Car Dealership Cyberattacks and a New AI Research Lab | Bloomberg Technology
>> THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. ED: I'M ED LUDLOW IN SAN FRANCISCO. THIS IS BLOOMBERG TECHNOLOGY. CAR DEALERSHIPS ACROSS THE U.S. HOLD SERVICES -- HALT SERVICES AFTER A CYBER ATTACK.
PLUS, THE OPENAI CO-FOUNDER ANNOUNCES A NEW AI RESEARCH LAB. WE HAVE THAT EXCLUSIVE REPORTING. IN AI VIDEO START UP HITS A HALF BILLION DOLLAR VALUATION. WE DISCUSSED WITH THE CEO. A QUICK CHECK IN ON MARKETS. THE S&P 500 BRIEFLY HIT THE 5500 HISTORIC MARK AND THEN PULLED BACK. WE ARE FLAT ON THE NASDAQ 100, TREADING WATER AFTER U.S.
HOLIDAY. THE STORY IS INDIVIDUAL NAMES IN THE AI INFRASTRUCTURE. WE ARE TALKING ABOUT DELL AND NVIDIA. LATER, WE WILL BRING DETAILS OF WHAT PLAYED OUT 24 HOURS AGO ON SOCIAL MEDIA.
DELL IS BUILDING AN AI FACTORY. ELON MUSK BACK ON SOCIAL MEDIA AS WELL AND YOU CAN SEE SUPER MICRO, THE KIND OF BIGGEST BENEFICIARY OF THAT MOVE COMING UP. THE TOP STORY IN TERMS OF NEWS FLOW IS WHAT WE WERE TALKING ABOUT A MOMENT AGO. CAR DEALERS WERE AFFECTED BY A
SECOND CYBERATTACK THIS MORNING AFTER AN INITIAL ATTACK YESTERDAY COMPROMISED THE SOFTWARE PLATFORM AND HALTED BUSINESS. THESE ARE SOME OF THE PUBLICLY TRADED DEALERSHIPS AND AUTO RETAILERS IMPACTED NOW OR MOVING TO THE DOWNSIDE. LET'S GET TO JEFF STONE WITH THE LATEST BECAUSE IT IS MOVING QUICKLY. THERE WAS A SECOND REPORT OF AN ATTACK THIS MORNING. WHAT DO WE KNOW? >> THIS IS A BIG, MESSY CYBERATTACK. A SECOND INCIDENT WAS JUST REPORTED AS THIS SOFTWARE PROVIDER IS ALREADY TRYING TO RECOVER FROM WHAT LOOKS LIKE A PRETTY COSTLY OUTAGE. THE NATURE OF THE INCIDENT IS
NOT CLEAR YET. WE KNOW DEALERS ARE WAITING FOR MORE INFORMATION FROM THE COMPANY, BUT WE KNOW IT LOOKS BAD. ED: YOU ARE KIND OF A KEY MEMBER OF OUR CYBERSECURITY TEAM.
WHAT WAS THE VULNERABILITY HERE? >> THE NATURE OF THE BREACH AND POINT OF ENTRY IS STILL UNDER INVESTIGATION. BUT THIS INCIDENT FITS WITH A RECENT STRING OF ATTACKS IN THE HEALTH CARE SECTOR THAT ARE TARGETING CUSTOMER SERVICE SOFTWARE PROVIDERS AND ALMOST INNOCUOUS COMPANIES THAT A LOT OF YOUR VIEWERS WILL NOT THINK ABOUT ON A DAILY BASIS. THESE COMPANIES SIT AT A KEY POINT IN THE AREAS SUPPLY CHAINS. WHEN THEY ARE HIT, THERE ARE RIPPLE EFFECTS THAT HAVE MAJOR IMPACT THROUGHOUT THE SUPPLY CHAIN. ED: I HAVE COVERED THE AUTOMOTIVE
INDUSTRY FOR A LONG TIME AND LEARNED ABOUT FRONT OFFICE, BACK OFFICE, BUT ALSO NAMES THAT HAVE BEEN IMPACTED ON THE NAMEBRAND SIDE ARE BIG ONES LIKE SUBARU, TOYOTA. WHAT HAVE RESPONSES FROM COMPANIES BEEN AND WHAT HAVE THEY BEEN TELLING CUSTOMERS? >> PLEASE GIVE US TIME AND PATIENCE. DEALERSHIPS ARE WAITING FOR MORE INSTRUCTIONS FROM PARENT COMPANIES AS THIS CONTINUES TO UNFOLD.
FOR NOW, A LOT OF DEALERSHIPS ARE SLOWER TO MAKE SALES. SALES REPRESENTATIVES ARE INCREASINGLY WORKING WITH PAPER TRANSACTIONS RATHER THAN QUICK, AUTOMATIC STUFF THAT WE HAVE BECOME USED TO. THEY ARE WAITING FOR MORE INFORMATION.
ED: THIS IS ONE HACK IN A SERIES OVER YEARS THAT YOU AND I HAVE DISCUSSED. IN TERMS OF SCALE, WHERE DOES IT SIT IN THOSE WHO HAVE COVERED IN RECENT YEARS? >> GROWING. THE HEALTH CARE SECTOR HAS BEEN THE MAIN FOCUS. THE COST OF THIS BASED ON THE NUMBER OF DEALERSHIPS CERTAINLY AFFECTED SEEMS TO BE HIGH. WE ARE WAITING TO SEE IF THERE WILL BE GOVERNMENT ACTION OR GUIDANCE FROM THE DEPARTMENT OF HOMELAND SECURITY IN TERMS OF UNDERSTANDING THE SCOPE OF THE INCIDENT, BUT FOR NOW IT IS STILL CALCULATING. ED: ANOTHER BIG STORY WE ARE TRACKING IS IN CHINA, WHERE E-COMMERCE GIANTS HAVE BEEN SLASHING PRICES USING'S LIBERTY ENDORSEMENTS TO BOOST ENTHUSIASM FOR A SHOPPING FESTIVAL. THIS IS A NEWER ONE FOR ME.
