Bloomberg Technology 12/19/2023
>> OF THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS "BLOOMBERG TECHNOLOGY" WITH CAROLINE HYDE AND ED LUDLOW. ♪ CAROLINE: I'M CAROLINE HYDE IN NEW YORK. ED LUDLOW IS OFF TODAY. THIS IS "BLOOMBERG TECHNOLOGY." APPLE RACES TO TWEAK ITS SMARTWATCH SOFTWARE.
DETAILS AHEAD IN THE CONVERSATION. ONE ARGUES THE DEVICE INFRINGES PATENTS. A BLUE ORIGIN ROCKET TAKES TO THE SKY FOR THE FIRST TIME IN 15 MONTHS, PAVING THE WAY FOR PEOPLE TO START FLYING ON NEW SHEPARD AGAIN. WE WILL SIT DOWN WITH A GUEST AS HE RETURNS TO THE SOFTBANK OPPORTUNITY FUND.
THAT CONVERSATION AND SO MUCH MORE COMING UP THIS HOUR. FIRST, A CHECK ON THE MARKETS. NASDAQ IS ON QUITE A ROLL. THE NASDAQ 100 HITTING THE INTRADAY RECORD HIGH, UP 0.2%. THE 10 YEAR PULLING BACK WITH OPTIMISM THE FEDERAL RESERVE IS DONE ON ITS RATE HIKE AND WE WILL BE SEEING RATE US AS SOON AS MARCH NEXT YEAR. WE LOOK AT NEW YORK CRUDE UP
MORE THAN 2%. GEOPOLITICAL TENSION WITH AN ISSUE IN THE RED SEA AND THE TRAVELING OF OIL WILL TAKE MUCH LONGER IF THEY HAVE TO BYPASS THAT PARTICULAR ROUTE. WE LOOK AT THE WORLD OF CRYPTO BECAUSE THE DOLLAR HAS BEEN FALLING AWAY BUT SO HAS BITCOIN. STILL AT $42,300 LEVEL. WE WILL HAVE A CONVERSATION ON ULTIMATELY WITH THE ETF IS LINED UP TO. GET A LIQUID ETF BY JANUARY AS SANCTIONED BY THE SEC? JOINING US NOW, CHAD ANDERSON, THE AUTHOR OF "THE SPACE ECONOMY." THE SPACE ECONOMY GOT A RETURN
OF A KEY PLAYER. HOW IMPORTANT WAS THIS TO GO AS WELL AS IT SEEMINGLY DID? >> IT SEEMED TO GO FLAWLESSLY. GREAT TO SEE THAT AFTER 15 MONTHS, A PRETTY EXTENDED PERIOD FOR ANY VEHICLE TO BE OFF-LINE, I THINK A LOT HAS TO DO WITH SOME REGULATORY CHECKS THAT NEED TO HAPPEN BEFORE A VEHICLE EXIT -- VEHICLE LIKE THIS COMES BACK ONLINE, BUT I THINK BLUE ORIGIN IN THEIR CULTURE AND DNA SINCE THE BEGINNING ARE VERY METHODICAL AND SLOW. THEY WANT TO GET EVERYTHING RIGHT. SLOW IS SMOOTH AND SMOOTH IS
FAST HAS BEEN THEIR MOTTO. GREAT TO SEE IT COMING BACK ONLINE. BUT I THINK THE COMPANY HAS BIG AMBITION AND WILL NEED TO STEP IT UP AND START MAKING MOVES TO HELP THAT HAPPEN. CAROLINE:
LET'S TALK ABOUT THOSE MOVES BECAUSE NOT ONLY THE LAUNCH OF THE 24TH WAS A REUSABLE ROCKET DOING WELL BUT ULTIMATELY A CHANGING OF THE GUARD AT THE HELM OF BLUE ORIGIN. WE HEARD FROM JEFF BEZOS SAYING WE NEED TO BE MORE DECISIVE. HOW DO YOU SEE THAT BECOME A REALITY? CHAD: IS GREAT TO SEE. -- IT IS GOOD TO SEE. LOOK, YOU HAVE SPACEX AND BLUE
ORIGIN, BOTH FOUNDED IN 2002. BOTH HAVE SIMILAR AMBITIONS AND SIMILAR FUNDING. BEZOS CONTINUES TO FUND HEAVILY INTO BLUE ORIGIN WITH ANOTHER COUPLE BILLION DOLLARS THIS YEAR , WHICH BRINGS HIS TOTAL INVESTMENT INTO THE COMPANY SOMEWHERE AROUND $10 BILLION, WHICH IS SLIGHTLY MORE THAN WHAT SPACEX HAS RAISED. BUT IF YOU LOOK AT THE TWO COMPANIES AND WHAT THEY HAVE ACHIEVED, SPACEX DOMINATES THE LAUNCH MARKET.
THEY ARE LAUNCHING ALMOST 100 TIMES THIS YEAR. THEY ARE TAKING NASA ASTRONAUTS TO THE SPACE STATION. LOTS OF HIGH-PROFILE CLASSIFIED MISSIONS FOR THE DEPARTMENT OF DEFENSE. THEY ARE IN POLE POSITION TO LAND NASA ASTRONAUTS ON THE MOON. MEANWHILE, BLUE ORIGIN HAS NEW SHEPARD FLYING AND THEY HAVE BIG ASPIRATIONS AND INTERESTING THINGS IN THE WORKS, BUT 20 YEARS LATER, YOU WOULD LIKE TO SEE SOME OF THOSE THINGS START TO COME ONLINE. BEZOS IS CONFIDENT IN THEIR LARGER ORBITAL VEHICLE WILL COME ONLINE NEXT YEAR SO NEXT YEAR SHOULD BE PRETTY BIG FOR THE COMPANY. CAROLINE:
TO THAT END, WE REMIND OUR YOU ARE AN INVESTOR IN SPACEX. ULTIMATELY, THE BUSINESS MODELS HAVE BEEN DIFFERENT AND THERE IS A FOCUS ON SPACE TOURISM FROM BLUE ORIGIN. IS THERE ENOUGH MARKET SHARE AND REWARD FOR THIS AMOUNT OF PLAYERS WITHIN THE SPACE TO PARDON THE PUN? CHAD: SURE. THE WORLD RUNS ON SPACE TECHNOLOGY. GPS IS THE MOST VISCERAL, MOST PERSONAL EXAMPLE THAT YOU CAN GIVE.
SOME OF THE MOST SUCCESSFUL SPACE TECHNOLOGY HAS CONTRIBUTOR TRILLIONS OF DOLLARS. THE SPACE ECONOMY AN OPPORTUNITY IS MUCH LARGER THAN JUST ROCKETS AND HARDWARE. WITH THE LAUNCH TODAY, THAT IS WHAT WE ARE TALKING ABOUT TODAY.
IT MAKES THINGS LOOK EASY. THE LAUNCH TODAY WAS FLAWLESS AND MAKES THINGS LOOK EASY, BUT OF THE 100 PLUS COMPANIES THAT HAVE RAISED $27 BILLION OVER THE LAST 10 YEARS, THERE ARE ONLY THREE THAT ARE OPERATIONAL, SPACEX, ROCKET LAB, AND NEW SHEPARD IF YOU COUNT IT AS A SUBORBITAL VEHICLE. THERE IS ACTUALLY ONLY TWO. SEE IF DOES WE WILL SEE IF -- WE WILL SEE IF ULA COMES ONLINE. WE CAN USE SOME COMPETITION HERE.
