BILL, DOES YOUR COMPANY THRIVE IN DIFFICULT TIMES? I THINK YOU WERE TALKING ABOUT CUSTOMERS MOVING AWAY FROM DIFFERENT INDIVIDUAL VENDORS AND BASICALLY COMING TO YOU FOR A ONE TOP STOP -- ONE STOP SHOP SOLUTION. WHEN CUSTOMERS DO THAT, IT IS OFTEN BECAUSE THEY ARE HAVING TO LOOK AND MAKE CHANGES, REACTIONARY, DO YOU SEE WHAT I MEAN? BILL: HERE IS THE SITUATION. IF YOU BELIEVE INDEPENDENT RESEARCH COMPANIES LIKE IDC, THEY WILL TELL YOU I.T. SPEND FOR SOFTWARE WILL GROW IN DOUBLE DIGITS THIS YEAR. THAT IS A FACT, AN INDEPENDENT
RESEARCH TRACK. LET'S ASSUME THAT IT NOT HAPPEN. LET'S ASSUME THERE WAS NO INCREASE IN I.T. SPEND. WHAT IS HAPPENING NOW WITH CUSTOMERS, WHERE THEY HAVE THREE OR FOUR TECHNOLOGIES THAT DO SOMETHING SIMILAR, LET -- THEY SAY, LET'S CANCEL THREE AND GO WITH THE ONE THAT IS THE BEST ALTERNATIVE. WE DO NOT WANT ALL FOUR.
DURING THE HYPE CYCLE OF THE PANDEMIC WHERE PEOPLE WERE TRYING TO FIGURE THINGS OUT, THEY JUST BOUGHT EVERY POINT SOLUTION THEY COULD GET THEIR HANDS ON. NOW, THEY REALLY WANT TO GO FOR PLATFORMS THAT MATTER. WHAT SERVICENOW INC IS ENABLING COMPANIES TO DO WITH REALLY CONSOLIDATE THE SPEND, MOVE AWAY FROM PLATFORMS THAT DO NOT MATTER, AND INCREASE YOUR PRODUCTIVITY QUITE DRAMATICALLY ON ONE THAT DOES. SO, TAKE COST OUT, GO FOR SERVICENOW INC. PUT GROWTH IN, GO FOR
SERVICENOW INC ALL ON ONE PLATFORM FOR DIGITAL TRANSFORMATION. CAROLINE: IT'S INTERESTING. YOU ARE SUCH A POSITIVE PERSON, IT SOUNDS LIKE. IN MANY WAYS, RIGHTLY SO. I AM LOOKING AT ANALYST RECOMMENDATIONS. 36 OF ANALYSTS SAY BY YOUR STOCK. ONLY ONE, STEPHAN, AT BNP PARIBAS. WHAT WOULD YOU SAY TO STEPHAN? BILL: WELL, I HAVE TO GO SPEAK WITH HIM.
I THINK HE NEEDS A MEETING WITH ME. COME TALK TO OUR PEOPLE. WE HAVE NOT SPENT ENOUGH TIME WITH HIM. ONE OUT OF 36 IS NOT TOO BAD. I WOULD JUST TELL THEM, LIKE, -- HIM, LIKE, IF YOU LOOK AT WHERE THE NEW ECONOMY IS GOING, IT'S A PLATFORM ECONOMY. IN THIS ECONOMY YOU HAVE HYPER
SCALE CLOUDS THAT ARE ALL VERY RELEVANT. OUTSTANDING COMPANIES THAT WILL DO VERY WELL. THEN YOU HAVE A COUPLE OF SASS COMPANIES. AMONG THOSE COUPLE OF SASS COMPANIES THAT MATTER WE ARE ONE OF THEM.