I HAVE BEEN READING ABOUT 618, BUT YOU WOULD SAY THE CONSUMER IN CHINA IS GETTING AN UNPRECEDENTED LEVEL OF INCENTIVE THIS WEEK FROM THE BIG E-COMMERCE NAMES. HENRY: WE ARE SEEING THINGS WE HAVE BEEN EXPECTING, THE PRICE CUTS. THEY HAVE BEEN LETTING CUSTOMERS KNOW IT HAS BEEN PUTTING FORWARD STEEPER THAN EVER PRICE DISCOUNTS BUT ALSO WE HAVE SEEN SOMETHING UNEXPECTED, FOR EXAMPLE APPEARING ON LIVESTREAMING E-COMMERCE, BUT IT IS NOT HIM EXACTLY. IT IS A DIGITAL AVATAR OF HIM BUT IN THE MEANTIME A POPSTAR CUT RIHANNA, WHO IS PRETTY FAMOUS AND POPULAR IN MAINLAND CHINA AS WELL, IS EATING A CHINESE STYLE OF PANCAKES IN FRONT OF A CAMERA. WE HAVE BEEN SEEING EVERYTHING HERE WITH ALL SORTS PROMOTIONS. ED: WE ARE TALKING ABOUT NAMES WE ALWAYS DISCUSS ON THIS PROGRAM. THAT IS THE COMPANY SIDE OF THE
STORY, BUT THERE IS ALSO THE CHINESE CONSUMER SIDE OF THE STORY THAT WE TRACK ON BLOOMBERG TECHNOLOGY. IS THE IDEA THAT THEY NEED TO DISCOUNT SO HEAVILY AND GET SO CREATIVE IN INCENTIVES A SIGN THAT THE CHINESE CONSUMER NEEDS HELP? HENRY: YES. THE STORY WE HAVE BEEN REPORTING IS THE CHINESE CONSUMERS ARE CAUTIOUS IN TERMS OF DEALS AND THIS HAS BEEN A TREND THAT HAS BEEN CONFIRMED AS WELL. THE MAIN MESSAGE HAS BEEN PRICE CUTS, WHICH HAS BEEN SEEN ACROSS LIVESTREAMING PLATFORMS AS WELL AS BIG COMPANIES, BUT ALSO WE SEE LOCAL MEDIA REPORTING SOME CATEGORIES, FOR EXAMPLE WOMEN'S APPAREL OR LUXURY GOODS, HAVE SEEN HIGH RETURN AND CANCELLATION RATES AS HIGH AS 75% TO 80%, WHICH SHOWS CONSUMERS ARE CAUTIOUS. THEY ARE PROBABLY SPENDING BECAUSE OF PRICE CUTS AND PROMOTIONS, BUT THEY ARE KEEN AND TERMS OF PICKING THE CHEAPEST DEALS, NOT NECESSARILY THE BEST IN TERMS OF QUALITY. ED: THANK YOU SO MUCH.
GREAT TO SEE YOU AGAIN. COMING UP, WE WILL BE JOINED BY NANCY TENGLER. REALLY INTERESTING MOVE INTO AN INTERESTING NAME THAT IS TOP OF MIND THIS MORNING AND I LOOKING FORWARD TO THE CONVERSATION. THIS IS BLOOMBERG TECHNOLOGY. ED: TOM KNAUF -- TIME NOW FOR TALKING TECH. TELLING SHAREHOLDERS AT THE ANNUAL MEETING THEY ARE LOOKING FOR THEIR NEXT BIG MOVE IN TECH AFTER THE COMPANY SAW A STRING OF LOSSES THROUGH THE START UP. PLUS, AND OPENAI CO-FOUNDER HAS
ANNOUNCED A NEW VENTURE CALLED SAFE SUPER INTELLIGENCE. THE COMPANY AIMS TO CREATE A SECURE, POWERFUL AI SYSTEM WITH NO INTENTIONS TO SELL IT OUR PRODUCT OR SERVICES LIKE OPENAI AND GOOGLE. FINALLY, DELL ANNOUNCED IT IS BUILDING OUT AN AI FACTORY WITH THE HELP OF NVIDIA TO POWER ELON MUSK'S X AI WITH SUPERMICRO ADDING SERVER CAPACITY IN AN EFFORT TO WIN MORE BUSINESSES MAKING AI EXPANSIONS. I SAT DOWN WITH MICHAEL DELL
LAST MONTH, WHO DEFINED IN OUR FACTORY -- AN AI FACTORY IS THE FOLLOWING. >> YOU GET INTO THE ECOSYSTEM OF ALL THE SOFTWARE AND THE MODELS, SMALL AND LARGE MODELS, OF COURSE IT IS NOT JUST GPU. IT IS ALSO NETWORKING AND STORAGE AND MEMORY THAT COME TOGETHER. ED: THAT WAS A LOT OF BUZZ WORDS, BUT WE ARE ABOUT TO HAVE A CONVERSATION WHERE I THINK WE CAN GET TO THE ROOT OF WHAT WE ARE TALKING ABOUT WITH NANCY TENGLER. YOU GOT INTO DELL EARNINGS MAY 30 AND THERE WAS A MIXED RECEPTION TO EARNINGS. THERE IS A GROWTH STORY THERE
ABOUT AI INFRASTRUCTURE AND THERE WERE NEAR-TERM CONCERNS, BUT LET'S START WITH WHY YOU LOOKED AT DELL AND THOUGHT THIS WAS THE MOVE YOU WERE GOING TO MAKE. NANCY: A COUPLE REASONS. WE WERE LATE TO THE PARTY. WE HAVE BEEN LATE TO OTHER PARTIES.
