IBM Pledges $150B US Investment, Apple Shakes Up AI Unit | Bloomberg Technology
>> FROM 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: LIVE FROM NEW YORK, THIS IS "BLOOMBERG TECHNOLOGY." COMING UP, FOUR OF THE MAGNIFICENT SEVEN SET TO REPORT EARNINGS THIS WEEK.
THE GIANTS A CUP 20% WEIGHTING IN THE S&P 500. PLUS, IBM PLANS TO INVEST $150 BILLION IN THE U.S. OVER THE NEXT FIVE YEARS WITH QUANTUM AND MAINFRAMES MADE IN AMERICA. AND WE WILL BE JOINED BY THE CEO OF PALO ALTO NETWORKS AS HE ANNOUNCES A NEW DEAL TO LEVERAGE THE AI SECURITY OPPORTUNITY.
FIRST, WE CHECK ON THE MARKETS. A LITTLE BIT OF A SELLOFF AFTER A MIGHTY RALLY LAST WEEK THAT SAW NASDAQ, BIG TECH, ON TOP THROUGHOUT THE FIVE TRADING DAYS. CURRENTLY OFF BY A QUARTER OF A PERCENT, THE FIRST DOWN DAY IN FIVE DAYS. IT IS NOTABLE WHAT IS HAPPENING IN TERMS OF RISK SENTIMENT HEADING INTO THIS WEEK.
THAT'S MOVED INDIVIDUAL MOVERS AND THE EARNINGS WE ARE SET TO GET. META AND MICROSOFT STAY, THEN APPLE, AMAZON OR WHAT IS PRICED IN, WHERE HAVE INVESTORS AND ANALYSTS STARTED TO THINK ABOUT THE PULL FORWARD FOR THE FISCAL REPORT BECAUSE OF TARIFFS AND WHAT OF THE MACROECONOMIC ENVIRONMENT GOING INTO THE FULL YEAR? WHAT IS SO INTERESTING ABOUT THESE NUMBERS AND THE FACT THAT MANY ANALYSTS, IN THE LACK OF CLARITY, HAVE NOT REALLY BEEN ABLE TO DOWNGRADE THEIR EXPECTATIONS. >> ABSOLUTELY. WE ARE STARTING TO SEE THIS IN SOME NAMES, ESPECIALLY FOR 26, BUT FOR THE MOMENT, PEOPLE ARE HOLDING FIRM WITH THEIR EXPECTATIONS. WE REALLY DO NOT KNOW WHAT TO ACCEPT OUT OF RESULTS THIS ORDER. WE DO NOT KNOW WHAT ANY COMPANY
WILL SAY ABOUT ANYTHING, ABOUT THE ECONOMIC ENVIRONMENT, ABOUT THE OUTLOOKS FOR THE REST OF THE YEAR. THAT MAKES IT EXTREMELY DIFFICULT FOR ANALYSTS TO KNOW HOW TO PEG THEIR EXPECTATIONS, THEIR ESTIMATES. IN TURN, EVALUATIONS ARE UP IN THE AIR. WE DO NOT KNOW WHAT FAIR VALUE LOOKS LIKE, BECAUSE IT IS HARD TO EVALUATE THESE NEEDS ON A PRICE-TO-EARNINGS BASIS IF THERE IS SO MUCH UNCERTAINTY ABOUT THE EARNINGS. CAROLINE:
WE ARE LOOKING CURRENTLY AT THE ANALYSTS BEING VERY SLOW TO CUT PROFIT ESTIMATES ON THE 12 MONTH EARNINGS ESTIMATES. BUT META WILL FEEL THE EFFECTS OF CHINESE COMPANIES, LIKE TEMU, SHEIN, NO LONGER ADVERTISING WITH THEM IT POTENTIALLY. ALSO, THEY HAVE HARDWARE THEY HAVE TO IMPORT FROM CHINA. ARE WE GOING TO GET ANY SIGNAL OF WHAT THAT IS TO THE BOTTOM LINE? RYAN: THESE TYPES OF QUESTIONS ARE PARAMOUNT FOR INVESTORS NOW.
OBVIOUSLY, THESE COMPANIES HAVE THEIR OWN INDIVIDUAL IMPACTS RELATED TO TARIFFS AND SO FORTH. A COMPANY LIKE META, SO HEAVILY RELIANT ON ONLINE ADVERTISING, IT WILL NOT BE AS RELEVANT FOR THEM AS APPLE, WHICH IS HARDWARE-BASED. WE WILL SEE DIFFERENT KINDS AND LEVELS OF IMPACT, BUT OVERALL, THERE SO MUCH UNCERTAINTY ABOUT WHAT THE ECONOMY IS GOING TO LOOK LIKE NOT EVEN A YEAR FROM NOW BUT EVEN A FEW QUARTERS FROM NOW OR A COUPLE MONTHS FROM NOW, SO ANY KIND OF CLARITY INVESTORS WILL GET WILL BE WELCOME, BUT IT IS HARD TO SEE HOW ANY COMPANY CAN EVEN BE TOO CONFIDENT ABOUT ANYTHING RIGHT NOW. CAROLINE: ALPHABET BEAT LAST WEEK, AND ALL OF THESE STOCKS SOARED LAST WEEK AS WELL. RYAN VLASTELICA, THANK YOU. PRESIDENT TRUMP'S TARIFF ANNOUNCEMENTS HAVE RULED WASHINGTON, AND CHINESE APPS HAVE STARTED PASSING ON THE COSTS.
CHINA THOSE FAR HAS DENIED HAVING ANY TRADE TALKS WITH THE UNITED STATES, THOUGH PRESIDENT TRUMP IS STILL HOPEFUL CHINA WILL MAKE A DEAL EVENTUALLY. >> THEY WANT TO MAKE A DEAL CARE RIGHT NOW, THEY'RE NOT DOING BUSINESS WITH US. PEOPLE TALK ABOUT GOING COLD TURKEY WITH CHINA. WE WERE LOSING HUNDREDS OF BILLIONS OF DOLLARS A YEAR WITH CHINA.