WHAT IS UNIQUE ABOUT US IS WHETHER YOU ARE DOING WORKLOADS IN A PUBLIC CLOUD, A PRIVATE CLOUD, OR, A MULTI-CLOUD FORMATION, SERVICENOW INC SERVES AS THE CONTROL TOWER FOR END-TO-END DIGITAL TRANSFORMATION. IF ANYONE UNDERSTANDS THE IMPLICATIONS OF THAT AND THE NETWORK EFFECT IT CREATES AND THE FACT THAT WE ARE THE STICKIEST, MOST LOYAL CUSTOMERS -- HAVE THE STICKIEST, MOST LOYAL CUSTOMERS IN THE BUSINESS WITH RETENTION RATES NEAR 100% AND WE GROW SAME ACCOUNT REVENUE GROWTH NEARLY 30% PER CUSTOMER, PLUS WE GET LOTS OF NEW BUSINESS, WE GOT A NEW BUSINESS SURGE IN Q4, I FIND IT HARD TO UNDERSTAND WHY ANYBODY WOULD NOT HAVE A BUY RATING ON THE STOCK. FROM AN INDIVIDUAL INVESTOR PERSPECTIVE, LOOK, THE WHOLE THING, CAROLINE, IS THE TIGHTENING MONETARY POLICY IS WHAT COMPRESSED THE MULTIPLES, ESPECIALLY IN HIGH-TECH.
BUT AS THAT NOW GETS MORE NORMALIZED, YOU WANT TO BE IN THE COMPANY'S THAT HAVE THE ABILITY TO GIVE YOU TREMENDOUS LEVERAGE. BECAUSE, ONCE THAT TIGHTENING OF THE MONETARY POLICY LOOSENS, GETS MORE NORMALIZED, EVERYBODY IN 24 HOURS, 40 EIGHT HOURS, WILL JUMP ON THE BANDWAGON TO GET INTO HIGH LEVERAGED GROWTH STOCKS LIKE SERVICENOW INC AND YOU WANT TO BE THERE BEFORE THAT 24 HOUR OR 48 HOUR RUSH OR YOU WILL MISS OUT. CAROLINE: TIMING THE MARKET, SERVICENOW INC CEO PHIL -- BILL MCDERMOTT. LET'S TALK AMAZON. SELLING A VAGUE IT BAY AREA OFFICE COMPLEX PURCHASED -- VACANT AREA OFFICE COMPLEX PURCHASED DURING THE PANDEMIC IN 2021, THE LATEST EFFORT TO UNWIND A PANDEMIC EXPANSION THAT LEFT IT WITH A SURPLUS OF WAREHOUSES AND EMPLOYEES. THE BAYER FOR -- AREA OFFICE MARKET HAS BEEN HIT HARD THE LAST TWO YEARS AS COMPANIES PIVOTED TO REMOTE WORK AND GAVE UP REAL ESTATE TO CUT COST. ED:
I WANT TO GET INTEL, DOWN 1.5 PERCENT, PUSHING OR ACCELERATING ON DECLINES AFTER HOURS. THE BIG HEADLINE I SAW IS ACTUALLY THERE IS WEEK SERVER DEMAND IN CHINA. THEY ARE TALKING A BIG GAME AROUND CONTROLLING EXPENSES. 2023 OPERATING EXPENSES UNDER 20 BILLION.
EXPECTING BIG CUTS IN CUSTOM INVENTORY IN Q1. THAT IS A STOCK WE HAVE TO KEEP WATCHING BECAUSE THERE IS A BIG REACTION TO INTEL'S QUARTERLY EARNINGS REPORTS. BOOMING WITH INTEREST IN ARTIFICIAL INTELLIGENCE. WE SPEAK WITH INSIGHT PARTNERS WHO HAVE BEEN AT IT FOR A WHILE WHEN IT COMES TO AI. THIS IS BLOOMBERG.
CAROLINE: SHOULD YOU BE USING CHAT GPT FOR INVESTING ADVICE? IF YOU ASK IT TO PICK CERTAIN SPOTS TO OUTPERFORM IN AN ETF IT WILL PROBABLY SIT ON THE FENCE. IT MIGHT INSIGHT YOU TO LOOK FOR ACTUAL INVESTMENTS THAT USE THE POWER OF AI. THERE ARE A COUPLE OF ETF SON IN MARKET USING ARTIFICIAL INTELLIGENCE LIKE EQUITY ETF THAT DESCRIBES INFORMATION FROM THE INTERNET AND REGULATORY FILINGS TO HELP IT'S OVER 6000 STOCKS IT ANALYZES PICK, EVERY UNTOWARD -- WE ORIENTATE, AND OUTPERFORM.