THE POINT IS THAT YOU GET THERE AND WE SOUGHT AS AN OPPORTUNITY TO STEP IN, NOT JUST ON THE DATACENTER SIDE OF THE BUSINESS BUT THE PC UPGRADE CYCLE PART OF THE BUSINESS, SO IF YOU LOOK AT THE HYPER SCALARS THEY ARE -- THEY HAVE SPENT ABOUT $200 MILLION -- $200 BILLION IN AI ON THEIR BUDGETS, SO WE THINK USE CASES ARE REAL, TECHNOLOGY ISRAEL, SO THIS WAS AN AREA WE WERE UNDERWEIGHT HARDWARE IN OUR TECH EXPOSURE AND WHERE WE COULD JUMP IN. ED: SO YOU DO NOT HOLD NVIDIA, WHICH IS INTERESTING. THE BIG STORY WE ARE TALKING ABOUT IS WHAT PLAYED OUT ON SOCIAL MEDIA WEDNESDAY, THAT MICHAEL DELL POSTED THEY ARE BUILDING AN AI FACTORY FOR XA I AND ELON MUSK SAYS SUPERMICRO IS INVOLVED AS WELL, SO LET'S DO SOME MATH WHICH MY COLLEAGUES WALKED ME THROUGH THIS MORNING. IF THIS DEAL IS FOR GROK THREE, HE WILL NEED 100,000 H 100S FOR THAT. THERE ARE 36 NVIDIA GPU'S IN EACH RACK. THAT COULD MEAN 1.5 BILLION DOLLARS IN BOOKINGS FOR DELL
AND SUPERMICRO IF THEY ARE RIGHT ABOUT THE 3 BILLION-DOLLAR DEAL VALUE YOU DO NOT HOLD NVIDIA, BUT YOU KIND OF DO INDIRECTLY THROUGH DELL. IS THAT FAIR? >> YES, I WILL TAKE THAT BECAUSE IT SEEMS SILLY TO NOT BE IN NVIDIA. WE HAVE STRICT VALUATION METRICS, SO I'M WAITING FOR HEDGING TO GO TO THE HAMPTONS AND HOPING WE WILL GET A PULLBACK IN NVIDIA, BUT I THINK THAT IS THE IMPORTANT THING TO THINK ABOUT, THAT THE INVESTMENT CYCLE AS LARGE LANGUAGE MODELS BECOME LARGER, THE POWER NEEDED TO GENERATE THE METRICS AROUND THAT, THAT IS GOING TO AUGUR WELL NOT JUST FOR NVIDIA BUT FOR DELL AND BROADCOM. WE OWN BROADCOM. I AM HAPPY WITHOUT HOLDING. IT IS UP 65 PERCENT, BUT THAT PALES IN COMPARISON TO NVIDIA. ED: ON THE VALUATION QUESTION, I THINK NVIDIA TRADES AT 45 TIMES OR SOMETHING LIKE THAT, SO IT IS A RULES-BASED ISSUE. YOU CALLED BROADCOM THE POOR MAN'S NVIDIA.
COULD YOU EXTRAPOLATE WHY YOU WOULD SAY THAT? NANCY: IT IS NOT AS MUCH IN THE SWEET SPOT. THE HIGHEST-PAID CEO IN CORPORATE AMERICA, HE IS A MASTER OPERATOR. IT SMOOTHS OUT THE HARDWARE CYCLE AND THEY WILL FACE COMPETITION FROM NVIDIA IN THE NETWORKING SIDE OF THEIR BUSINESS, BUT WE THINK IT IS A COMPANY THAT WE HAVE OWNED FOR A LONG TIME. IT IS A MEMBER OF OUR 12 BEST IDEAS PORTFOLIO AND WE LIKE IT HERE. I LOVE THESE OLD ECONOMY OR OLD TECHNOLOGY NAMES LIKE BROADCOM, ORACLE, DELL WHO HAVE REMADE THEMSELVES THANKS TO STRONG MANAGEMENT TEAMS WHO PIVOTED WHEN THEY SHOULD HAVE, JUST LIKE AT MICROSOFT, WHICH IS ANOTHER 12 BEST IDEAS NAMES FOR US. ED: ONE OF THE OTHER TOP STORIES IS
THIS RESEARCH NOTE FROM CITI. THEY ARGUE AI WILL DISPLACE MORE JOBS IN THE BANKING SECTOR THAN ANY OTHER SECTOR. I WAS LOOKING ACROSS YOUR PORTFOLIO AND YOU HAVE THIS 12 BEST IDEAS PORTFOLIO. IF WE STICK WITH THE AI THEME,
WHAT DO YOU MAKE OF THAT? THAT IT IS GOING TO BE IN BANKING WHERE AN IMPACT TO THE WORKFORCE IS MOST FELT FROM AI? NANCY: I DO NOT THINK IT IS GOING TO BE THE GOLDMAN SIDE OF BANKING. I HAVE HEARD ALL SORTS OF PROGNOSTICATIONS ABOUT WHAT WILL HAPPEN THAT NEVER HAPPENS. ARTIFICIAL INTELLIGENCE WILL AUGMENT WORKERS, PARTICULARLY THE KIND OF PROFESSIONAL WORKERS THAT GOLDMAN EMPLOYEES, SO I DO NOT THINK IT IS A BANK TELLER, ROBOCALL SIDE OF THE BUSINESS THAT WILL BE IMPACTED, BUT THAT IS NOT GOLDMAN ANYMORE SINCE THEY HAVE EXITED RETAIL BANKING AND WE THINK M&A ACTIVITY IS GOING TO ACCELERATE. WE STILL LIKE IT HERE. IT IS STILL CHEAP BASED ON OUR WORK. SO I AM NOT WORRIED ABOUT THAT. ED: HENRY WREN WAS TALKING ABOUT THE CHINESE CONSUMER AND HOW MANY OF THE BIG CHINESE TECHNOLOGY NAMES ARE DOING HEAVY INCENTIVE THIS WEEK. IF THERE IS ONE THING THAT
KEEPS NANCY TENGLER UP AT NIGHT, I THINK I'M RIGHT IN SAYING IT IS THE CONSUMER BROADLY. WHY IS IT SUCH A CONCERN TO YOU, THE STATE OF THE CONSUMER? NANCY: THERE ARE TWO CONSUMERS, THE BABY BOOM CONSUMER WHO HAS HALF OF THE COUNTRY'S NET WORTH. THEY ARE SPENDING AND THEY ARE NOT BEING IMPACTED BY THIS.
THEY HAVE BIG STOCK PORTFOLIOS. BUT IT IS THE LOW END CONSUMER GETTING CRUSHED BY INFLATION, WHICH IS STILL WITH US. ONLY ON WALL STREET DO WE SAY INFLATION IS DECLINING BECAUSE THE RATE OF CHANGE IS GOING UP LESS FAST THAN IT WAS PREVIOUSLY.