NOW, THEY ARE NOT DOING ANY BUSINESS WITH US. NOT BECAUSE OF THEM, BECAUSE OF ME, BECAUSE OF 1455%, YOU CAN'T DO BUSINESS. BUT SOMETHING IS GOING TO HAPPEN. CAROLINE:
BLOOMBERG'S MIKE SHEPPARD STANDING BY. WE ARE STILL DOING THIS IS WITH CHINA, BUT WE ARE PAYING THE PRICE FOR IT. MIKE: YOU ARE RIGHT, AND WE ARE SEEING WHAT ECONOMISTS HAVE BEEN WARNING FOR SOME TIME, AND THAT IS THAT CONSUMERS WOULD BEAR THE INCREASED COSTS AND ECONOMIC PAIN OF THOSE IMPORT LEVIES. WE ARE SEEING THE PRICES ARE BEING PASSED ALONG BY TEMU AND SHEIN. AT SHEIN, SOME GOODS, THE PRICES HAVE GONE UP BY AS MUCH
AS 300%. KEEP IN MIND, IT IS NOT JUST HERE IN THE U.S. WHERE THE PAIN IS BEING FELT BY CONSUMERS. THE RETALIATORY PROGRAMS BY SOME OTHER TRADING PARTNERS, INCLUDING CANADA, INCLUDING CHINA, INCLUDING THE E.U. HAVE INCREASED COSTS ON GOODS FROM THE U.S. INTO THOSE COUNTRIES. WE SAW TESLA OVER THE WEEKEND URGING CONSUMERS TO TRY TO TAP THE PRE-TARIFF INVENTORY BEFORE PRICES WENT UP AND BEFORE IT BECAME TOO LATE TO AVOID THOSE INCREASES.
THERE IS A RIPPLE AND COROLLARY EFFECT JUST IN THE U.S. BUT ELSEWHERE AROUND THE WORLD. CAROLINE: EXTRAORDINARY REPORTING. YOU MENTIONED TESLA HAVING TO PASS ON COSTS. WE ALSO GOT IMPORT TARIFFS WEIGHING ON TEMU'S SHOPPING CART K THEY LOOKED AT SOME OF THE MOST POPULAR THINGS PEOPLE BY ON TEMU, APPARENTLY A POWER STRIP, BUT BASICALLY INSTEAD -- IT IS DOUBLING IN PRICE BECAUSE OF TARIFFS. WHEN YOU THINK OF AMAZON, BLOOMBERG INTELLIGENCE THINGS AMAZON HAS ABOUT 70 SOME -- 77% OF ITS PRODUCTS, EITHER OFFERED BY AMAZON OR THIRD-PARTIES, COMING FROM CHINA. THIS WILL HAVE A LONG TAIL.
AND IT -- MIKE: AND IT WILL NOT JUST BE STICKER SHOCK, THERE WILL BE SUPPLY SHOCK. WE HAVE HEARD A LOT FROM ECONOMISTS OUT THERE WHO WARNED WE COULD BE SEEING A COVID-LIKE SHOCK. THIS IS A CRUCIAL TIME OF YEAR. YOU AND I ARE JUST TRYING TO GET THROUGH THE END OF THE SCHOOL YEAR FOR OUR CHILDREN, BUT WE ARE ALL LOOKING AHEAD. IF YOU ARE A RETAILER, YOU ARE LOOKING AT FOR CHRISTMAS, BACK TO SCHOOL. NOW IS WHEN THE INVENTORY IS ACTUALLY PLANNED, PURCHASED, AND SHIPPED.
IT IS USUALLY IN THE WATER BY APRIL, TO GET HERE IN TIME FOR BACK-TO-SCHOOL AND FOR THE HOLIDAYS. THERE WILL BE A RIPPLE EFFECT. WE HAVE ALREADY SEEN A DROP IN CARGO SHIPMENTS FROM THE WORLD'S SECOND-LARGEST ECONOMY TO THE U.S. IN THE WAKE OF THESE TARIFFS. THERE WILL BE A LOT OF PAIN FELT ALONG THE SUPPLY CHAIN. IT IS NOT JUST GOING TO BE CONSUMERS AT THE END, LIKE YOU AND ME, LOOKING AT PRICES IN OUR TEMU SHOPPING CART OR EVEN ON THE GROCERY STORE OR OTHER RETAILERS' SHELVES.
IT WILL BE IN A LOT OF DIFFERENT PLACES. CAROLINE: YET MANY HOLD OUT FOR A DEAL. CHINA PUSHING BACK AGAIN, SAYING NO NEGOTIATIONS ARE HAPPENING. MIKE:
THAT'S RIGHT. SCOTT BESSENT IS INDICATING THE BALL IS IN CHINA'S COURT, WE WANT TOXIC UNDERWAY. THE PRESIDENT INDICATED EVEN AT THE END OF LAST WEEK, DURING A TIME WHEN CHINESE OFFICIALS WERE HERE IN WASHINGTON FOR THE WORLD BANK AND IMF MEETINGS, WHERE MAYBE THERE WAS SOME CONTACT BETWEEN THE TWO SIDES. BUT IT WAS INFORMAL, IF IT EVEN TOOK PLACE. FOR THE CHINESE, THEY WANT SOMETHING MUCH HIGHER LEVEL. THEY WANT SOMETHING LAUNCHED
FORMALLY. THEY WOULD LIKE TO BE SPEAKING REGULARLY WITH SCOTT BESSENT AND OTHER OFFICIALS OF HIS PORT, TO BE ABLE TO GET ALL OF THOSE KEY POINT FOR THEM, NOT JUST TARIFFS , BUT ALL THE U.S. EXPORT RESTRICTIONS ON ADVANCED TECHNOLOGY WE HAVE BEEN TALKING ABOUT SO MUCH. CAROLINE: PARTICULARLY IN THE SEMICONDUCTOR SPACE. MIKE SHEPARD, THANK YOU. IBM PLANS TO INVEST $150
BILLION IN THE U.S. IN THE NEXT FEW YEARS. WHY? THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: IBM JUST RAISING EARLIER GAINS AS THE MARKET TURNS A LITTLE LOWER. IT ANNOUNCED PLANS TO INVEST $150 BILLION IN THE U.S. OVER THE NEXT FIVE YEARS, THE LATEST COMPANY FOLLOWING THE LIKES OF APPLE AND ELI LILLY, PLEDGING TO INCREASE SPENDING IN THE COUNTRY FOLLOWING PRESIDENT TRUMP'S ELECTION AND HIS TARIFF THREATS. LET'S BRING IN BRODY FORD.