STATE STREET FUND IS POWERED BY IBM WATSON. IT TOO IS STOCKPICKING AND UP ABOUT 10% ON THE YEAR SO FAR. ONE THING CHAT GPT MIGHT INCENTIVIZE YOU TO DO IS STAY DIVERSIFIED. WHEN YOU ASK IT ABOUT TIME TO FIND A BALANCED PORTFOLIO IT WILL RECOMMEND YOU SPREAD YOUR INVESTMENTS ACROSS VARIOUS ASSET TYPES DEFINED UNCORRELATED RETURNS. BE DIVERSIFIED. IT IS NOT THAT STRONG AT MATHS, BUT IT IS THE FOCUS OF A COMPANY THAT WHEN YOU ASK CHAT GPT WHAT TO DO ON INVESTMENT IT SITS ON THE FENCE. IT SAYS YOU CAN LOSE MONEY OR GAIN IT. WHAT THE POWER OF AI IS IN YOUR
INVESTMENTS. NOW COMPANIES ARE TRYING TO MAKE OUT HOW THEY ARE USING AI, IN THE SAME WAY WE USE TO A BLOCKCHAIN. EVERYBODY STARTED TO PUT BLOCKCHAIN AT THE END OF THEIR NAMES AND IT GAVE THEIR STOCK A POP. OTHER COUNTRIES -- COMPANIES ARE SAYING THEY ARE HARNESSING AI. ED: I THOUGHT THE WHOLE POINT OF ETF WAS SUPPOSED TO BE ABOUT PASSIVE INVESTING. KATIE GREIFELD WROTE A STORY ABOUT IT. IS IT ACTIVE? IS IT PASSIVE THIS ROBOT DOES
IT? CAROLINE: TALK ABOUT COMPANIES TRYING TO GET ON THE BANDWAGON OF HARNESSING AI, OPEN AI, OF COURSE, THE COMPANY BEHIND CHAT GPT, WELL, IT HAS BEEN ALL THE BUZZ AT BUZZFEED BECAUSE BUZZFEED IS PLANNING TO USE OPEN AI TO BOLSTER SOME CONTENT CREATION. THAT SENT SHARES SURGING AT ONE POINT MORE THAN 200% THIS THURSDAY. BUZZFEEDS MARKET VALUE HITTING $400 MILLION. LET'S GET TO IT WITH ALECIA DIAZ. ALECIA, ULTIMATELY WHAT WILL THIS HELP BUZZFEED DO? ALECIA: THE MAIN POINT HERE IS THAT BUZZFEED SENT A MEMO TO STAFF TODAY SAYING THIS WILL HELP FRAME LOWER COST TO THE CONTENT IT PRODUCES. AND I THINK WE HAVE SEEN AI A LOT IN TECH IN TERMS OF ALGORITHMS. THAT IS WHERE A LOT
OF US ARE MOST FAMILIAR WITH IT. IT IS REALLY INTERESTING TO SEE THAT THEY WANT IT TO BE UNLIMITED WITH THE CONTRACT -- IMPLEMENT IT WITH THE CONTENT IT IS CREATING. ED: THE PITCH HERE IS TO REPLACE JOURNALISTS WITH ARTIFICIAL INTELLIGENCE, WHICH FOR THE THREE OF US IS AN UNCOMFORTABLE THING TO DISCUSS. LET'S TALK ABOUT WHAT WALL STREET IS SAYING ABOUT THE PARTNERSHIP.
THE STOCK REACTION SAYS IT ALREADY, DOESN'T IT? ALICIA: DEFINITELY DIFFERENT GROUPS OF PEOPLE HAVE DIFFERENT OPINIONS ON THIS. WALL STREET IS EXCITED ABOUT THE IDEA OF AI. YOU SHOW -- SAW SHARE VOLUME GO BONKERS TODAY WITH OVER 200 MILLION SHARE EXCHANGES HAPPENING. I THINK ANALYSTS ARE EXCITED. AND, HAVE A GENERALLY POSITIVE OUTLOOK ABOUT AI. I THINK THERE IS PROBABLY MORE TO COME. I THINK THIS IS JUST THE
BEGINNING OF THE DISCUSSION. AS WE LEARN MORE ABOUT THE OUTLINE OF WHEN BUZZFEED PLANS TO IMPLEMENT THIS, I THINK IT WILL NARROW DOWN HOW ANALYSTS ARE VIEWING IT. ALIX: CAROLINE: ALECIA DIAZ LOOKING INTO APPLICATIONS OF AI FOR BUZZFEED. GENERATIVE AI COULD DISRUPT MOST PARTS OF INDUSTRY RIGHT NOW IT FEELS LIKE. MAYBE, THIS IS A NEW TIPPING POINT. LONNE JAFFE AT INSIGHT PARTNERS HAS BEEN TRACKING AI SINCE 2016.