I THINK IT IS WEARING ON THEM, THE ACCESS TO CREDIT AND ALL OF THIS AND THEN WE KNOW THAT FULL-TIME JOBS DECLINED IN MARCH YEAR-OVER-YEAR. HOURS WORKED DECLINED. WAGES IN TERMS OF AVERAGE HOURLY EARNINGS DECLINED, SO THIS IS A PROBLEM SPOT FOR THE ECONOMY AND THE LOW END OF THE CONSUMER IS GREATER IN NUMBERS THAN BABY BOOMERS, SO WE HAVE TO WATCH THIS. RETAIL SALES NUMBERS ARE NOT COMPREHENSIVE AND REVISIONS DOWN WERE DISAPPOINTING. ED: EARNINGS SEASON IS AROUND THE CORNER. GIVE ME YOUR EXPECTATIONS FOR
TECHNOLOGY EARNINGS. NANCY: I THINK TECH WILL CONTINUE TO SHINE. WE HAVE BEEN ADVOCATING OVERWEIGHTING TECH SINCE 2022 WHEN EVERYONE WROTE IT OFF IS NOT THE PLACE HE WANTED TO BE, THAT HIGHER INTEREST RATES WERE GOING TO HURT TECHNOLOGY COMPANIES BECAUSE THAT WAS AN OLD-SCHOOL VIEW OF THE WORLD, BUT MOST OF THE MEGA CAP TECH NAMES HAVE BENEFITED FROM HIGHER INTEREST RATES, SO WE THINK EARNINGS WILL BE A BRIGHT SPOT THROUGH THIS YEAR INTO NEXT, SO WE WANT TO OWN THE HYPER SCALARS AND HARDWARE COMPANIES AND THEY WROTE OFF SOFTWARE A FEW WEEKS AGO, BUT WAIT A FEW WEEKS AND I THINK HEDGE GUYS WILL BE BACK IN BUYING SOFTWARE. THERE IS MY CYNICAL VIEW OF THE WAY THE WORLD WORKS. ED:
I APPRECIATE THAT YOU RELATE TO THE PARTY ON DELL, BUT YOU MADE IT TO THE PARTY -- THAT YOU WERE LATE TO THE PARTY ON DELL, BUT YOU MADE IT TO THE PARTY. WE WILL BE RIGHT BACK. THIS IS BLOOMBERG TECHNOLOGY. ED: EIGHT FORMER EMPLOYEES OF SPACEX FIRED IN 2022 AFTER WRITING AN OPEN LETTER CRITICIZING ELON MUSK HAVE NOW FILED A LAWSUIT AGAINST SPACEX AND THE CEO ALLEGING SEXUAL HARASSMENT AND RETALIATION. WE SPOKE WITH ONE OF THE PLAINTIFFS IN THE SUIT. >> SPACE X EMPLOYEES ARE ENCOURAGED TO FOLLOW SPACEX AND ELON MUSK ON TWITTER. IN MY ORIENTATION, WE WERE
ENCOURAGED TO FOLLOW HIM ON TWITTER AND IN THE EMPLOYEE HANDBOOK IT MENTIONS THAT HIS TWITTER FEED IS A SOURCE OF OFFICIAL COMPANY NEWS THAT IS ALLOWED TO BE SHARED WITH THE PUBLIC, SO IF YOU ARE NOT FOLLOWING HIM ON TWITTER YOU ARE MISSING THINGS. ACTUAL DELIVERY DATES AND DEADLINES AND FUNCTIONS OF ENTIRE TEAMS AND DEPARTMENTS ARE IMPACTED DAY-TO-DAY I WHAT HE DECIDES TO TWEET IN THE MIDDLE OF THE NIGHT. HE DECIDED TO PUT OUT A RETURN TO OFFICE ORDER AND TALK ABOUT IT ON HIS TWITTER AND THAT BECAME THE LAW. A FRIEND OF MINE HAD A STARSHIP DELIVERY DATE CHANGED OVERNIGHT BECAUSE IT WAS ON TWITTER SO NOW IT IS LAW. IT IS NOT JUST THE NONSENSE BUT THE STUFF THAT IMPACTS ACTUAL DAY-TO-DAY WORK FUNCTIONALITY IS TWEETED ABOUT AND THEN SINCE HE HAS ALREADY SAID IT AND IT IS PUBLIC IT IS NOW BURNED INTO THE OFFICIAL PLAN.
>> IT WAS INTERESTING YOU SAID YOU FELT LIKE AN OUTSIDER BECAUSE YOU ARE FEMALE BUT MANY WOULD SAY THE PERSON ACTUALLY RUNNING THE SHOW, THE COO, IS FEMALE TOO. HOW IS HER VOICE NOT ALLOWING YOUR VOICE TO BE HEARD? >> SHE IS VERY MUCH PART OF THE PROBLEM. I THINK SHE COMES FROM A GENERATION OF -- JUST A DIFFERENT PERSPECTIVE, MAYBE, BUT SHE IS SO INGRAINED IN THE CULTURE THERE AND THE LIFESTYLE THAT SHE IS NOT WILLING TO ROCK THE BOAT AT ALL AT THIS POINT. SHE IS VERY MUCH NOT THE ADULTS IN THE ROOM THAT THE REST OF THE WORLD MAKES HER OUT TO BE. SHE IS A HUGE PART OF THE PROBLEM.