IT SEEMS TO BE ABOUT MADE IN AMERICA. HOW MUCH INNOVATION IN THE HOME AND U.S. SPENDING IS THIS? >> THAT IS THE BIG QUESTION. IBM SAYS WE WILL SPEND $30 BILLION R&D IN THE U.S. THEY REPORTED ABOUT 33 BILLION DOLLARS IN R&D OVER THE LAST FIVE YEARS, I BELIEVE MOSTLY IN THE U.S. HARD TO SAY, IS THIS ACCELERATION, IS THIS THEM
PUTTING A PRETTY BOW ON SPENDING THEY WOULD DO ANYWAY? THIS IS THE BIG QUESTION AS WE SEE ANNOUNCEMENTS FROM COMPANIES LIKE APPLE AND NVIDIA. WHAT IS CLEAR IS, AS TARIFFS HIT, FOR COMPANIES FEEL A LOT OF PRESSURE TO SAY WE HAVE CAPABILITIES IN THE U.S. IN UPSTATE NEW YORK, WE CAN BUILD YOUR MAINFRAMES TOO. CAROLINE: VIZIO SAYING IBM REMAINS THE EPICENTER OF THE WORLD'S MOST ADVANCED COMPUTING AND AI CAPABILITIES. I WANT TO GET THE AI COMPANY
BUT -- AI CAPABILITIES. NSCALE IN THE U.K., A BITCOIN MINER TURNED COMPUTE OFFER, AND THEY ARE TALKING ABOUT A DEAL WITH BYTEDANCE. BRODY: THEY ARE FOCUSED ON BUILDING THESE AI SPECIFIC DATA CENTERS. THEY HAVE BEEN FUNDRAISING, TELLING EVERYBODY, WE HAVE THIS DEAL WITH BYTEDANCE, WE ARE ABOUT TO SIGN THE PAPER, IT WILL BE WORTH $2 BILLION, WE WILL GIVE THEM ALL THESE GREAT GPU'S.
BYTEDANCE TOLD US, THAT WAS OVERSTATING THINGS. THEY DO NOT HAVE THAT MUCH BUSINESS WITH THEM. THIS IS HARD. GPU'S ARE A SENSITIVE THING. IT IS AN INTERESTING INSTANCE THAT SHOWS US HOW MUCH THE FINANCING AROUND AI DATA CENTERS HAS BECOME VERY INTERESTING IN THE LAST YEAR. CAROLINE:
OF COURSE, THEY ARE HOME TO NVIDIA CHIPS. BRODY FORD BREAK THAT DOWN. LET'S TALK MORE ABOUT NVIDIA CHIPS AND COMPETITION TO THEM. IN CHINA, HUAWEI IS SET TO TEST
OUT A NEW AI PROCESSOR THEY HOPE CAN ARRIVAL THE LIKES OF NVIDIA. NVIDIA TRADING LOWER, NOW ACCELERATING LOSSES. IAN KING TALKS ABOUT THIS, BUT FIRST, WHAT IS THE LONG-TERM PICTURE OF HALLWAY TRYING TO HELP CHINA BECOME MORE SELF-SUFFICIENT HERE? IAN: WHAT WE HAVE TO DO, BECAUSE IT IS DIFFICULT TO GET A CLEAR PICTURE OF WHAT IS GOING ON THERE AND THE CAPABILITY OF THOSE TRIPS, WHAT IS IMPORTANT TO DO IS TO TAKE IT BACK TO WHAT NVIDIA HAS SAID, WHICH IS IF WE ARE NOT ALLOWED TO DO BUSINESS THERE, IF WE ARE STRICKEN FROM EXPORTING TRIPS TO CHINA, THEY WILL FIND A WAY TO DO THEIR OWN OVERTIME. IT IS JUST A MATTER OF TIME. THIS REPORT IS ANOTHER EXAMPLE OF EFFORTS BEING MADE TO DO THAT. ARE THEY COMPETITIVE WITH WHAT NVIDIA CAN DO? PROBABLY NOT THIS POINT.
IS IT GOOD ENOUGH IS THE KEY QUESTION. THE ANSWER IS WE WILL SEE. BUT THEY ARE PROBABLY ANOTHER STEP ON THE PATH TOWARDS THAT. CAROLINE: THERE IS A MORE LOCAL COMPETITOR WHO HAS NOT BEEN MUCH OF A COMPETITOR TO NVIDIA OF LATE, AND THAT IS INTEL. YOU WROTE A GREAT TECH DAILY REPORT ON HOW THEY ARE TRYING TO INFLUENCE CULTURE AT INTEL. IAN: THEY REALLY DO NOT GIVE ANY OF THE CONCRETE ANSWERS WALL STREET WANTED IN TERMS OF WHEN THE NEW PRODUCTS WOULD ARRIVE, WHEN WILL YOU HAVE OUTSIDE CUSTOMERS FOR YOUR FACTORIES. WHAT HE DID FOCUS ON AND GIVE
SPECIFICS ON WAS INTEL'S CULTURE IS NOT IN A GOOD POSITION, AND THESE ARE SOME OF THE SHOCKING THINGS WE ARE SEEING GOING ON. FRANKLY, IT WAS PRETTY BRUTAL. THAT IS CLEARLY SOMETHING HE BELIEVES NEEDS TO BE FIXED. BUT AS WE KNOW, FIXING A COMPANY CULTURE AND GETTING EVERYBODY MOVING IN THE RIGHT DIRECTION IS IMPORTANT, TAKES TIME IN WHAT IS -- AND WHAT IS ARGUABLY MORE IMPORTANT YOU GET THEM MOVING IN THE RIGHT DIRECTION TOWARDS PRODUCTS, CUSTOMER RELATIONSHIPS THAT WILL TURN THE COMPANY AROUND. CAROLINE: WE HAVE SEEN THE RESPONSE TO THE EARNINGS. IAN KING, TECH IN DEPTH, THE
NEWSLETTER COME OUT TODAY. COMING UP, GENERATED AI -- GENERATIVE AI PLATFORM WRITER. THE LLM'S NEW CAPABILITIES WITH THE CEO, MAY HABIB. ♪ CAROLINE: A SHAKEUP IS UNDERWAY FOR APPLE'S AI AND MACHINE LEARNING DIVISIONS. THE COMPANY HAS BEGUN TO BREAK UP WHAT HAD BEEN A UNIFIED APPROACH. FOR MORE, BLOOMBERG'S MARK
ORMAN HAS MORE. YOU HAVE BEEN TALKING ABOUT ONE POTENTIAL -- PARTICULAR EXECUTIVE LURED AWAY FROM GOOGLE. >> HERE IS THE STORY. SIRI LAUNCHED IN 2011. BY 2015, 2016, THEY REALLY FELT BEHIND. GOOGLE ASSISTANT CAME ONLINE, YOU HAD A LOT OF COMPETITORS, INCLUDING ALEXA FROM AMAZON. IT FELT LIKE APPLE HAD