LONNE, YOU SAID THIS IS PERHAPS THE FEELING LIKE THE EARLY LAUNCH OF THE INTERNET ITSELF. WHY? WHAT IS SO IMPORTANT AND IMPACTFUL ABOUT GENERATIVE AI? LONNE: BEFORE THE RELEASE OF CHAT GPT PEOPLE HAD BEEN UNDERESTIMATING THE PROGRESS OF AI OVER THE LAST FEW YEARS AND THAT IT WILL MAKE GOING FORWARD. IT WAS LIKE THE SPARK THAT LIT THE FIRE AROUND IT GENERATIVE AI AND CREATED A FUNDRAISING DYNAMIC. ONE WAY TO THINK ABOUT IT AS WE
HAVE GONE FROM THESE SYSTEMS OF PRODUCTION, LIKE CLASSIFICATION OR RECOMMENDATION, TO SYSTEMS OF CREATION. NOW YOU HAVE REALLY INTERESTING POWERFUL GENERATIVE SYSTEMS LIKE OUR PORTFOLIO COMPANY JASPER THAT CAN HELP YOU WRITE A BLOG POST OR GENERATE IMAGES OR WRITE CODE. WE WILL LIKELY SEE PILOTS EMERGE WITH THE ABILITY TO CREATE FIRST DRAFTS OF ALL SORTS OF THINGS, MEDICAL CONTRACTS, LEGAL DOCUMENTS, LESSON PLANS. ED:
THE THING FOR ME IS IT ALWAYS COMES BACK TO MONEY. THE TEAM AT SQUIRREL CAPITOL ROTUNDA RESEARCH REPORT RECENTLY THAT AI HAS THE POTENTIAL TO GENERATE TRILLIONS OF DOLLARS OF ECONOMIC VALUE. HOW DO WE GET THERE? TO ACTUALLY IMPLEMENT AI IN A WAY THAT LEADS TO VALUE CREATION? OR PRODUCTS AND SERVICES WE CAN ACTUALLY CHARGE FOR? LONNE: IT WILL BE INTERESTING TO WATCH WHERE THE POOLS OF VALUE CREW AND WHERE THE -- THE CREW AND WHERE ECONOMIC VOTES WILL BE THE DEEPEST. SOME PEOPLE BELIEVE THAT ECONOMIC POWER WILL GO TO COMPANIES BUILDING LARGE FOUNDATION MODELS BECAUSE THEY REQUIRE SO MUCH TIME, SKILL, AND MONEY. SOME THINGS THAT IT WILL BE DEEPEST WHERE COMPANIES ARE FINE-TUNING MODELS FOR SPECIFIC USE CASES SO THEY CAN ENJOY DEMAND-SIDE ECONOMIES OF SCALE FROM HAVING PROPRIETARY TRAINING DATA OR FEEDBACK FROM USERS. BUT I THINK IT'S A LITTLE EARLY. IT'S THE FOG OF WAR AROUND IT
ALL. ED: YOUR CV IS FASCINATING. WE SHOWED SOME OF YOUR PORTFOLIO COMPANIES ON THE SCREEN. YOU INTERNED AT MICROSOFT IN YOUR EARLIER YEARS. YOU WORKED AT IBM. WHO WILL GET THERE FIRST? A BIG TECH COMPANY LIKE MICROSOFT, OR MORE NIMBLE STARTUPS YOU ARE INVESTING IN NOW? LONNE: I THINK THE RISE OF GENERATIVE AI IN PARTICULAR COULD DEMOCRATIZE ACCESS TO AI TECHNOLOGY BECAUSE IT CAN BE DELIVERED AS A SERVICE. THE CAPABILITIES OF THE