I THINK IT IS THIS BRAND OF GIRL BOSS FEMINISM THAT DOES NOT REALLY UPLIFT THOSE AROUND YOU, DOES NOT FEEL THE NEED TO OPEN YOUR EYES TO THE VERY REAL CONCERNS OF PEOPLE AROUND YOU. WHEN PEOPLE HAVE CONVERSATIONS WITH HER, SHE WILL FOCUS ON ONE COUNTERPOINT TO THE ARGUMENT AS A MEANS OF DISMISSING THE ENTIRE ARGUMENT, WHICH IS DISINGENUOUS AND IN BAD TASTE. >> YOU HAVE THEREFORE SUED AND I'M INTERESTED TO KNOW WHAT YOU HOPE TO GET OUT OF THIS. >> ACCOUNTABILITY MOST OF ALL, BUT I THINK ACCOUNTABILITY BECAUSE THE LEADERSHIP FORMS THE CULTURE SO MUCH AND BECAUSE IT IS SUCH A PAINFUL PLACE TO WORK AND WORKING AT SPACE X CAN OPEN DOORS FOR YOU SO IT IS AN AMAZING OPPORTUNITY AND I DO NOT THINK THAT OPPORTUNITY SHOULD BE CONSTRAINED TO PEOPLE WHO ARE THE TYPICAL ENGINEERING DEMOGRAPHIC. THEIR VOICES AND PERSPECTIVES TO BE HEARD CAN CONTRIBUTE IN A MEANINGFUL WAY THAT DO NOT LOOK LIKE THE STATUS QUO, BUT ASIDE FROM THAT I THINK, SPEAKING UP AND TELLING MY STORY HOPEFULLY WILL HELP OTHER PEOPLE WHO AROUND THEM AND DO NOT SEE ANYONE ELSE THAT LOOKS LIKE THEM I DO NOT KNOW THAT THEIR EXPERIENCES ARE NOT ISOLATED TO THEIR OWN EXPERIENCES CAN SPEAK UP AND SHARE THE STORIES AROUND THEM. I'M HOPING TO OPEN THE PLATFORM TO LET PEOPLE EVOLVE AND LET MARGINALIZED GROUPS HAVE THESE CONVERSATIONS AND FEEL SAFE BECAUSE I THINK IT SHOULD BE A HUMAN RIGHT TO FEEL SAFE IN THE WORKPLACE. ED: BLOOMBERG TECHNOLOGY REACHED
OUT TO SPACE X FOR COMMENT ON THE SUIT AND THE ALLEGATIONS MADE, BUT THEY DID NOT RESPOND. SPACEX HAS PREVIOUSLY DENIED ANY WRONGDOING AND SAID THE FIRED EMPLOYEES INVOLVED IN THE CASE VIOLATED POLICY. IT ALSO SAID MOSQUE -- ELON MUSK HIMSELF WAS NOT INVOLVED IN THE TERMINATIONS. ED:ED: A QUICK CHECK IN ON THE MARKETS. THE NASDAQ 100 IS THIS TECH HEAVY INDEX, A LOT OF HIGHER MULTIPLE NAMES.
WE ARE ESSENTIALLY FLAT AS A PANCAKE. IT WAS A MARKETS HOLIDAY IN THE U.S. ON WEDNESDAY, BUT ONE CLEAR MOVER TO THE UPSIDE IS NVIDIA, CONTINUING TO PUSH HIGHER AND NOW THE MOST VALUABLE COMPANY BY MARKET CAP. A BIG PART OF THE STORY IN THURSDAY'S SESSION WAS SOMETHING THAT PLAYED OUT ON SOCIAL MEDIA. MICHAEL DELL TAKING TO X, SAYING THEY ARE MAKING AN AI FACTORY TO POWER ROCK -- GROK. SUPERMICRO IS ALSO PROVIDING SERVER RACK AND DESIGN TO XAI AND SUPERMICRO IS THE BIGGER BENEFICIARY OF THE TWO. BOTH ARE GETTING A PUSH TO THE
UPSIDE. IS THE NVIDIA GPU AT THE HEART OF IT THAT POWERS IT. IN PUBLIC MARKETS, WE CONTINUE TO COVER WHAT IS HAPPENING IN AI AND PRIVATE COMPANIES. THE OPENAI CO-FOUNDER, WHO TOOK PART IN THE 2023 OUSTER OF SAM ALTMAN, HAS DISCLOSED PLANS TO CONTINUE HIS WORK AT A NEW RESEARCH LAB FOCUSED ON ARTIFICIAL GENERAL INTELLIGENCE. FOR MORE, LET'S BRING IN OUR AI EDITOR IN NEW YORK CITY.
WE HAVE A NEW START UP WITH A CLEAR MISSION AND RE-MET. GIVE US THE DETAILS. >> WE DO NOT KNOW MANY DETAILS. FOR THE LAST SIX MONTHS, EVERYONE HAS BEEN WONDERING AND WE SEEM TO HAVE AN IDEA. WE WILL HAVE A RESEARCH LAB BUILDING A FUTURE THEORETICAL VERSION OF A SUPER INTELLIGENT AI THAT WOULD BE SMARTER AND OUTPERFORM HUMANS. WHAT THEY ARE NOT DOING IS TRYING TO COMMERCIALIZE THOSE YET, SO IT IS A DIFFERENT PATH THAN HIS PRIOR COMPANY AND I THINK THE BIGGEST QUESTION IS, WHEN WILL WE SEE PROGRESS ON THAT FRONT? WHO IS GOING TO END UP STAFFING THE COMPANY? WILL WE SEE HIM AND HIS NEW COMPANY HIRED DISAFFECTED FORMER COLLEAGUES FROM OPENAI AND OTHER PARTS OF THE INDUSTRY? ED: THE VENTURE IS CALLED SAFE SUPER INTELLIGENCE AND THE MAIN PLEDGE I SEE IS NO COMMERCIAL PRODUCT.
THEY WILL NOT SELL ANYTHING UNTIL THEY HAVE THE DEFINITIVE -- I DO NOT EVEN WANT TO SAY PRODUCT. DEFINITIVE ARTIFICIAL GENERAL INTELLIGENCE. THE INFERENCE IS THAT HE DID NOT SHARE -- WE HAVE TALKED ABOUT THIS.
THE INFERENCE IS THAT ILYA DID NOT AGREE WITH SAM ALTMAN PRIORITIZING COMMERCIALIZATION OF AI TECHNOLOGY. HE IS GOING BACK TO THE R&D AND ACADEMIC SIDE OF THIS. >> THERE IS SO MUCH UNSPOKEN HERE AND ILYA HAS BEEN QUIET ABOUT HOW HE FEELS ABOUT SAM ALTMAN'S LEADERSHIP. ED: THIS WAS A STORY THAT ASHLEE VANCE BROKE IN BUSINESSWEEK. WE REALLY APPRECIATE HAVING YOU ON THE PROGRAM. LET'S STICK WITH AI.