SQUANDERED A 3, 4 YEAR LEAD. AT THE TEAM -- TIME, APPLE FELT THAT PART OF THAT WAS THAT THE AI WORK WAS SCATTERED ACROSS THE COMPANY. THEY WORKED IN SILOS ACROSS DIFFERENT DIVISIONS, HARDWARE, SOFTWARE SERVICES. THEY HIRED JOHN GIANNANDREA, WAS RUNNING GOOGLE SEARCH AT THE TIME. THEY BELIEVED HE WOULD ACHE THEM -- IT HAS NOT WORKED OUT SO FAR. SO NOW THEY WILL TRY BREAKING
IT UP, GOING BACK TO THE ROOTS, GOING BACK TO THE APPLE FUNCTIONAL ORGANIZATION, TAKING PIECES OF THE AI GROUP AND RE-SCATTERING THEM AROUND THE COMPANY. THEY MOVED SIRI FROM THEIR AI DIVISION TO THEIR SOFTWARE ENGINEERING DIVISION, WHICH MAKES SENSE, TO SOME EXTENT, BECAUSE SIRI IS SOFTWARE. NOW THEY ARE TAKING THE ROBOTICS DIVISION, WHICH WAS ALSO IN THE AI ORGANIZATION, AND MOVING THAT INTO HARDWARE ENGINEERING. ROBOTICS IS A HARDWARE PLAY IN PART, SO IT MAKES SENSE TO PUT THAT IN HARDWARE. WE WILL SEE HOW THAT WORKS OUT. BUT TELL ME AND MANY PEOPLE AT APPLE, IT FEELS LIKE THEY ARE REPAIRING FOR A WORLD WITHOUT A TRUE AI CHIEF, BACK TO APPLE IS TRULY FUNCTIONALLY ORGANIZED. CAROLINE: AND A WORLD WHERE THEY ARE ABOUT TO REPORT EARNINGS, TRYING TO TACKLE CHINA SUPPLY CHAINS AND MOVE IT TO INDIA.
MARK: THIS WILL BE ONE OF THE MORE INTERESTING APPLE EARNINGS RESULTS, PRESENTATIONS, NOT BECAUSE OF THE NUMBERS THEY WILL SHARE, NOT BECAUSE OF THE DATA THEY WILL GIVE IN THE PREPARED REMARKS, BUT BECAUSE THEY HAVE A LOT MORE QUESTIONS THEY WILL HAVE TO ANSWER THAN USUAL, WHEN IT COMES TO AI, OF COURSE, IT WILL BE BIG ON THE MINDS OF ANALYSTS ON THE CALL, BUT ALSO TARIFFS, ALSO DEALING WITH A TRUMP ADMINISTRATION, DEALING WITH INNOVATION QUESTIONS. THAT WILL BE A REALLY IMPORTANT EARNINGS CALL TO LISTEN TO, NOT BECAUSE OF WHAT THEY WILL COME OUT AND SAY BUT OF WHAT THEY WILL BE ASKED AND HOW THEY WILL RESPOND. I AM VERY MUCH LOOKING FORWARD TO THAT. CAROLINE: WE ARE EXCITED FOR YOUR
REPORTING ON IT. OUR KERMAN, WE APPRECIATE ALL THINGS APPLE. MEANWHILE, IN OTHER AI NEWS, ENTERPRISE AI PLATFORM WRITER IS ADOPTING A NEW ADAPTIVE REASONING MODEL THEY BELIEVE IS CHEAPER AND FASTER THAN COMPETING LLM'S. MAY HABIB, WRITER CEO, JOINS US. TELL ME ABOUT THE NEW MODEL AND WHAT MAKES IT A FRONT. MAY: HI, CAROLINE.
SO GOOD TO SEE YOU. THAT IS THE HEADLINE, PALMYRA X5 IS OUT. IT IS BUILT FOR GENTECH AI. IT HAS PERFORMANCE ON PAR WITH OTHER FRONTIER MODELS, BUT IT IS 3X FASTER, FOUR TIMES CHEAPER. IT IS AVAILABLE ON AWS BEDROCK. CAROLINE:
TELL US ABOUT HOW YOU GET THAT COST EFFICIENCY. YOU ARE OFFERING $.60 PER ONE MILLION INPUT TOKENS, SIX DOLLARS PER 10 MILLION OUTPUT TOKENS. HOW DO YOU GET TO THAT PRICE? MAY: IT IS IMPORTANT FOR PEOPLE TO UNDERSTAND WHAT PEOPLE -- WHEN WE LAUNCHED OUR AI HQ, WE HAD 100 PLUS PREBUILT AGENTS BUILT FOR THE ENTERPRISE, AND FOLKS WERE ASKING ME, HOW ARE YOU GETTING THIS KIND OF EFFICIENCY AND ACCURACY, WITH REALLY COMPLEX WORKFLOWS? AGENTS AT AN UBER, FINK AND TEMPLETON, THINGS THAT WERE CAPABLE OF TAKING MULTIPLE SYSTEMS, DATA FROM THIRD-PARTY, AND INTERNAL RESEARCH, AND ABLE TO GENERATE REALLY COMPLEX WORK? WE ARE ABLE TO TAKE THE FULL ONE MILLION TOKEN PROMPT AND PROCESS THAT CONTEXT WINDOW IN 22 SECONDS, FIRING OFF MULTI-TURN FUNCTION CALLS IN 300 SECONDS, ALL WHILE GETTING THIS PRICE EFFICIENCY. -- 300 MILLISECONDS, ALL WHILE GETTING THIS PRICE EFFICIENCY. WE TRAINED THIS MODEL ON ABOUT $1 MILLION OF GPU'S, SO ALSO AND READILY EFFICIENT ON THE TRAINING. CAROLINE:
HOW WAS THIS OCCURRING? IS THIS THE NEW DEEPSEEK TREND YOU ARE DOING, WHERE YOU DO MORE AND MORE WITH LESS, ABOUT TURNING TO OPEN SOURCE? HOW HAVE YOU MANAGED TO BE SO EFFICIENT? MAY: WE DEEPSEEKEK BEFORE DEEPSEEK. THIS IS A 100% SYNTHETIC BASED APPROACH, WHICH HAS THE IP FRIENDLINESS THE ENTERPRISE REQUIRES. ALGORITHMICALLY, WE ARE DOING A VERY INTERESTING SET OF TECHNIQUES AROUND A HYBRID ATTENTION MECHANISM, BLENDING LINEAR AND OTHER APPROACHES, AND WE ARE DOING A MIXER OF EXPERT SET OF TECHNIQUES, SO WE ARE ONLY ACTIVATING THE MOST RELEVANT SUBNETWORKS.