COMPETITION SPURS LOWER COST AND MORE ENTRANTS AND MORE INNOVATION. WITH ONLY A COUPLE OF PRIVATELY FUNDED PLAYERS, WE COULD DEFINITELY USE SOME MORE. CAROLINE: IS THE VENTURE CAPITAL THEY ARE TO BACK SUCH COMPETITION? IS THERE AN INTERNATIONAL COMPETITION WE NEED TO SEE? CHAD: WE HAVE BEEN OPERATING IN SPACE FOR DECADES BUT IT HAS ONLY BECOME A CATEGORY RECENTLY FOR SPACE X FROM NO PRIVATE OPPORTUNITY 10 YEARS AGO. ON THE HEELS OF SPACEX, WE HAVE SEEN $280 BILLION INVESTED IN 1800 COMPANIES THE LAST 10 YEARS. THERE IS A LOT MORE ACTIVITY HAPPENING TODAY, AND MOST OF THAT IS COMING FROM VENTURE CAPITAL. THREE QUARTERS OF ALL OF THE ROUNDS THAT HAVE GONE THAT MAKE UP THE $280 BILLION ARE FROM VENTURE CAPITAL AND TWO THIRDS OF THE CAPITAL IS COMING FROM VENTURE CAPITAL. A LOT OF ACTION IS HAPPENING IN
THE U.S., A SIGNIFICANT PORTION OF IT, BUT THIS IS AN INTERNATIONAL PLAY. GEOPOLITICS ARE PLAYING IN THIS IN A BIG WAY. PERMITS AROUND THE WORLD I
WAKING UP TO IT AND THEY KNOW IT GIVES POSITIONING, GEOSPATIAL INTELLIGENCE, AND INTELLIGENT ABOUT -- INTELLIGENCE ABOUT THE MOVEMENT OF GOODS AND THE EARTH SURFACE AND IS CONNECTING US THROUGH SATELLITE CONNECTIONS LIKE STARLIKE HELPING TO KEEP THE UKRAINIANS CONNECTED, FOR EXAMPLE, BUT CONNECTING REMOTE PARTS OF THE PLANET AS WELL. THIS IS CRITICAL NATIONAL INFRASTRUCTURE NOT JUST FOR THE U.S. BUT FOR MANY COUNTRIES, AND WE ARE SEEING INCREASED ACTIVITY ACROSS THE GLOBE. CAROLINE: WHETHER IT COMES FROM JEFF BEZOS OR AMAZON OR SPACEX AND MORE BROADLY ABROAD AS WELL. SO GOOD TO CATCH UP WITH YOU. THANK YOU SO MUCH. MEANWHILE, LET'S SHIFT GEARS A
LITTLE BIT AND LOOK AT ALPHABET RIGHT NOW BECAUSE IT WOULD HAVE TO PAY $700 MILLION AND ALTER ITS POLICIES TO SETTLE CLAIMS THAT GOOGLE PLAY UNLAWFULLY DOMINATES THE APPLICATIONS MARKET. OUR GUEST JOINS US ON THIS ANTITRUST CASE. THIS WAS ATTORNEY GENERAL PUTTING THIS FORWARD ON BEHALF OF MILLIONS OF CONSUMERS ULTIMATELY. WHAT ARE THE POLICIES THAT WILL HAVE TO CHANGE? >> YEAH, SO THIS WAS A CASE BROUGHT TOGETHER BY 36 STATE ATTORNEYS GENERAL BUT THE SETTLEMENT WAS SIGNED BY ALL 50 SO THIS WILL APPLY ACROSS THE COUNTRY. GOOGLE AGREED TO PLAY 70, BUT THE BIGGER TO JUST -- BUT THE BIGGER CHANGES ARE THAT IT WILL NOT REQUIRE SAMSUNG AND MOTOROLA TO HAVE THE PLACE TO BE EXCLUSIVELY AND THE ONLY APP STORE AVAILABLE ON PHONES.
IT WILL ALSO ALLOW DEVELOPERS TO USE ALTERNATIVE PAYMENT SYSTEMS. INSTEAD OF JUST USING GOOGLE PLAY, YOU MIGHT BE ABLE TO USE THINGS LIKE SQUARE OR VENMO OR PAYPAL. THEY ALSO WILL BE ALLOWED TO TELL CONSUMERS A LITTLE BIT MORE ABOUT WHETHER THEY CAN GET CHEAPER OPTIONS ELSEWHERE. FOR EXAMPLE, THEY CAN SAY, HEY, IF YOU AGREE TO SIGN UP FOR OUR SUBSCRIPTION ONLINE INSTEAD OF THROUGH THE OUTCOME, WE WILL GIVE YOU A THREE DOLLARS DISCOUNT -- A THREE DOLLAR DISCOUNT. THEY MIGHT HAVE A LINK TO THEIR
WEBSITE WHERE YOU CAN GET A CHEAPER PRICE. CAROLINE: ALL OF THIS BEGS THE QUESTION POST THE EPIC GAMES LAWSUIT, AND THEY SAID THEY WILL BE FIGHTING THAT ONE, BUT ULTIMATELY THIS IS QUESTIONING THE BUSINESS MODEL NOT JUST OF ALPHABET, GOOGLE, BUT ALSO APPLE. AND IT LEADS INTO A HOLE FEELING THAT ANTITRUST IS ON FIRE RIGHT NOW. YOUR BEAT IN PARTICULAR, THE FACT THAT WE ARE SEEING CASE AFTER CASE BEING BROUGHT AN M&A FALLING APART.
AM I FEELING RIGHT THAT IT HAS UPPED THE ANTE? LEAH: ANTITRUST USUALLY TAKES A LOT OF TIME SO THE CASES WE TALKED ABOUT THAT HAVE COME TO FILE THIS YEAR WERE FILED OR STARTED IN 2019, 2020. IT HAS TAKEN A LONG TIME BUT WE ARE STARTING TO SEE RESULTS OF THE EXCESS ENFORCEMENT THAT HAS BEEN BREWING UP TO THIS POINT. WITH THE ANTITRUST ENFORCERS, THE FTC AND JUSTICE DEPARTMENT, THEY HAVE BEEN CHALLENGING A LOT MORE DEALS. WE HAD A STORY EARLIER THIS WEEK ABOUT HOW THEY CHALLENGED A RECORD NUMBER OF 50 DEALS LAST YEAR, WHICH IS MORE THAN ANY SINCE THEY STARTED LOOKING AT DEALS BEFOREHAND IN THE 1970'S. CAROLINE: WELL, YOU PUT THE CONTEXT THERE FOR US. THESE THINGS TAKE A LONG TIME BUT THEY SEEM LIKE BUSES WHEN THEY COME AT ONCE.
YOU HAVE BEEN BUSY. THANK YOU. COMING UP, WE WILL BE SITTING DOWN WITH TECHNOLOGY ENTREPRENEURS AND ONE KEY INVESTOR ON HIS RETURN TO SOFTBANK'S OPEN OPPORTUNITY FUND, AND WE LOOK AT THE IMPACT ON DIVERSE FOUNDERS. ALSO, LET'S KEEP AN EYE ON SOME PUBLICLY TRADED COMPANIES. BLOCK IS UP 4%. WALMART HAS BEEN EXPANDING. WE HAVE TO FOCUS IN ON SOME OF THESE FINTECH NAMES ON THE DATE.