ARTIFICIAL INTELLIGENCE'S ANTHROPIC IS RELEASING A NEW MODEL IT CALLS ITS FASTEST AND MOST CAPABLE YET IN ITS RIVALRY AGAINST OPENAI. TRACK ANTHROPIC CLOSELY -- WE TRACK ANTHROPIC CLOSELY BECAUSE IT IS NEAR COMPETENCE TO OPENAI. >> THE NEW MODEL IS COMING ONLY THREE MONTHS AFTER ITS LAST MOST POWERFUL MODEL AND WHAT THEY ARE CLAIMING IS IT IS AHEAD OF OPENAI ON SEVERAL KEY EVALUATIONS AROUND REASONING AND MATH AND IT SHOWS HOW QUICKLY THESE COMPANIES ARE TRYING TO COME OUT WITH THE LATEST AND GREATEST MODELS. ED: HOW DOES ANTHROPIC OPERATE IN A WAY THAT IS DIFFERENT OR SIMILAR TO OPENAI? I SAW PEOPLE INVOLVED IN EARLY BETA ACCESS, SO THEY APPEAR TO DO A CAREFUL ROLLOUT, BUT IT ALSO SEEMS QUICK TO MAKE A PRODUCT THAT I ASSUME THEY CAN SELL.
SHIRIN: ANTHROPIC HAS FOCUSED ON ENTERPRISE CUSTOMERS AS A PRIORITY. I TALKED TO THE COFOUNDER AND PRESIDENT, WHO TOLD ME THEY ARE NOT DISTRACTED BY THINGS LIKE COMING UP WITH IMAGE GENERATION OF A CAT ON A SNOWBOARD SHE SAID THAT JOKINGLY, BUT IF YOU COMPARE THE COMPANIES ANTHROPIC IS MORE FOCUSED ON USE CASES SPECIFIC TO BUSINESS ENTERPRISE CUSTOMERS. ED: DO WE HAVE CASE STUDIES OF HOW IT WILL BE USED OR HOW IT IS DIFFERENT OR CAPABLE? SHIRIN: THE COMPANY HAS TALKED ABOUT HOW IT IS USED FOR THINGS LIKE FINANCIAL ANALYSIS. THEY HAVE TALKED ABOUT PARTNERING WITH DRUG COMPANIES LIKE PFIZER, SOMETHING OPENAI IS STARTING TO DO. WE ARE STARTING TO SEE CLOSE INTEGRATIONS OF THESE TOOLS. ED: COMING UP, WE'LL BE JOINED BY A PARTNER AT PORTAGE FOR A LOOK AT THE GLOBAL FINTECH INDUSTRY, SOMETHING WE HAVE COVERED A LOT ON THE SHOW, THE BATTLE FOR TALENT AND THE IMPACT OF AI ON FINTECH. STAY WITH US.
THIS IS BLOOMBERG TECHNOLOGY. MAKE SURE TO CHECK OUT OUR PODCAST ON APPLE, SPOTIFY, AND I HEART. THIS IS BLOOMBERG. ♪ ED: WE ARE GOING TO TAKE A LOOK AT THE WORLD OF FINTECH WITH A PARTNER AT THE GLOBAL FINTECH FOCUS FIRM PORTAGE, WHICH HAS 2.5 BILLION DOLLARS IN ASSETS UNDER MANAGEMENT AND ALSO THE COHEAD OF CAPITAL SOLUTION STRATEGY, WHERE THEY FOCUS ON GROWTH EQUITY AND SPECIAL SITUATIONS INVESTMENTS IN FINANCIAL TECHNOLOGY, FINANCIAL SERVICES COMPANIES THAT OPERATE GLOBALLY.
WE HAVE HAD ALL KINDS OF FINTECH NAMES ON THE SHOW IN THE LAST FEW WEEKS AND THE SENSE I GET IS THERE IS A BIFURCATION OF HOW COMPANIES ARE MOVING IN EUROPE AND HOW THEY ARE MOVING IN UNITED STATES, PARTICULARLY THOSE THAT MIGHT HAVE GROWN RAPIDLY BUT NOW THEY ARE TRYING TO SCALE AROUND THE WORLD. YOU SAY THAT IS A FAIR THESIS? >> CERTAINLY WE ARE SEEING IN THE U.S. THAT ACTIVITY IS PICKING UP IN THE FINTECH SPACE. VALUATIONS ARE STARTING TO RECOVER AND THERE IS MORE OPTIMISM AROUND THE IPO MARKETS REOPENING, BUT IN EUROPE THANKS CONTINUE TO BE SLOWER FROM A GROWTH EQUITY PERSPECTIVE. WE ARE STARTING TO SEE MORE M&A ACTIVITY IN EUROPE, SO THAT IS ONE PATH TO LIQUIDITY THAT HELPS SUPPORT THAT MARKET, BUT OVERALL IT IS A MORE MUTED ENVIRONMENT IN EUROPE NOW.