IT IS RESULTING IN MUCH LOWER LATENCY, MUCH MORE EFFICIENCY. CAROLINE: YOU TALKED ABOUT SOME OF THE VERY WELL-KNOWN COMPANIES THAT YOU CURRENTLY SERVE. TO GET THESE SORTS OF INVESTORS AND VANGUARDS OF THIS WORLD TO COME ON BOARD, HOW ARE YOU MAKING YOURSELF KNOWN? ARE YOU HAVING TO OFFER THIS SORT OF PRICE EFFICIENCY? IS THAT HOW YOU RISE ABOVE THE NOISE? IT FEELS THEY ARE SO MANY ENTERPRISE-SUITED OFFERINGS RIGHT NOW. MAY: IT IS ABSOLUTELY SO NOISY, BUT WHAT WE ARE SEEING IS FOLKS WHO DO NOT HAVE RESULTS OUR UNDERSTANDING THAT THEY CANNOT BUILD EVERYTHING THEMSELVES. SO IN ADDITION TO ENTERPRISE GRADE FRONTIER LLM'S, WE HAVE AN END TO END PLATFORM FOR BUILDING, ACTIVATING, SUPERVISING THESE AGENTS, AND THAT IS HOW WE STAND OUT. THAT ENTIRE PACKAGE IS WHAT RESULTS IN THE INCREDIBLE ROI, FOR BUILDING AMUSING AGENTS, AND IT IS ONE OF THE HIGHEST THEY HAD EVER SEEN.
SO IT IS INCREDIBLY NOISY FOR THESE ENTERPRISES, BUT CEOS ARE SEEING THAT THERE CEOS ARE DEMANDING RESULTS, AND I THINK THIS IS AI'S COVID COMMENT. IN COVID, YOU HAD THIS EXPLOSION OF COLLABORATION TOOLS, BECAUSE FOLKS HAD TO DO IT. I THINK WE ARE GOING INTO THE KIND OF ECONOMIC UNCERTAINTY THAT DEMANDS RESULTS AND WRITER IS PROVIDING THAT. CAROLINE: YOU THINK, IN THIS POTENTIAL DOWNTURN FROM A GLOBAL GDP PERSPECTIVE, PEOPLE WILL BE MORE DRAWN TO YOUR PRODUCTS, NOT LESS? MAY: 100%. WE ARE AI SOFTWARE THAT BUILDS SOFTWARE. WE ARE ALREADY SEEING IN OUR CUSTOMER BASE.
EXECUTIVES, CEOS, WHO SAY BEFORE YOU ASK MORE HEADCOUNT, BEFORE YOU ASK OR MORE SOFTWARE, I WANT TO SEE THAT AI COULD NOT DO IT BETTER. CAROLINE: WHAT ABOUT, THEREFORE, YOUR OPPORTUNITIES, AS WE GET MORE NERVOUSNESS AND ECONOMIC UNCERTAINTY? PRIOR TO ALL OF THIS, YOU ARE GETTING OTHER TECH STARTUPS COMING TO YOU SAYING, I CANNOT KEEP ON DOING THIS, MY EXPENSES ARE TOO HIGH, WOULD YOU MIND BUYING ME? ARE THERE STILL M&A OPPORTUNITIES FOR YOU NOW? MAY: WE ARE TRYING TO GROW ORGANICALLY AS FAST AS POSSIBLE. WE CANNOT KEEP UP WITH THE DEMAND. I AM WITH YOU FROM OUR LONDON OFFICE. WE ARE ALMOST 100 PEOPLE HERE. MORE THAN 400 GLOBALLY. TRYING TO BE 800 GLOBALLY AS
SOON AS POSSIBLE. FOLKS REALLY NEED RESULTS, AND THEY ARE COMING TO US TO BE ABLE TO REALLY BRING AI, ESPECIALLY GENTECH AI, TO THE BUSINESS. CAROLINE: MAY HABIB, THANKS FOR JOINING US FROM LONDON. MEANWHILE, COMING UP, WE SPEAK WITH THE PALO ALTO CO, NIKESH ARORA, LIVE ON A NEW ACQUISITION HE JUST MADE. FROM NEW YORK, THIS IS "BLOOMBERG TECHNOLOGY."
♪ CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY'S. WE ARE AT SESSION LOWS. THE NASDAQ WAS UP MORE THAN 6% LAST WEEK. WE GOT THE OPTIMISM IN TERMS OF WHAT THE FEDERAL RESERVE WOULD DO. WE HAVE THE PUSH AND PULL IN TERMS OF NEGOTIATIONS WITH CHINA. NOW WE ARE OFF ABOUT 1%. TAKING RISK OFF THE TABLE WHEN IT COMES TO THE NASDAQ. BITCOIN IS ALSO TRADING LOWER. YOU MOVE ON AND HAVE A LOOK AT THE INDIVIDUAL MOVERS.
I WANT TO SHINE A LIGHT ON THE FACT THAT WE HAVE INDIVIDUAL STORIES AROUND WHAT CHINA DOES TO FIGHT BACK ON A LACK OF ACCESS TO CHIPS FROM NVIDIA. MAYBE HUAWEI IS ABLE TO SERVE THAT MARKET. WE ARE OFF ALMOST 4% ON NVIDIA. MICROSOFT SET TO GIVE US EARNINGS. 20% OF ALL THE WEIGHTINGS ON THE S&P 500 ARE FOUR MEGA CAP NAMES. MICROSOFT IS ONE OF THEM. WE STILL THINK ABOUT AI
INFRASTRUCTURE AND CAPEX SPEND. PALO ALTO NETWORK MANAGES TO FIGHT THE NARRATIVE. WE ARE UP. THE COMPANY INTENDS TO ACQUIRE PROTECT AND -- PROTECT AI EXPANDING THE COMPANY'S CAPABILITY AND SECURITY. ALL OF THIS AS WE GET THE CONFERENCE UNDERWAY. JOINING US IS NIKESH ARORA, PALO ALTO NETWORK CEO. YOU HAVE A LOT TO ANNOUNCE. LET'S GO TO THE NEW
ANNOUNCEMENT IN TERMS OF M&A. I WAS HEARING UP TO SIX ENTERED $50 MILLION -- $650 MILLION. NIKESH: WE WILL NOT TALK ABOUT WHAT WE PAID. WE ARE ALL TALKING ABOUT AI.