PERHAPS KATHY WOOD HAS BEEN EXITING BUT WE ARE UP 3.7% TO THAT END. CAROLINE: OPEN OPPORTUNITY FUND ANNOUNCED THAT MARCELLO THIS COMING BACK AND RETURNING TO THE COMPANY AS VICE CHAIRMAN AND GENERAL PARTNER. HE IS JOINING US NOW AND THE CHAIRMAN WHO MANAGED TO LURE HIM BACK. ALREADY, FUND 1, 1 HUNDRED MILLION DOLLARS PUT TO WORK.
CAN YOU SAY HOW YOU MANAGED TO MAKE AN IMPACT AND HOW WE HAVE SEEN 7X? SO FA -- 7X SO FAR? >> THEY ARE GOING AT 100% YEAR-OVER-YEAR, ALL OF THEM. THIS SHOWS THAT EVEN THOUGH MINORITY FOUNDERS ARE OFTEN OVERLOOKED, WHEN GIVEN THE CHANCE, THEY OVERCOME AND OUTPERFORM. CAROLINE: OFTEN IT IS FELT IF YOU CANNOT SEE IT, YOU CANNOT BEAT IT. HERE WE SEE A LATINO FOUNDER AND A BLOCK OPERATOR AND FOUNDER.
PEOPLE REALIZE IT CAN BE DONE, BUT IT IS HARD. WHY DID SOFTBANK LET YOU BUY IT? MARCELO: THIS WAS SOMETHING THAT I STARTED AT SOFTBANK IN JUNE OF 2020 WHEN THE WHOLE BLACK LIVES MATTER WAS A BIG PROBLEM. IT BOTHERED ME TO SEE SO MANY PEOPLE TALK AND SAY WE STAND BEHIND THE BLACK COMMUNITY, BUT REALLY NOBODY WAS DOING ANYTHING. SO I SAID, HEY, WHY DON'T WE DO THIS? WE ARE A VENTURE CAPITAL FIRM SO WHY DON'T WE START A FUND TO HELP BLACK AND LATIN ENTREPRENEURS? WE STARTED THIS FUND.
WE INVITED PAULETTE LAUNCHED AND IT HAS BEEN PROVEN TO BE SUCCESSFUL -- PAUL AND LAUNCHED AND IT HAS BEEN PROVEN TO BE SUCCESSFUL. I DON'T THINK THERE IS A BETTER DUO THAN A HISPANIC ENTREPRENEUR AND INVESTOR WITH PAUL, WHO IS ONE OF THE BEST BLACK INVESTORS AND OPERATORS. SO WE ARE READY TO TACKLE THE 75 COMPANIES AND ARE ALREADY STARTING TO RAISE FOR FUND NUMBER TWO.
A LOT A PEOPLE ALWAYS SAY WE ARE HERE TO HELP, BUT THIS IS SOMETHING I AM INCREDIBLY PASSIONATE ABOUT. I AM A HISPANIC FOUNDER. WHEN I STARTED, I STRUGGLED TO RAISE CAPITAL, AND IT IS SOMETHING CLOSE TO MY HEART. I WANTED TO RAISE CAPITAL BUT FOR MY COMPETITORS, IT WAS EASY FOR THEM TO RAISE CAPITAL. I WANT TO MAKE SURE IT IS EASY
FOR SUCCESSFUL BLACK AND LATINO ENTREPRENEURS TO HAVE A FUND SOLELY DEDICATED TO THEM. CAROLINE: SOME OF THE SECURITY-BASED COMPANIES YOU FOUNDED, YOU ARE A THREE-TIME FOUNDER, YOU HAVE DONE IT ALONGSIDE OTHER PEOPLE OF COLOR AND THE RETICENCE FOR PEOPLE TO ALLOCATE THE CHECKS. SOFTBANK WILL BE A KEY INVESTOR IN FUND TWO.
BUT WHO ARE THE OTHER INSTITUTIONS? HOW GALVANIZED ARE THEY TO STILL GIVE MONEY AT THIS POINT? PAUL: I THINK THERE IS A LOT OF ORGANIZATIONS THAT THEY KNOW THIS IS THE RIGHT THING TO DO. BUT WE HAVE PROVEN WITH FUND ONE IT IS ALSO THE PROFITABLE THING TO DO. FUND ONE IS OUTPERFORMING, DELIVERING TOP RETURNS.
WHEN YOU LOOK AT THE PORTFOLIO, OVER 80% OF COMPANIES WE INVESTED IN OUR B2B SOFTWARE COMPANIES SO THEY ARE AREAS WHERE MINORITY FOUNDERS HAVE A POINT LIKE EDUCATION, FINANCE, WORKFORCE DEVELOPMENT, HEALTH CARE, BUT HALF OF THOSE COMPANIES ARE SOLVING SOME OF THE HARDEST PROBLEMS IN AI AND CYBERSECURITY SO WE SEE ORGANIZATIONS WHETHER IT BE ENDOWMENTS OR PENSION FUNDS OR INSTITUTIONAL INVESTORS SUPPORTING US IN FUND TWO AND BEYOND. CAROLINE: TRYING TO FIX ACCESS TO REAL ESTATE AND CREDIT CHECKING. WHEN YOU THINK ABOUT THE FOUNDRIES YOU WANT TO BACK AT THE MOMENT, WHERE ARE YOU FINDING THEM? YOU ARE SOMEONE BUSY LOOKING IN LATIN AMERICA FOR BUTTON AMERICA -- FOR LATIN AMERICAN FOUNDERS. MARCELO:
I HAVE BEEN BUYING INTERESTS OF A LOT OF DIFFERENT FUNDS IN BRAZIL. THE GROWTH FUND IN LATIN AMERICA, A COUPLE OF PARTNERS WITH A PRIVATE EQUITY COMPANY, AND SO ON. IN THIS NEW PART OF MY LIFE TO MY WANT TO MAKE SURE I AM BACKING SUCCESSFUL PEOPLE SO I CAN PASS ON MY CAPITAL, EXPERIENCE, CONTACTS. THIS IS A LITTLE BIT DIFFERENT
BECAUSE THIS FUND IS REALLY PERSONAL TO ME AND THIS IS SOMETHING I AM INCREDIBLY PASSIONATE OF HELPING. I THINK BLACK AND LATINO FOUNDERS ARE AS GOOD AS ANY OTHER FOUNDERS BUT SOMETIMES ARE NOT GIVEN THE OPPORTUNITY. I WILL BE TWO OF MY FAVORITE AREAS OF INTEREST NOW THAT PROBABLY TWO OF MY FAVORITE AREAS OF INTEREST NOW. CAROLINE:
THIS HAS BECOME POLITICIZED NOW BECAUSE OF THE USE OF WHICH THE SUPREME COURT THINKS ABOUT HOW MONEY AND INDEED ALLOCATIONS TO PEOPLE GETTING TO GET ARRESTED AND ALLOCATIONS OF MONEY TO DIVERSE PEOPLE. I AM INTERESTED WHEN YOU HAD ANY POLITICAL PUSHBACK FROM LPS WANTING TO GET INTO A FUND OR WHETHER YOU STILL FEEL PEOPLE BELIEVE IN PROFITS OVER IT. MARCELO: I AM A HUGE BELIEVER. WHEN I FIRST STARTED MY FIRST COMPANY COME I NEVER USED THE LATINO CARD BECAUSE I HATED TELLING PEOPLE TO GIVE ME PREFERENTIAL TREATMENT BECAUSE I AM LATINO. THAT IS WRONG. WE HAVE A PROVEN MODEL. THE FOUNDERS WE ARE BACKING ARE AS GOOD AS ANY OTHER FOUNDERS BUT PEOPLE SHOULD NOT INVEST WITH US BECAUSE IT IS JUST LET'S HELP BLACK AND LATINO. WE DON'T WANT THAT. WE WANT THEM TO RECOGNIZE THE FUND AS A TOP FUND WITH AMAZING FOUNDERS AND ENTREPRENEURS. YOU HAVE TO TRY SOMETIMES TWICE
AS HARD AS A BLACK OR LATINO ENTREPRENEUR, BUT ONCE YOU ARE THERE, THEY ARE JUST AS CAPABLE AS ANYONE ELSE. WE DON'T WANT PEOPLE TO GIVE US MONEY BECAUSE IT FEELS GOOD TO BACK BLACK AND LATINOS. WE WANT PEOPLE TO UNDERSTAND THERE IS A GREAT BUSINESS MODEL HERE, THAT THESE FOUNDERS ARE AS GOOD AS ANYBODY ELSE. CAROLINE:
YOU HAVE THE GROWTH THUS FAR. THANK YOU FOR JOINING US. WONDERFUL TO HAVE YOU IN STUDIO. MEANWHILE, COMING UP, WE ANALYZE THE CRYPTO MARKET THAT HAS HAD A BIT OF A RUN UP LATE. KAVITA GUPTA JOINS US. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: I'M FOR TALKING TECH NOW.