ED: I HAVE COVER INDUSTRIES OVER THE LAST SIX YEARS OR SO WHERE GROWTH EQUITY HAS BEEN ACTIVE AND YOU GET SORT OF LEGACY FINANCE NAMES THAT COME IN AND SUPPORT WHAT WE REGARD AS BEING TECHNOLOGY COMPANIES, PARTICULARLY PRIOR TO IPO. WHY IS THAT ACTIVITY AND INTEREST NOT HAPPENING IN EUROPE? >> EUROPEAN MARKETS HAVE ALWAYS BEEN MORE FICKLE IN APPETITE FOR GROWTH OPPORTUNITIES WITHIN THE IPO MARKETS. THERE IS A DYNAMIC SPECIFIC TO FINTECH WHERE THERE IS A HIGHER PREVALENCE OF FINTECH WITH BANK CHARTERS IN EUROPE THEN YOU SEE IN THE U.S. AND THAT DOES TIE THEIR HANDS A
LITTLE IN TERMS OF OPTIONS AVAILABLE FOR THEM TO RAISE CAPITAL IN THIS MARKET ENVIRONMENT, WHERE VALUATIONS HAVE BEEN A BIT WHIPSAWED. ED: ONE OF THE STORIES ON BLOOMBERG IS ABOUT A RESEARCH NOTE FROM CITI, WHO SAY DISPLACEMENT WILL BE FELT IN BANKING VERSUS OTHER SECTORS. IS THAT SOMETHING YOU SEE HAPPENING? >> WE SEE A HUGE OPPORTUNITY FOR AI WITHIN FINANCIAL SERVICES. THE VOLUME OF ACTIVITY THAT IS HAPPENING IN THAT SPACE, THE MORE REPEAT NATURE OF MANY INTERACTIONS AND FORMS OF ANALYSIS ALLOW FOR NICE USE CASES FOR MACHINE LEARNING AS WELL AS GENERATIVE AI. WHAT WE ARE SEEING IS THAT, WITHIN THE SECTOR, WE EXPECT DATASETS WILL DRIVE THE WINNERS FOR HOW AI GETS APPLIED AND AI ITSELF, THE STRENGTH OF YOUR AI CAPABILITIES WILL BE LESS OF A DIFFERENTIATOR. ED: I LIKE HAVING YOU ON BECAUSE YOU ARE A SIZABLE FIRM AT SCALE AND YOU OPERATE IN MULTIPLE JURISDICTIONS. WHERE ARE YOU PUTTING MONEY TO
WORK RIGHT NOW? >> AROUND AI, RENTECH IS AN AREA WE ARE EXCITED ABOUT. WE SEE OPPORTUNITIES FOR TECHNOLOGY DISRUPTION. WE ARE SPENDING INCREASING TIME AROUND CONSUMER FINANCE. WE THINK WE ARE AT A POINT WHERE THERE ARE STRONGER BUSINESS MODELS THAT WE ARE EXCITED TO BACK AND WE ARE CONTINUING TO SPEND TIME AROUND OPPORTUNITIES FOR EMBEDDED FINANCIAL SERVICES, PARTICULARLY PAYMENTS AND MORE TRADITIONAL SOFTWARE BUSINESSES, SO THOSE ARE SOME OF THE THEMES WE ARE PLAYING WITH BUT FROM A GEOGRAPHIC PERSPECTIVE WE ARE ACTIVE ACROSS NORTH AMERICA AND EUROPE. ED: I LIKE THE IDEA OF REG TECH, BUT MY UNDERSTANDING IS THOSE ARE LARGELY SOFTWARE COMPANIES FOCUSED ON PROCESS, HELPING COMPANIES MAKE SURE THEY ARE COMPLIANT OR ADHERING TO WHATEVER SECTOR SPECIFIC REGULATORY REQUIREMENTS IS IN FRONT OF THEM. HOW DO YOU BE INNOVATIVE IN A SPACE LIKE THAT? >> THE INNOVATION COMES FROM HOW YOU DRIVE EFFICIENCIES.
EVERYONE ACROSS NORTH AMERICA AND EUROPE IS LOOKING FOR HOW THEY CAN TAKE OUT COST AND GROW BUSINESSES WITH FEWER REGULATORY INHABITANTS, BUT I WOULD SAY REGULATORY CHANGE IS ONE OF THE TOUGHEST STRATEGIC CHALLENGES FOR FINANCIAL SERVICES BUSINESSES TO MANAGE, SO ALLOWING THEM TO DO THAT MORE EFFICIENTLY ARE TOOLS THAT ENABLE THEM TO BE MORE INNOVATIVE IN VARIOUS ELEMENTS OF BUSINESS, SO WE SEE REG TECH AND MANAGING REGULATORY ENVIRONMENTS EFFECTIVELY AS AN IMPORTANT FOR INNOVATION IN THE SECTOR. ED: YOU JOIN US FROM TORONTO. YOU HAVE CAST YOUR EYE OVER EUROPE. WHICH JURISDICTION DO YOU THINK IS THE BEST FROM A REGULATORY STANDPOINT THAT ALLOWS FOR INNOVATION AND A MARKET WHERE TECHNOLOGY PROGRESS IS REWARDED? >> WE CONTINUE TO SEE THE U.S. AS A LEADER IN ENABLING INNOVATION. THERE ARE POCKETS TO THINK ABOUT TRANSACTIONS AND OPEN BANKING WHERE EUROPEAN REGULATORS HAVE LED THE WAY, BUT OVERALL WE SEE THE U.S. VIA MEANT AS BEING -- WE SEE
THE U.S. ENVIRONMENT AS BEING AN ATTRACTIVE ONE. THERE ARE POCKETS NOW WHERE THERE IS A LOT OF REGULATORY DYNAMICS FOR COMPANIES TO DIGEST, BUT OVERALL WE SEE IT AS A CONSTRUCTIVE ENVIRONMENT AND A LARGE ENVIRONMENT WHERE THERE IS MARKET OPPORTUNITY TO SUPPORT INVESTING IN INNOVATION. ED: DEVON KIRK. I LIKE THAT. I CANNOT MEMBER THE FIRST TIME WE USED THE PHRASE REG TECH, BUT IF YOU ARE OUT THERE GET IN TOUCH. COMING UP, WE WILL BE JOINED BY THE CEO OF THE AI VIDEO GENERATION PLATFORM HEYGEN. THIS IS BLOOMBERG. ♪
>> IN THE EARLY DAYS OF COMPUTER PROGRAMMING, A SIGNIFICANT HISTORICAL ANTIDOTE IS KNOWN. ED: THAT WAS NOT A REAL PERSON BUT AN AVATAR OF JOSHUA XU, THE CEO OF HEYGEN, A START UP THAT LETS USERS CREATE REALISTIC USING -- REALISTIC LOOKING AVATARS. THE COMPANY IS VALUED AT MORE THAN $500 MILLION AND HEYGEN'S REAL-LIFE CEO JOINS ME ON SET. IT WAS AN INTERESTING VIDEO.