ANY TIME YOU HAVE A TECHNOLOGY INFLECTION POINT IT BECOMES IMPORTANT WE ARE ABLE TO COME FORWARD AND PROVIDE SOLUTIONS TO OUR CUSTOMERS SO THEY CAN SECURELY DEPLOY TECHNOLOGY. IN THAT CONTEXT WE ARE ASSERTIVELY EMPLOYING A BUILD AND BY STRATEGY TO BUILD THE MOST IMPORTANT THING OVER THE NEXT FEW YEARS, WHICH IS A PLATFORM THAT ALLOWS YOU TO DEPLOY AI SECURELY. CAROLINE: LET'S TALK ABOUT BUILD VERSUS BUY AND WHY WAS THIS ASSET SO IMPORTANT? NIKESH: IF YOU LOOK WHAT IS GOING ON WITH AI. PEOPLE TRYING TO FIGURE OUT HOW TO DEPLOY INFRASTRUCTURE, WHETHER IT IS IN THE PUBLIC CROWD -- IN THE PUBLIC CLOUD. ALL OF THESE ARE VERY IMPORTANT DECISIONS WHICH ARE GOING TO UNDERPIN THE PLATFORMS OF THE FUTURE. WHEN YOU PUT THEM TOGETHER AND YOU DEPLOY THEM YOU HAVE TO MAKE SURE YOU ARE LOOKING AT THE SECURITY ASPECT OF EVERY ONE OF THESE THINGS.
PROTECT AI AFTER AN EXTENSIVE LOOK AROUND THE MARKET WE FOUND WAS WORKING ON SOME VERY INTERESTING TOPICS WHICH ARE COMPLEMENTARY TO WHAT WE HAVE BEEN BUILDING. WE HAVE BEEN BUILDING A GREAT PLATFORM TO PROTECT OUR CUSTOMERS. PROTECT AI WAS WORKING ON SOMETHING SIMILAR WHERE WE WERE LOOKING IN ALL THE MODELS IN THE WORLD SCANNING THEM TO MAKE SURE THERE WAS NOT BAD STUFF LURKING. THE COMBINATION OF THE TWO ALLOWS US TO BE MORE COMPREHENSIVE IN WHAT WE WILL OFFER OUR CUSTOMERS. CAROLINE: I WANT TO GET YOUR BIRDSEYE PERSPECTIVE. NO ONE CAN PUSH US FORWARD AS
MUCH AS YOU CAN IN THE FUTURE OF AGENTIC AI. THERE IS DEMAND FOR TRADITIONAL ENDPOINT PRODUCTS OF SECURITY. HOW DOES THAT SHIFT IF YOU'RE GOING FROM A USER LEVEL TO AN AGENT LEVEL? NIKESH: THAT IS THE BUZZ WORD. PEOPLE WILL TALK ABOUT HOW YOU MAKE AGENTS WORK? IT IS STILL UNCLEAR. THERE'S A LOT OF INNOVATION IN THE MARKET. THEIR WONDERFUL BUZZWORDS WE CREATE IN OUR INDUSTRY.
AS AGENTIC, TO ME IT BECOMES REAL WHEN YOU START GIVING AI ARMS AND LEGS, WHETHER ROBOTIC OR REAL. THAT IS WHERE THE QUESTION BECOMES CAN I RELY ON AI TO ACCOMPLISH THE TASK WITHOUT SUPERVISION. THAT IS WHERE THINGS WILL GET VERY INTERESTING. IT BECOMES IMPORTANT NOT ONLY TO MAKE SURE THE AGENT YOU'RE GIVING UP PTOLEMY TO IS SOMETHING YOU ARE COMFORTABLE AT WITHIN THE GUARD RAILS THAT YOU PUT OUT FOR THAT AGENT AND MAKE SURE NOBODY CAN TAKE OVER YOUR AGENT AND HIJACK IT IN A WAY TO MAKE THEM DO THINGS THEY DO NOT WANT TO DO. THAT WILL BE THE NEXT FRONTIER OF CYBERSECURITY AS WE GET AI DEPLOYED IN MULTIPLE PLACES HOW TO GIVE A CONTROL TO THE AGENTS, HOW DO WE GIVE THEM AGENCY AND WE CANNOT WAIT FOR THAT TO HAPPEN BUT IT WILL BE A NEW SET OF OPPORTUNITIES THAT WILL OPEN UP FOR US. CAROLINE: THERE ARE A LOT OF NAMES TRY TO MAKE THE MOST OF THE OPPORTUNITY.
A LOT OF THEM ARE THE HYPERSCALERS. MANY BECOME YOUR COMPETITORS. WHERE'D YOU SIT IN THIS ENVIRONMENT? NIKESH: IT HAS BEEN FASCINATING. CLOUD PROVIDERS SHOULD HAVE BEEN OUR COMPETITORS BUT THEY ARE NOT. THEY ARE FOCUSED ON MAKING SURE TECHNOLOGY GETS DEPLOYED AS QUICKLY AS POSSIBLE WHICH IS GOOD FOR THEIR BUSINESS AND ALL OF THEIR CUSTOMERS. OUR JOB IS TO MAKE SURE WE STAY IN LOCKSTEP WITH THEM AND WORK WITH OUR CUSTOMERS TO MAKE SURE THEY CAN DEPLOY TECHNOLOGY IN A SECURE FASHION.
IF OUR CUSTOM EASE HAVE COMFORT THAT WHEN THEY DEPLOY AI AND GIVE ECONOMIST CONTROL TO AI TO DO REPETITIVE TASKS OR INTERESTING TASKS IT CAN BE DONE SECURELY. THE MOMENT WE CAN PROVIDE THE UNDERPINNING OF TRUST AND RELIABILITY, THE FACT IF YOU DEPLOY WITH PALO ALTO NETWORKS THERE IS A HIGH PROBABILITY IT WILL BE MUCH SAFER THAN ANYTHING ELSE. THAT IS WHERE THE COMBINATION HAPPENS. I DO NOT SEE THIS AS A COMPETITOR ENVIRONMENT.