FIRST UP, RESHUFFLING. A CHAIRMAN WILL RETIRE IN 2024 AND CEDE HIS ROLE. HIS REPLACEMENT IS THE DRIVING FORCE BEHIND THE ADVANCED PACKAGING BUSINESS PRODUCING CHIPS FOR APPLE AND NVIDIA. MICHAEL DELL CONGRATS IS DOUBLING DOWN ON THE BITCOIN APPROVAL FOR JANUARY. HE TOLD CNBC HE EXPECTS SEC APPROVAL FOR JANUARY 10.
THERE ARE PLANS TO LAUNCH A BITCOIN ETF, ONE OF MANY. LET'S DISCUSS THE STATE OF THE CRYPTO MARKET. I HAVE A FEELING AS WE ENTER THE HOLIDAY SEASON SOME OF THE CONVERSATIONS AROUND THE DINNER TABLE ARE EASIER AT THE MOMENT WITH THE RUN OF BITCOIN. HOW DO YOU FEEL ABOUT JANUARY 10 OR AT LEAST SOME SORT OF DATE BEING VIEWED AS THE ONE WHERE WE GET A BITCOIN ETF? KAVITA: IT IS TIME. THIS HAS BEEN GOING ON FOR TOO LONG AND THE SEC HAS NEVER GIVEN CLARITY ON WHY NOT. SETTING UP A DAY, IT IS
COUNTING YOUR DAYS AND WALKING IN FOR APPROVAL AND HAVING AN INSTITUTIONAL BUYING INTO THE SPACE. I AM VERY EXCITED AND HAVE TWEETED THIS BECAUSE LAST YEAR DURING THIS TIME EVERYBODY WAS TEXTING ME AND ASKING ME, ARE YOU DOING OK? WHAT DO YOU NEED FOR NEW YEAR'S? THIS YEAR, ALL I AM HEARING ABOUT IS HOW TO BUY CRYPTO FOR MY BOYFRIEND AND MY DAD. I COULD THIS WILL BE A LITTLE CRAZY NEW YEAR, WHICH MAY OR MAY NOT BE ENJOYABLE FOR ME. CAROLINE: EVERYONE GRAVITATES TO BITCOIN, BUT IS THE CRYPTO OF CHOICE AT THE MOMENT THE AREA PEOPLE WILL BE GALVANIZED BY SUCH AN ETF OR WILL IT SPILL OVER? AND WHAT ABOUT SOME OF THE PROJECTS YOU HAVE BEEN ANALYZING? KAVITA: I THINK TECHNOLOGY WILL CONTINUE TO BE THE HEART OF THIS WILL INDUSTRY.
LIKE OLD COINS ITSELF, TECHNOLOGY COINS ACTUALLY FROM DIFFERENT LABELS AND PROJECTS HAVE ALSO FUELED UP REALLY HIGH. ONE OF THE MAJOR PROJECTS I AM A HUGE FAN OF, POLYGON, IT WENT DOWN TO AROUND $.50 OR $.48 WHEN THE SEC NEWS CAME OUT THAT THEY WERE CLASSIFYING IT AS A SECURITY. THAT HAS JUMPED UP TO $.88, $.90. NOT JUST BITCOIN, BUT OF COURSE, THE WHOLE POSITION OF SEC OR THE MARKET THAT WILL BE A HUGE INSTITUTION INTO THE SPACE ALSO MOVES THE OTHER OLD COINS UP SO WE ARE SEEING IT HAVING A GOOD HOLDING POSITION AT 2.2 FROM THE $1600 POINT IT HAS BEEN LYING AT. ALSO, A LOT OF TECHNOLOGY MARKETS COMING UP, A BUNCH OF THOSE PROJECTS ARE LOOKING AT THE MARKET WITH ADOPTION OF THESE INSTITUTIONS. CAROLINE: TALKING OF INSTITUTIONAL PLAY,
WE HEARD FROM MICHAEL AT GRAYSCALE ABOUT HIS OPTIMISM AROUND ZONE CONVERSION TO AN ETF. TAKE A LISTEN. >> I THINK THE SEC SHOULD AND DOES IN FACT WANT TO CREATE AN EVEN PLAYING FIELD SO WE PUBLICLY HAVE BEEN ADVOCATES OF THE FACT THAT WHEN THE COMMISSION'S WOULD BE TO GIVE THE REQUISITE APPROVALS FOR SPOT PRODUCTS TO COME TO MARKET THAT SHOULD BE DONE ALL AT ONCE. THE ISSUE RS TO COME OUT THE GATE ALL AT ONCE. CAROLINE:
I GATE ALL AT ONCE IN JANUARY -- COME OUT THE GATE ALL AT ONCE IN JANUARY. DO THEY PUT NUMBERS OR THOUGHT TO THAT WHEN AT THE SAME TIME WE ARE STILL HEAVING FROM THE LIKES OF JAMIE DIMON WHO SAYS I WOULD CLOSE IT DOWN IF I WAS IN POWER? KAVITA: EVERY TIME JAMIE DIMON HAS TAKEN THE STAGE AND SAID SOMETHING NEGATIVE ABOUT BITCOIN, THE MARKET HAS REALLY PICKED UP SO HE IS A GOOD SIGN AND A GOOD OMEN FOR US SO HE CAN GO ON SAYING ALL OF THESE THINGS. BUT LOOKING AT 1, 2, OR IF ALL OF THEM COME OUT BASED ON THE APPLICATIONS, BLACKSTONE HAS MADE SOME CHANGES, AND A LOT OF OTHER PLIERS ARE MAKING CHANGES. IT IS A MULTI-BILLION-DOLLAR TO A $1 TRILLION MARKET WE ARE LOOKING INTO. BUT I FEEL LIKE ALSO THE TECHNOLOGY OF CUSTODY ASSOCIATED WITH IT.