FOUNDATION MODELS, IT MAKES IT EASIER FOR REGULAR COMPANIES TO CONSUME WITHOUT BEING QUITE AS DEEP TECH. IT'S IMPORTANT TO REMEMBER THAT IT'S NOT JUST GENERATIVE AI COMPANIES MAKING TRANSFORMATIVE IMPACTS. IN MORE TRADITIONAL AI, LIKE HEALTH CARE, WE HAVE A PORTFOLIO COMPANY WHERE THE CEO AND THEIR TEAM HAVE BUILT TECHNOLOGY THAT CAN TELL YOU IF A TOOTH NEEDS FILLING FOR COMPUTER VISION FOR COLONOSCOPY VIDEOS IN REAL TIME TO CATCH CANCEROUS POLYPS MISSED BY A GASTROENTEROLOGIST. THAT CAN BE HUGE FOR HEALTH CARE. ED:
WE ARE LOOKING FORWARD TO WATCHING THAT ALONG WITH YOU, MANAGING DIRECTOR AT INSIGHT PARTNERS, THANK YOU FOR JOINING CAROLINE AND I ON THE SHOW. IN CRYPTO MOODY'S IS WORKING ON A SCORING SYSTEM FOR STABLECOINS , THE CRYPTO SECTORS MOST TRADED TOKENS DESIGNED TO MAINTAIN VALUE WITH A LESS VOLATILE ASSET. THE PROJECT IS STILL IN EARLY STAGES AND WILL NOT REPRESENT AN OFFICIAL CREDIT RATING. AND WE GET A LOOK AT THE LIST OF WALL STREET HEAVYWEIGHTS FTX OWES MONEY TO INTRUDING GOLDMAN SACHS, J.P. MORGAN CHASE, WELLS FARGO. BIG NAMES. BANKRUPTCY COURT DOCUMENTS REVEALED THE LIST. OTHER
CREDITORS INCLUDE U.S. GOVERNMENTAL DEPARTMENTS, FOREIGN AND DOMESTIC SECURITIES REGULATORS. THE DISCLOSURE DOES NOT REVEAL THE NATURE OR SIZE OF THE DEBTS.
CAROLINE: COMING UP, SUCCESSION GOES VIRAL. WE DISCUSSED THAT NEXT. THIS IS BLOOMBERG. CAROLINE: GOING VIRAL TODAY. HAVE YOU SEEN THE NEW TEASER FOR THE SEASON FOUR OF HBO'S SUCCESSION? THE MARCHED WHEN HE FOURTH SEASON PREMIERE WAS TRENDING ACROSS SOCIAL MEDIA. HBO'S HAS AN AVERAGE OF 6.1 MILLION VIEWERS WATCHED SEASON THREE.
THE SEASON THREE FINALE HELD 1.7 MILLION VIEWERS THAT TUNED IN LIFE. SECESSION, WHITE LOTUS, SOME OF THESE KEY TALKED ABOUT ONCE. THEY ARE NOT SOME OF THE MOST POPULAR IF YOU LOOK AT NUMBERS. ED:
I GET WHY THE BLOOMBERG FAMILY WOULD BE INTO SUCCESSION. THE MONEY BEHIND IT, THE STORIES. THIS IS GOING VIRAL #SUCCESSION. THE VIDEO ON TWITTER HAS 1.5 MILLION VIEWS. PEOPLE GET EXCITED ABOUT THIS AND GET TO TALKING ABOUT IT BECAUSE THEY LOVE THE STORIES.
CAROLINE: COMPARED TO YOUNG SHELDON, AVERAGE AUDIENCE 7 MILLION, WAY MORE THAN SUCCESSION. YELLOWSTONE SEASON FIVE IS GETTING 12 MILLION IN OVERALL VIEWERSHIP. PERHAPS AS MUCH FUROR IT GETS, SUCCESSION IS JUST REALLY GOOD AT MARKETING ITSELF ON SOCIAL MEDIA. ED:
A CASE OF MARK -- KNOWING YOUR AUDIENCE, I GUESS. CAROLINE: MAYBE WE ARE IT. FROM HERE IN SAN FRANCISCO, I HAVE TO GET ON A PLANE. ED: THANK YOU FOR BEING HERE. CHECK OUT OUR PODCAST AND
2023-01-27