I SEE IT AS AN OPPORTUNITY FOR US TO WORK TOGETHER AND MAKE SURE WE ACCELERATE THE ADOPTION OF TECHNOLOGY AS OPPOSED TO HAVE OUR CUSTOMERS BE CONFUSED WHICH WAY TO GO. CAROLINE: YOU USED TO WORK AT GOOGLE AND HOST YOUR PRODUCTS ON GOOGLE CLOUD. HOW DO YOU FEEL ABOUT THEIR BIG SPLASHY DEAL? NIKESH: IT WILL BE INTERESTING TO WATCH. I HAD LOTS OF CONVERSATIONS WITH PEOPLE AT GOOGLE ABOUT IT. WE DO NOT INTEND TO CHANGE HOW WE DEPLOY OUR PRODUCTS. SOMETIMES WE SEE THEM IN THE MARKET.
OUR HOPE IS OUR CUSTOMERS WILL UNDERSTAND YOU WANT AN UNBIASED PRODUCT THAT WILL OPERATE EFFECTIVELY ON EVERY CLOUD PROVIDER AS OPPOSED TO BEHOLD TO A PARTICULAR PROVIDER. WE STILL NEED TO SOLVE FOR EVERYONE ELSE OUT THERE. WE WANT TO BE INDEPENDENT AND DELIVER THE SAME LEVEL OF CAPABILITY ACROSS EVERY PLATFORM SO OUR CUSTOMERS DO NOT HAVE TO SPEND TIME TRYING TO INTEGRATE ALL OF THE STUFF TOGETHER WHICH IS OUR ENTIRE PHILOSOPHY. CAROLINE: I LOVE FOLLOWING WHAT YOU ARE DOING IN TERMS OF PLATFORM OFFERINGS IN TERMS OF THE LATEST M&A BUT I ALSO LOVE FOLLOWING ON SOCIAL. WHETHER YOU WANTED TO OR NOT YOU ARE INVOLVED IN THE AI DEBATE ABOUT WHETHER WE WOULD GET AS MUCH CAPEX AND WHETHER INFRASTRUCTURE IS REALITY VERSUS HYPE. WHERE DO YOU STAND NOW?
NIKESH: EVERYBODY IS GETTING READY FOR A LARGE ADOPTION OF AI SCENARIO SO YOU SEE MILLIONS OF DOLLARS COMMITTED. WE MAY GET THE TIMING NOT PERFECT. YOU MAY BUILD TOO MUCH BUT I THINK IT IS HEADED IN THE RIGHT DIRECTION. I THINK SHORT-TERM AND THE 12 TO 24 MONTHS YOU COULD SEE A LOT OF THE INVESTMENT IS GOING TOWARDS INNOVATION. MAKE A SMARTER MODEL, MAKE ROBOTICS WORK.
YOU NEED A LOT OF COMPUTE TO GET TO A PLACE WHERE THE MODELS BECOME EXTREMELY USEFUL. ONCE WE GET TO A POINT WHERE THE MODELS ARE USEFUL THE QUESTION BECOMES HOW DO I DEPLOY THEM IN MY BUSINESS? HOW DO I AS A REGULAR CUSTOMER DEPLOY THESE THINGS EFFECTIVELY AND SECURELY. EVERYBODY IS EXPERIMENTING AND WE ARE NOT ALL EXPERTS.
THIS IS SOMETHING THAT CAME ABOUT LESS THAN 24 MONTHS AGO SO WE HAVE TO UNDERSTAND HOW THIS AFFECTS OUR BUSINESS, HOW DO I BUILD ROBOTIC THINGS THAT CAN DO STUFF FOR ME? HOW DO I BUILD AI AGENTS THEY CAN DO STUFF FOR ME? DO I BUILD OR BUY FROM SOMEBODY. ALL THAT STUFF WILL TAKE LONGER TO PAN OUT BUT WHEN IT HAPPENS WE WILL NEED ALL THAT CAPACITY. UNFORTUNATELY WE CANNOT WAIT TO BUILD CAPACITY, WE HAVE TO BUILD IT AHEAD OF DEMAND. IT IS THE RIGHT DIRECTION AND TIMING IS STILL TO BE FIGURED OUT. CAROLINE:
THANKS FOR SHARING YOUR EXPERTISE ACROSS ALL OF THE SUBJECTS. PALO ALTO NETWORKS CEO. NEXT UP, TALKING TECH. I AM TALKING ABOUT UAI DATA CENTER DEVELOPER PLANNING A MAJOR EXPANSION INTO SAUDI ARABIA.
THE COMPANY IS PLANNING TO TAKE 25% OF THE MARKET SHARE, DIRECTLY COMPETING WITH SMALLER AND LOCAL FIRMS. PLUS GERMAN DEFENSE STARTUP HAS RAISED IN ITS -- IT IS THE SECOND TIME THE COMPANY AIMS TO EXPAND IN UNITED KINGDOM. IT DECLINED TO SHARE ITS EVALUATION. ALPHABET IS NOW SET TO BE OFFERING $4 BILLION IN U.S. HIGH-GRADE CORPORATE DEBT. ACCORDING TO SOURCES THE
COMPANY IS SAID TO BE SELLING BONDS IN AS MANY AS FOUR PARTS AND COULD MARK THE COMPANY'S FIRST BOND SALE IN 2020. COMING UP WE TALK TO THE MANAGING PARTNERS OF FPV ABOUT FINDING AI START UPS THE LATEST FUND. MEANWHILE THERE IS NEWS ON SONY. COULD THEY BE SPITTING OUT THE SEMICONDUCTOR PART OF THE BUSINESS? SHARES HAVE RISEN THAT IS THE COMPANIES GETS MORE FOCUSED IT IS ALL ABOUT PLAYSTATION AND GAMING BUT THEY'RE ALSO SELLING OFF SOME OF THE ASSETS THAT DO NOT MEAN QUITE SO MUCH TO THE CORE BUSINESS. THIS IS BLOOMBERG TECHNOLOGY.
ON APPLE, SPOTIFY, AND I HEART. THIS IS BLOOMBERG. ELON MUSK'S X AI IS IN TALKS TO RAISE $20 BILLION IN FUNDING FOR ITS COMBINED AI AND SOCIAL MEDIA BUSINESS. THE DEAL WOULD VALUE THE COMPANY AT OVER $120 BILLION. IF COMPLETED IT WOULD BE THE SECOND-LARGEST STARTUP FUNDING ROUND OF ALL TIME BEHIND OPENAI IN THEIR $40 BILLION FINANCING EARLIER THIS YEAR. NOW WE HAVE SO MUCH NEWS WHEN IT COMES TO VC AND THERE'S MORE FUNDRAISING NEWS.