THE KNOLOGY OF BEING ABLE TO GIVE IT TO INDIVIDUAL CLIENTS WHO HAVE LIQUIDITY IS ALSO IMPORTANT. CAROLINE: SO GREAT TO CATCH UP WITH YOU. COME BACK IN JANUARY. AND APPLE. ♪ CAROLINE: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." LET'S GET A QUICK CHECK ON THESE MARKETS BECAUSE WHILE WE ARE STILL RALLYING ON NEW HIGHS IN THE NASDAQ 100, WE ARE FADING ON BITCOIN IN THE TENURE BID AS WE ANTICIPATE WE WILL SEE FED CUTS SOON AS MARCH OF NEXT YEAR, BEING ECHOED BY ANOTHER FED MEMBER. BITCOIN OFF BY 1.5%. MAYBE THERE IS SOME PROFIT-TAKING AT THE MOMENT.
ARK HAS BEEN SELLING SOME OF ITS SHARES AT BUT COULD HAPPEN RALLYING TO 43,000. HAVE A LOOK AT SOME INDIVIDUAL NAMES WE ARE LOOKING AT BECAUSE THERE ARE SOME DEALS BEING MADE. WE LOOKING AT A FIRM REALLY RALLYING HARD, DEEPENING UP THE PAY LATER. MARKETING HIGHER ON FURTHER
DEEPENING OF PARTNERSHIPS. I AM LOOKING AT ILLUMINA UP 5%. THIS AS WE SEE AGITATION. COULD WE INDEED SEE THEM TRYING TO IMPACTING THE BUSINESS AS THEY SELL OFF THE ACQUISITION THAT ULTIMATELY WAS PUT OFF BY REGULATORS? ILLUMINA ON THE UPSIDE AS MANY FEEL'S INVESTOR COULD MAKE CHANGES TO THE BUSINESS. MEANWHILE, WE WANT TO TALK ABOUT OTHER AREAS OF CHANGE AND PERHAPS DRAMA BECAUSE ON CHRISTMAS DAY, YOU WILL NO LONGER TO BUY SOME SMARTWATCH DEVICES IN THE U.S. THE COMPANY BATTLES AN ONGOING DISPUTE. FOR MORE, MARK JOINS US NOW
FORGET THIS IS THE CULMINATION OF A DISPUTE THAT CAME OUT FROM OCTOBER. IS THIS POSTURING OR ACTUALLY YOU WILL NOT BE ABLE TO BUY THE APPLE ITSELF? >> THIS HAS BEEN GOING ON FOR QUITE A WHILE. THERE WAS A LENGTHY TRIAL IN CALIFORNIA.
THIS IS IN RELATION TO PATENTS FOR BLOOD OXYGEN SATURATION. THE TECHNOLOGY USED DETERMINES THE AMOUNT OF OXYGEN IN YOUR BLOOD. THEY SUED APPLE OVER THIS, THAT THEY VIOLATE THE PATENTS FOR THEIR APP THAT LAUNCHED IN 2020. THIS IS NO JOKE, NOT POSTURING.
THERE WILL BE AN IMPORT INJUNCTION THAT IS SCHEDULED TO COME INTO PLACE ON CHRISTMAS DAY, DECEMBER 25. APPLE HAS PUT ALL THE MEASURES IN PLACE TO STOP SALES, WHICH REPRESENT THE VAST MAJORITY OF APPLE WATCH SALES. THESE ARE THEIR NEWEST SMARTWATCH IS. THE SALES. ONLINE ON THURSDAY. CHRISTMAS EVE ON THE 24TH, THEY WILL STOP AT 270 U.S. RETAIL SALES SO THIS IS JUST RETAIL STORES SO THIS IS HAPPENING -- RETAIL STORES SO THIS IS HAPPENING.
IT IS UNLIKELY ANYTHING CHANGES. MAYBE THERE IS A SETTLEMENT WERE CROSSLICENSING OR A LICENSING AGREEMENT WITH THE WHITE HOUSE STEPPING IN THE NEXT FEW DAYS, BUT SALES OF THE APPLE WATCH SERIES TWO AND NINE WILL CEASE TO HAPPEN THROUGH APPLE'S DIRECT SALES CHANNELS BY CHRISTMAS. CAROLINE: FASCINATING. GREAT ANALYSIS. THANK YOU FOR BRINGING IT TO US. AS MENTIONED, IT IS A MEDICAL DEVICE MAKER THAT HAS ACCUSED APPLE OF COPYING PATENTED TECHNOLOGY FOR MEASURING BLOOD OXYGEN LEVELS THAT THEY USED IN THEIR SMARTWATCH. JOINING US NOW IS THE FOUNDER AND CHAIRMAN AND CEO OF THE COMPANY, AND IT IS GOING TO HAVE SOME TIME WITH YOU. HAS APPLE IN ANY WAY TURNED TO YOU, TRIED TO MAKE ANY SORT OF AGREEMENT OR NEGOTIATE SOME SORT OF A SETTLEMENT HERE? >> NO, NO THEY HAVEN'T. EVER SINCE 2013 WHEN THEY
CONTACTED ME AND SAID THEY WANT US TO GO IN, MEET WITH THEM BECAUSE THEY WANT TO INTEGRATE OUR TECHNOLOGY, WE HAVE NOT HEARD FROM THEM. INSTEAD, THEY ENDED UP RECRUITING 25 OF MY ENGINEERS, INCLUDING OUR CHIEF MEDICAL OFFICER AND CTO FROM A SPINOFF COMPANY, AND THIS IS NOT AN ACCIDENTAL INFRINGEMENT. THIS IS A DELIBERATE TAKING OF OUR ACTUAL PROPERTY. CAROLINE: YOU SPENT MILLIONS TO TAKE ON APPLE. IS THIS BECAUSE OF YOUR BUSINESS, BUT ULTIMATELY YOU COULD WIN OUT IN TERMS OF THEM PAYING YOU FOR THE USE OF YOUR TECHNOLOGY OR TO SETTLE, OR IS THIS SOMETHING BIGGER? >> FIRST OF ALL, I AM GLAD THE WORLD CAN SEE WE ARE THE TRUE INVENTORS AND CREATORS OF THIS TECHNOLOGY.
WE WANT TO ACTUALLY LET YOU KNOW THAT BY BANNING THE APPLE WATCH, IT IS NO ISSUE BECAUSE APPLE'S INTERNAL DOCUMENTS THAT WE SAW IN COURT SHOWED THAT THEY KNEW THE PRODUCT WAS NOT GOOD ENOUGH TO BE USED MEDICALLY AND THEY DID NOT EVEN SEEK FDA CLEARANCE BECAUSE OF THAT. THEIR OWN TESTING SHOWED THEY GOT TWO MEASUREMENTS A DAY OFF 37% OF THE PEOPLE, THAT'S IT. WE GET OVER 70,000 REGIMENTS A DAY ON EVERYONE. THEY PUSHED THAT ANYWAY BECAUSE THEIR EMAIL SHOWED THEY THOUGHT IN THE CHAOS OF COVID, THIS IS THEIR QUOTATION, THEY COULD GET MARKET SHARE AWAY FROM FITBIT. WHY WE SUED THEM, BECAUSE THIS IS OUR INTELLECTUAL PROPERTY. WE HAVE OUR OWN PRODUCT I AM
SHOWING HERE, AND WE HAVE BEEN IN THE BUSINESS FOR 35 YEARS, NOT ONLY IN CONSUMERS, BUT HOSPITALS. WE JUST GOT FDA CLEARANCE FOR A PRODUCT RECALLS TO WORK, WHICH IS A BABY MONITOR TO HELP PARENTS MONITOR THEIR BABY'S SYMMETRY WHEN THEY ARE NOT ASKED TO THEM. CAROLINE: AN APPLE SPOKESWOMAN SAID THE COMPANY IS WORKING ON SUBMITTING WORKAROUNDS IN THE U.S.