WE WILL BRING A BACKUP, BUT EXPLAIN WHAT IT WAS WE WERE LOOKING AT. >> THAT WAS THE DIGITAL VERSION OF ME. I ALWAYS WANT TO TRY OUT THE TECHNOLOGY MYSELF AND THEN A VERSION OF ME AND ENABLING THAT LIP SYNC WITHIN THE SAME AUDIO AND THIS IS WHAT WE SEE. ED: THE MAIN POINT IS IT REQUIRES
NO CAMERA OR STUDIO LIKE WE ARE SITTING IN NOW, SO HOW DOES IT WORK IN PRACTICE? EXPLAIN THE BASIC SIXS OF CREATING -- BASICS OF CRATING A CLIP LIKE THAT ONE. JOSHUA: WE WANT TO PRODUCE SOFTWARE TO HELP SIMPLIFY THE TRADITIONAL VIDEO PRODUCTION AND NOW EVERYONE IS WATCHING VIDEOS EVERY DAY, MORE THAN A BILLION HOURS OF VIDEO BEING WATCHED ON YOUTUBE EVERY DAY, BUT THE PROBLEM IS VIDEOS ARE EXPENSE OF TO MAKE AN BUSINESSES ARE STRUGGLING TO KEEP UP WITH DEMAND. THERE IS A WAY TO SOLVE IT, AI GENERATION. WE ARE BUILDING OUT AI VIDEO PLATFORMS TO DO THAT. IN ORDER FOR A CUSTOMER TO CREATE AN AVATAR OR DIGITAL TWIN OF HIMSELF, THEY NEED FOOTAGE AND THEN LIVE VIDEO CONSENT AND THEN OUR AI MODEL WILL VERIFY THAT AND CREATE A VERSION OF THAT. ED:
SOME OF THE USE CASES YOU GUYS DISCUSS ARE INTERESTING. IF YOU TAKE A NOT-FOR-PROFIT OR TRAINING VIDEO INSIDE A COMPANY, IF YOU THINK ABOUT TRAININGS PEOPLE HAVE TO DO EVERY QUARTER CUT WE DO THEM HERE. YOU SIT THROUGH VIDEOS. THAT I GET, BUT WHAT IS THE MARKET FOR IT? DO YOU FIND THAT BUSINESSES ARE WILLING TO PAY FOR THIS AS A SERVICE AS A SOFTWARE TOOL? JOSHUA: THE PRODUCT HELPED MORE THAN 40,000 PAYING CUSTOMERS TO DO THREE THINGS, CREATE, LOCALIZE, AND PERSONALIZE. FROM THE PRODUCT SCREENSHOT, THE CUSTOMER CAN CREATE A VIDEO WITHOUT CAMERA, BASICALLY WITH THE AVATAR FROM THE TEMPLATE AND CREATED ON THEIR OWN AND CREATE A VIDEO THAT WAY. THIS IS GREAT FOR VIDEOS, TUTORIALS THAT YOU JUST MENTIONED. ED: YOU JUST SAID 40,000 PAYING
CUSTOMERS BUT YOU HAVE RAISED $60 MILLION. WHAT DO YOU NEED THE MONEY FOR? >> THE PRIMARY MOTIVATION WAS BRINGING ADVISORS AND INVESTORS TO HELP US SCALE. WE ARE GROWING THE GROWTH MARKET TEAMS AND THE BUSINESS HAS BEEN PROFITABLE SINCE LAST YEAR. ED: WHAT IS YOUR BIGGEST COST? COMPUTE? JOSHUA: YES. IT IS MANAGEABLE.
ED: WE ARE TALKING IMAGE AND TEXT TO VIDEO. THAT IS WHAT WE ARE DISCUSSING HERE. HE BUILT IT IN PARTNERSHIP WITH WHO? JOSHUA: WE WORKED WITH LOTS OF CLOUD PROVIDERS. AMAZON POWERED IT AND WE HAVE A BIG CLUSTER TO CHANGE OUR MODELS, ESPECIALLY WHEN WE TALK ABOUT VIDEO MODELS. IT IS HEAVY LIFTING AND THEN THAT IS ONE OF THE BIGGEST COST AREAS. ED: WE WILL BRING THE VIDEO BACK
UP, WHICH IS NOT YOU. IT IS AI GENERATED, BUT THERE IS A TRUST AND SAFETY COMPONENT WHERE YOUR PLATFORM AND TOOL COULD BE USED TO CREATE CONTENT THAT IS NOT WHAT IT PURPORTS TO BE. HOW DO YOU OVERCOME THAT? JOSHUA: THERE ARE TWO MAIN AREAS ABOUT TRUST AND SAFETY THAT WE DO AT HEYGEN. THE FIRST QUESTION IS AROUND HOW WE PROTECT A DIGITAL TWIN. LIKE I MENTIONED, FOR EVERY
CUSTOMER WHO WANTS A VIDEO AFTER HIMSELF, WE HAVE A DEVICE FOR VERIFICATION AND A VERBAL PASSCODE AS WELL AS HUMAN REVIEW. THE SECOND PIECE IS ABOUT AUTOMATION. ED: IT IS POSTED IN THE PUBLIC DOMAIN. JOSHUA:
YOU HAVE THE AVATAR AND WHETHER IT COMPLIES WITH OUR POLICY, SO WE COMBINE THE AUTOMATIC SYSTEM WITH AN AI MODEL TO REALLY MAKE SURE THERE IS NO MISINFORMATION OR DISINFORMATION OR HARASSMENT OR CHILD SAFETY OR POLITICAL OR A SPECIFIC ACCOUNT BEING USED FOR THIS KIND OF TECHNOLOGY. ED: IT IS AN ELECTION YEAR IN UNITED STATES. THIS TOPIC IS OF CONCERN. ARE YOU BEING PROACTIVE IN THE CONTEXT OF THE ELECTION? JOSHUA: SURE. WE DO NOT ALLOW ANY POLITICAL CONTENT ON THE PLATFORM TODAY. POLITICS AND CREATION OF AN CONTENT -- IT IS CRITICAL TO OUR BUSINESS AND WE ARE WORKING ACTIVELY TO CONTINUE TO DEVELOP BEST PRACTICE TO COMBAT MISINFORMATION AND AI MISUSE.
ED: HEYGEN CEO JOSHUA XU. WE HAVE HAD YOU IN PERSON AND AN AI GENERATED VERSION OF YOU. WE APPRECIATE IT. THAT DOES IT FOR THIS EDITION
OF THE SHOW. IT HAS BEEN A SHORTER WEEK HERE IN UNITED STATES. WE HAD A HOLIDAY WEDNESDAY OBSERVING JUNETEENTH, BUT THE NEWS CYCLE CAME BACK IN FORCE.
YOU KNOW WHERE TO FIND THE POD. IF YOU WANT TO POD WITH US, WE ARE ON ALL THE BLOOMBERG PLATFORMS. ONE DAY LEFT IN THE WEEK TO GO AND I AM LOOKING FORWARD TO IT. THIS IS BLOOMBERG TECHNOLOGY. ♪
2024-06-22 04:35