TO THE CUSTOMS AGENCY, AND THAT IS OF COURSE IN CHARGE OF APPROVING CHANGES TO GET BACK IN THE MARKET, BUT YOU JUST SHOWED US YOUR PRODUCT SO DO YOU THINK IT COULD TAKE ANY MARKET SHARE HIT? JOE: ABSOLUTELY. WE ARE FOCUSING FROM HOSPITAL TO HOME RIGHT NOW BUT THERE IS A CONSUMER VERSION OF THE PRODUCT WILL BE INTRODUCING SHORTLY. THIS IS THE FREEDOM WATCH THAT HAS ALL OF OUR BIO SENSING CAPABILITY THAT WE HAVE IN THESE CHIPS, THAT WE PUT ON THE BACK OF THESE WATCHES, AND WITH OUR DISTRIBUTION CHANNEL, WHICH IS ABOUT 20,000 LOCATIONS WITH THE NEAR RECENT ACQUISITION WE MADE, WE HOPE TO PICK A GOOD MARKET SHARE FOR PEOPLE THAT REALLY CARE. PEOPLE WITH CHRONIC ILLNESSES, BUT A THIRD OF THE POPULATION THAT BUYS THESE WATCHES HAVE CHRONIC ILLNESSES, AND THEY BENEFIT FROM A SERIOUS AND ACCURATE PRODUCT. CAROLINE: ULTIMATELY, WHAT COULD HAVE BEEN DONE TO STOP THIS? OBVIOUSLY, APPLE COULD HAVE COME TO YOU AND BOUGHT AND LICENSED THE TECHNOLOGY, BUT WHEN ULTIMATELY BIG TECH COMPANIES OR ANY TECHNOLOGY COMPANIES TAKE TALENT AND EMPLOYEES, THAT IS KIND OF THE WAY IN WHICH BUSINESS IS DONE.
WHAT DO YOU THINK OF ANYTHING YOU COULD HAVE DONE TO STOP YOUR CTO, YOUR CHIEF MEDICAL OFFICER FROM LEAVING? JOE: FIRST OF ALL, NOT EVERY COMPANY DOES THIS. APPLE IS A BIG COMPANY, THE MOST POWERFUL COMPANY. THEY COULD BE AN EXAMPLE OF HOW TO DO THINGS RIGHT AND WELL THEY DID NOT HAVE TO STEAL OUR PEOPLE. WE COULD HAVE WORKED WITH THEM. SECONDLY, THIS WHOLE ITC CASE,
APPLE COULD HAVE NOT BEEN UNDER THEIR JURISDICTION IF THEY MADE THESE WATCHES IN THE USA. THE FACT THAT THEY STILL HAVEN'T , I DON'T KNOW, IT SAYS SOMETHING ABOUT THEIR RELATIONSHIP WITH CHINA. THIS COULD HAVE BEEN AVERTED FOR THEM. ULTIMATELY COME A WE ARE SUING THEM IN THE CALIFORNIA AND DELAWARE COURTS FOR PATENT INFRINGEMENT, AND IF WE WIN WE WILL GET AN INJUNCTION REGARDLESS WHERE THEY MANUFACTURE BUT THIS CASE COULD HAVE BEEN AVERTED BY THEM BY JUST MAKING IT HERE.
THEY REFUSED TO DO THAT. WE MAKE IT HERE. WE MAKE ALL OF OUR SENSORS IN NEW HAMPSHIRE, HUNDREDS OF BILLIONS OF LEDS AND DETECTORS. WE BRING THEM TO IRVINE AND DO THE FINAL MANY FACTORING, SO WHY THEY CANNOT MAKE IT HERE, I DON'T UNDERSTAND. CAROLINE: WOULD YOU SETTLE, JOE? JOE: THE SHORT ANSWER IS YES. DESPITE THEIR LEADERSHIP DOING SOME OF THE THINGS THEY HAVE DONE TO US, NOT JUST OUR COMPANY BUT OTHER SMALLER COMPANIES WHERE THEY DO INFRINGEMENT TO, FOR THE BETTERMENT OF PEOPLE AND ALBERT INVESTOR SHAREHOLDERS, I PUT UP ALL THE BRANCH ON ONE OF THESE NEWS PROGRAMS THAT I WOULD WORK WITH THEM TO IMPROVE THEIR PRODUCT WHERE THEY CAN PUT THESE CHIPS BEHIND THEIR PRODUCT. BUT I HAVE NOT CALLED. IT TAKES TWO TO TANGO -- BUT THEY HAVE NOT CALLED.
IT TAKES TWO TO TANGO. CAROLINE: WHAT DOLLAR AMOUNT WOULD BE RIGHT FROM THE PERSPECTIVE ON YOUR PART? JOE: THEY HAVE NOT EVEN ASKED. CAROLINE: WHAT WOULD BE YOUR STARTING NUMBER? SAY I AM APPLE ON THE PHONE. JOE: I AM NOT NEGOTIATING ON TV. THERE NEEDS TO BE AN HONEST DIALOGUE THERE NEEDS TO BE AN APOLOGY. THESE GUYS HAVE BEEN CAUGHT WITH THEIR HANDS IN THE COOKIE JAR.
INSTEAD OF BEING EMBARRASSED AND DOING THE RIGHT THING, THEY ARE BLAMING EVERYBODY IN FIGHTING EVERYBODY. IN 2012 WHEN THEY DECIDED TO MAKE THE WATCH, THEY DECIDED THE MOST IMPORTANT FEATURE, BUT THEY COULD NOT DO IT SO THEY CREATED A PROJECT CALLED ROVER TO SEE WHO CAMP THEY FOUND 50 COMPANIES , AND IN THEIR OWN INTERNAL DOCUMENTS, THEY SAID THERE ARE TWO STANDOUT COMPANIES, BOTH RUN BY ME. THEY WENT TO TIM COOK AND SAID WE SHOULD BUY THEM TO GET JOE AND ALL THE TECHNOLOGY. THEY CALLED ME THE STEVE JOBS OF THE HEALTH-CARE INDUSTRY, BUT TIM COOK SAID NO, YOU GET THE SAME RESULT BY SMART RECRUITING, SO WHAT DID THEY DO? I WAS PAYING MY PEOPLE 90% TILE. NOT LIKE I DO NOT PAY OUR
PEOPLE WELL. THEY BEGIN DOUBLING THEIR SALARIES AND BONUSES. SOME OF THEM THEY GAVE MILLIONS OF DOLLARS TO GET THERE. SOME IN UNLABELED BUILDINGS BLOCKS FROM ME THAT DID NOT WANT TO MOVE TO NORTHERN CALIFORNIA. THIS IS NOT NORMAL BUSINESS. CAROLINE: WE WILL PUT THAT TO APPLE.
COULD THEY FIX THIS SOFTWARE? JOE: SOFTWARE, I DON'T THINK THAT COULD WORK. IT SHOULDN'T BECAUSE OUR PATENTS ARE NOT ABOUT THE SOFTWARE. IT IS ABOUT THE HARDWARE WITH THE SOFTWARE, BUT THEY COULD DO A LOT OF THINGS DIFFERENTLY. MAYBE IT IS TIME THEY THINK DIFFERENT OR ACT DIFFERENT.
CAROLINE: WHAT ABOUT THE ADMINISTRATION? HAVE THEY BEEN IN TOUCH OR LOOKING FOR A DIFFERENT BEHAVIOR? JOE: I BELIEVE SO. THE ADMINISTRATION HAS BEEN CRITICAL OF THE TOP FOUR TECH COMPANIES, SAYING THEY ARE STEPPING ON SMALLER RIVALS AND THEY WILL TRY TO DEFEND THAT, SO I DON'T EXPECT THE PRIME MINISTER TO STEP IN HERE. EVERY TIME APPLE CONTACTS THEM, I GUESS BY LAW THEY HAVE TO CALL US TO GET OUR RESPONSE, SO WE HAVE BEEN IN CONTACT WITH THEM, AND WE DON'T THINK THEY WILL INTERVENE.
I THINK THE RECENT STUNT TO PULL THE PRODUCTS OFF THE MARKET EARLIER THAN THE ITC DECIDED IT SHOULD BE PULLED OFF THE MARKET, THEY ARE TRYING TO PUT THE PUBLIC TO FORCE THE BIDEN ADMINISTRATION TO DO SOMETHING THEY DON'T THINK THEY SHOULD DO, BUT I DON'T THINK IT WILL WORK. CAROLINE: JOE, FASCINATING TALKING TO YOU. YOU WILL NOT NEGOTIATE WITH ME ON TO BEAT, BUT WHEN OR IF YOU NEGOTIATE WITH APPLE, LET US KNOW. JOE: HOW MUCH FOR THE WATCH? IS THAT WHAT YOU WANT ME TO DO? CAROLINE: WE WILL SEE YOU.
COMING UP, WE WILL TALK ABOUT THE HEALTH OF VENTURE CAPITAL IN 2024. PITCHBOOK HAS ITS OUTLOOK OUT CAROLINE: FINANCIAL DATA AND RESEARCH FIRM PITCHBOOK THIS OUT FOR ITS 2024 VENTURE CAPITAL OUTLOOK AND WE WANT TO BREAK DOWN THE FINDINGS WITH YOU. KYLE STANFORD IS HERE FROM PITCHBOOK.
IT HAS NOT BEEN THE PRETTIEST PICTURES FOR 2023. WE ARE EXPECTING VC ALLOCATION OF FUNDS TO PICK UP IN 2024? KYLE: MAYBE A LITTLE BIT. WE ARE NOT LOOKING AT 2024 AS A FULL REBOUND FOR VENTURE, BUT CERTAINLY FUNDRAISING IS ONE AREA A LOT OF PEOPLE ARE INTERESTED IN. WE LOOKED AT OUR DISTRIBUTION DATA FOR THE NEXT FOUR QUARTERS AND WE SEE IT A RELATIVELY SIMILAR OR MAYBE UPTICK IN FUNDRAISING BUT NOT INCREDIBLE STRONG. WELL BELOW THE RECORDS OF 2020 AND 2021.
IT WILL BE WELL BELOW THE HISTORICAL GROWTH TREND, BUT WITH THAT DESCRIPTION DATA, THERE CAN ALWAYS BE $1 BILLION FUNDS THAT ARE RAISED AN INCREASE THE TOP LINE FIGURE TO A MORE ACCEPTABLE LEVEL FOR THE VC MARKET. CAROLINE: WE ARE LOOKING AT THE CHART OF ANNUAL VC PUBLIC BACKED VALUES LIKE WHERE THE EXITS COME FROM AS WELL, AND THAT IS GOING TO FEED BETTER, DO YOU THINK? WILLIE GET PUBLIC EXITS, MORE INTEREST IN MONEY BEING HANDED TO LPS AND LPS WANTING TO RECOMMIT? KYLE: I THINK TO EXPECT IT TO BE THIS RECORD YEAR ANYWHERE IN YOUR WHAT WE SAW IN 2021 IS PROBABLY A FOOLS ERRAND, BUT WHEN YOU LOOK AT WHERE THE IPO'S HAPPENED AND WHAT HAPPENED THIS YEAR, 39 SO FAR, MORE THAN HALF OF THOSE ARE IN HEALTH CARE. THEN YOU LOOK AT 720 UNICORNS IN THE U.S., IN THE U.S., AND A LOT OF MONEY STUCK IN THE PRIVATE MARKETS, BUT WE ARE ENTERING A YEAR WITH A LITTLE BETTER ECONOMIC SIGNALS THAT WE DID IN 2023.
RUSSELL 2000 GROWTH IS UP 12% LAST MONTH. PRICE OF SALES RATIOS ARE EXPANDING IN THE PUBLIC MARKETS, AND WE WILL GET TO A SPOT WHERE FOUNDERS OF COMPANIES ARE ABLE TO COMPROMISE ON A PRICE THAT WORKS FOR THEM AND GET OUT OF THE PUBLIC MARKET. THAT IS WHAT WE SEE. IT WILL NOT BE A GREAT YEAR BUT IT SHOULD BE BETTER THAN THIS YEAR. CAROLINE: THE NASDAQ 100 HAS A RECORD HIGH THAT HAS TO DO WITH THE MAGNIFICENT SEVEN. I AM INTERESTED TO KNOW IF WHO
IS COMMITTING TO THE WORLD OF VC. ARE WE SEEING A TYPICAL LP COMING IN AT THE MOMENT? ARE YOU SEEING DIFFERENT TYPES OF COMMITMENTS FROM INSTITUTIONS OR ARE THEY GOING DIRECT AND COMING OUT OF VC AND GOING TO THE STARTUPS THEMSELVES? KYLE: I LOCATION -- THE TWO VC'S WILL NOT GET CUT BUT LPS TRY TO FIND THEIR BALANCE. 2022, THE STOCK MARKET SHOCK, UNBALANCING PORTFOLIOS, NOT ALLOWING THEM TO COMMIT, NOW WE ARE SEEING A REBALANCING OF THE BROADER MARKET. THEY KNOW WHERE THEY SIT AND WHERE THEY CAN EXPECT INFLATION OR INTEREST RATES TO BE AND ADJUST THEIR PORTFOLIO THAT WAY SO WE EXPECT TO BE A LITTLE MORE INTEREST IN LPS COMMITTING TO FUNDS.
WE HAD $32 BILLION FUNDS -- WE HAD 32 ONE BILLION-DOLLAR FUNDS IN 2021. WE THINK LPS WILL CONTINUE COMMITTING NOT AT AN EXTREME PACE. SIMILAR TO WHAT WE SEE THIS YEAR BUT I LITTLE UPTICK FOR VC. CAROLINE: WHAT ABOUT OTHERS WE SEE ON THE INVESTOR LIST? WHEN I LOOK AT THE LATEST AI ROUNDS, AND A LOT OF THE TIME IT HAS BEEN DEBATE YET COME, CORPORATE. IS THAT SOMETHING -- IT HAS BEEN NVIDIA, ALPHABET, CORPORATES. IS THAT SOMETHING WE WILL SEE IN 2024? KYLE: THEY ARE TRYING TO BE THE LEAD FOR AI. MICROSOFT AND NVIDIA ARE HEAVY
IN THAT SECTOR. CORPORATE ACTIVITY HAS DECLINED THIS YEAR BROADLY SPEAKING. I THINK A LOT OF THAT HAS TO DO WITH THERE IS STILL SOME OUTLOOK OF A RECESSION. THEY DON'T WANT TO OVER COMMIT TO THESE LONG-TERM CAPITAL BASIS, BUT THE LARGE CORPORATIONS THAT ARE SITTING ON A LARGE STACK OF CASH HAVE THE MONEY TO PUT TO WORK IN STARTUPS, AND WE HAVE SEEN THERE IS A REALLY GOOD PLACE FOR THAT MONEY TO GO. CAROLINE: WE WILL SEE IF THAT CONTINUES.
IT HAS BEEN GREAT TO HAVE YOU THROUGHOUT THE YEAR. WE THANK YOU FOR PUSHING US TO 2024. MEANWHILE, COMING UP, WE WERE JUST TALKING ABOUT THE AI ALLOCATIONS FROM BIG COMPANIES TO SMALL. LET'S JUST TALK ABOUT A PARTICULAR COMPANY IN THE WORLD MAKING AI BASICALLY MORE EFFICIENT TO RUN THOSE LARGE LEG WHICH MODELS FROM AN ENERGY PERSPECTIVE. LIKE MATTER -- LIGHTMATTER WILL BE WITH US. THIS IS "BLOOMBERG TECHNOLOGY."
CAROLINE: LIGHTMATTER IS A START BUILDING COMPUTING PRODUCTS THAT USE LIGHT IN THE PLACE OF ELECTRICITY AND HAS RAISED ADDITIONAL FINANCING AMID THE AI BOOM, PUSHING ITS VALUATION TO $1.2 BILLION. JOINING US NOW IS THE LIGHTMATTER CEO. THE REASON YOU ARE SO IN DEMAND AT THIS PARTICULAR MOMENT OF GENERATIVE AI IS IT IS REALLY ENERGY INEFFICIENT TO BASICALLY TRAIN A BIG AI LARGELY WHICH MODEL. YOU ARE THINKING YOUR WORK FOR YEARS HAS BASICALLY BEEN DONE USING LIGHT AS A SCIENCE, AS A TECHNOLOGY TO BE ABLE TO MAKE IT MORE EFFICIENT. CAN YOU STRIP DOWN HOW THAT
HAPPENS? NICK: ABSOLUTELY. TODAY WHEN YOU LOOK AT AI MODELS LIKE CHATGPT AND PROJECT GEMINI, THESE SYSTEMS ARE BUILT ON 10,000 NODE, 60,000 NODE SUPERCOMPUTERS, AND THE CHIPS THAT COMPRISE THESE MASSIVE SUPERCOMPUTERS BUILDING AI MODELS ARE BURNING AN ENORMOUS AMOUNT OF ENERGY, SO WHAT WE ARE DOING AT LIGHTMATTER'S WE ARE FIGURING OUT HOW TO SCALE TO 100,000 NODES, HOW TO DRIVE THE ENERGY DOWN. JUST TO GIVE YOU A REFERENCE TODAY, COMPUTER CHIPS HAVE THE SAME ENERGY DEPUTY AS A NUCLEAR REACTOR, AND BETWEEN THE TIME WHEN I FOUNDED THE COMPANY AND TODAY, THEY HAVE ACTUALLY INCREASED BY 5X THE AMOUNT OF PACKAGE FOR POWER. IT IS A TOUGH TRAJECTORY AND IF WE WANT TO GET BIGGER AND BETTER MODELS, SOME FUNDAMENTALLY NEW TECHNOLOGIES ARE NEEDED, AND THAT IS WHAT WE ARE DOING AT LIGHTMATTER. CAROLINE: YOU ARE THEREFORE GROWING, HEAD UP 50% SINCE YOUR LAST VC ROUND BACK IN MAY OF 2023. IS IT ABOUT PEOPLE, TALENT, AND THAT IS WHAT YOU NEED THE MONEY, OR HOW ELSE DO YOU DEVELOP THE TECHNOLOGY? NICK: THIS ROUND, I THINK FOR THE FIRST TIME, LIGHTMATTER HAS HAD INVESTORS APPROACH US AND THE QUESTION IS, HOW FAST COULD YOU GO IF YOU HAD EFFECTIVELY APPROXIMATELY UNLIMITED FUNDING? WHAT WOULD YOU DO? WE LOOK AT THE HEADCOUNT REQUIREMENTS, OUR PRODUCT PIPELINE, AND WE DECIDED TO TAKE ON THE MONEY TO SO THE RATE ALL OF THAT.
WE ARE AT 150 PEOPLE TODAY AND WILL BE AROUND 220 BY THE END OF 2024, AND WHAT WE ARE DOING IS TAKING THIS MONEY TO ACCELERATE OUR INTERCONNECT PRODUCT PASSAGE COME ACCELERATE THE DEVELOPMENT OF THAT, GET IT INTO DATA CENTERS AT THE END OF NEXT YEAR, AND WE ARE INCREDIBLY EXCITED TO GET THIS WHOLE THING KICKED OFF TO GET YOU WILL START TO SEE THESE SUPERCOMPUTERS ARE BASED ON USING LIGHT TO CONNECT EVERYTHING, AND IT WILL BE CRITICAL FOR THE FUTURE, SO THIS FUNDING IS ENABLING ALL OF THAT AND MASSIVE SCALE DEPLOYMENT OF PASSAGE. CAROLINE: SO PEOPLE NEEDED ON THE R&D SIDE AND THE SALES SIDE AND YOU ARE GETTING IT INTO THE DATA CENTERS. WHAT IS YOUR BUSINESS MODEL? HOW DO YOU CHARGE THE CUSTOMERS? I AM THINKING OF THE HYPER SCALARS. NICK: SELL WAIVERS. THE WAIVERS SHIPPED FROM THE PARTNER AND WE ULTIMATELY SOLD TO THE BIG SEMI CONDUCTOR COMPANIES LIKE AMD, INTEL, NVIDIA, AND THE CLOUD BUILDING THEIR OWN.
YOU HAVE GOOGLE CLOUD, AMAZON AWS, AND SO ON. THESE ARE THE KIND OF COMPANY'S WE PARTNER WITH. WHAT THEY DO IS THEY TAKE THEIR GP WAS A DIFFERENT PROCESSOR CHIPS AND SCALE THEM OUT ON TOP OF PASSAGE, THIS CHESSBOARD THAT LINKS ALL OF THE CHIPS OPTICALLY AND ALLOWS YOU TO SCALE AND BUILD ABSOLUTELY MASSIVE COMPUTING CLUSTERS, SO YOU CAN TAKE THESE PASSAGES, THESE CHESSBOARD, AND SCALE THEM UP TO 300,000 NODES, THE KIND OF THING WE ARE WORKING ON TODAY. CAROLINE: SAME HEAT AND DENSITY AS A NUCLEAR REACTOR, ABSOLUTELY FASCINATING. THANKS FOR PUTTING THE PICTURE AND TELLING US WHAT YOUR TECHNOLOGY IS GOING AT LIGHTMATTER.
THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." YOU DON'T WANT TO GET ABOUT OUR PODCAST. YOU CAN GET CAUGHT UP ON THE TERMINAL, WHERE YOU GET YOUR CONTENT. THIS IS "BLOOMBERG TECHNOLOGY."
2023-12-21 12:29