THE VENTURE FIRM FPV HAS RAISED MILLIONS OF DOLLARS TO FIND TARGET -- -- TO FIND TARGET STARTUPS. CONGRATULATIONS ON THE FUNDING ROUND. TELL ME HOW HARD, HOW EASY WAS IT TO GET THE LP'S EXCITED IN THIS CURRENT ENVIRONMENT? >> LAST TIME WE RAISED -- WHEN WE ANNOUNCED IT WAS THE 75 BASIS POINTS SO WE ARE USED TO THIS AND OUR INVESTORS ARE BACK LONG-TERM FOUNDERS AND THAT IS WHAT WE ARE FOCUSED ON. THE ENVIRONMENT IS TOUGH AND WE ARE PRIVILEGED TO HAVE RAISED BUT WE HAD EXCEPTIONAL BLUE-CHIP FOUNDERS INVESTING IN THE LONG-TERM SO THEY ARE NOT AS DISTRACTED BY THE SHORT-TERM. CAROLINE: WE THINK ABOUT HOW MUCH CANVA HAS MANAGED TO BE AN ICONIC COMPANY HE FOUNDED NOT ON THE WEST COAST OF AMERICA BUT IN AUSTRALIA.
HOW DO YOU FIND TEAMS LIKE THAT AND REPLICATE THE SUCCESS? >> OUR FOUNDERS ARE AMAZING PRODUCT DRIVEN FOUNDERS AND THEY SEE OTHER AMAZING PRODUCT DRIVEN FOUNDERS. I SPOKE 15 YEARS AT GOOGLE, I HELPED LAUNCH GOOGLE ANALYTICS, GOOGLE VOICE. I HELPED THEM GROW. IT IS ONE OF THOSE THINGS THAT WHEN YOU WORKED ON THE PRODUCTS.
I GOT THE OPPORTUNITY TO MEET THE FOUNDERS. THEY WERE VERY EXCITED ABOUT SOME OF THE WORK I DID. I HELPED THEM BUILD AND PRIORITIZE SOME OF THE FEATURES. I LOVE SPENDING TIME WITH FOUNDERS WHO BUILT PRODUCTS WHO WANT TO CHANGE THE WORLD AND STAND THE TEST OF TIME. THAT IS WHAT WE DO. CAROLINE: IT IS ABOUT BEING THE OPERATORS
ALONGSIDE THEM. PEOPLE COME TO YOU FROM YOUR EXPERIENCE WITH GOOGLE. I AM INTERESTED AS TO WHAT ADVICE YOU'RE ARE GIVING TO FOUNDERS RIGHT NOW WHEN NONE OF US HAS ANY IDEA WHAT THE CLARITY IS.
>> ONE THING IS CLEAR AND EVERYONE IS LIKE WHAT IS HAPPENING TO THE MARKET? IT WILL BE WHIPLASH. WE WILL HAVE A FEW YEARS OF UP-AND-DOWN BUT WE BOTH STARTED OUT DURING THE TECH BUBBLE BURST AND I WAS CIO OF MORGAN STANLEY DURING THE FINANCIAL CRISIS. YOU CANNOT GO UP TO THE RIGHT ALL THE TIME. YOU CANNOT BE BUILDING FOR THE NEXT YEAR OR THE NEXT TWO YEARS AND FOR THE FOUNDERS LOOKING FOR THOSE 10 YEAR PLUS HORIZONS IT IS ACTUALLY A GREAT TIME BECAUSE YOU HAVE TO FOCUS, YOU CANNOT GET AS MUCH DISTRACTION, YOU CANNOT GET AS MUCH COMPETITION. IF YOU ARE A MISSION DRIVEN FOUNDER WHO IS FOCUSED ON CHANGING THE FUTURE THIS IS A GREAT TIME TO STAY LASER FOCUSED. IF YOU'RE NOT A MISSION DRIVEN FOUNDER IT WILL BE HARD IF YOU'RE DEPENDING ON THE HYPE IN THE SHORT TERM STUFF.
THE HYPE MIGHT NOT LAST. WE SAY STAY FOCUSED IF YOU HAVE A BIG MISSION AND WORK WITH THE TIMES. CAROLINE: YOU HAVE BEEN THE ANTI-APOSTLES SAYING CUT THROUGH THE NOISE. A LOT OF LP'S THOUGHT THERE WOULD BE HYPER EXITS AROUND IPOS BUT THAT IS NOT HAPPENING. HOW ARE YOU HELPING YOUR PREVIOUS FUND BE ABLE TO GIVE LIQUIDITY TO THEIR TALENT AND HOW ARE YOU HELPING THEM MARCH THROUGH THIS? >> ONE OF THE WONDERFUL THINGS ABOUT THE LP'S WE FOUND IS THEY ARE LONG-TERM THINKERS. MOST OF THEM THINK DECADES IF NOT 50 YEARS INTO THE FUTURE AND THEY KNOW WE ARE NOT PLACING THE BET FOR TODAY, WE ARE DOING IT 10 YEARS IN THE FUTURE. THAT IS LIQUIDITY TIME HORIZON.
WE ARE NOT WORRIED OF THINGS EXIT TOMORROW OR NEXT YEAR. WE WORRY ABOUT IT THINGS WILL BE BIG IN 10 YEARS. THEY HAVE THE OPTION TO EXIT BUT IF THEY HOLD ON THEY ADD MORE VALUE. THEY ARE SUCH LONG-TERM THINKERS. WE WANT TO RETURN MONEY BUT WE WANT TO DO IT AT THE RIGHT TIME AND DO IT WHEN THINGS ARE GREAT.
THE COMPANIES THAT SURVIVED THE RECESSIONS, THAT SURVIVED THE MARKET TURMOIL, WHETHER TARIFFS OR WORLD WAR OR WHATEVER ELSE, THEY ARE LEFT AND THEY ARE THE WINNERS AND THEY HAVE THESE WONDERFUL EXITS. GOOGLE IN 2004. THEY EXITED AND THEY BECAME A BIG MARKET WINNER. >> I WORKED ON AN IPO AND EVERYONE IS FREAKING OUT IT WOULD NEVER COME BACK. SEVERAL YEARS LATER AFTER THE FINANCIAL CRISIS, WORKDAY, SALESFORCE, ALL OF THESE COMPANIES BUILT. IT TAKES LONGER TO EXIT BUT THAT IS ONE OF THE BENEFITS WE HAVE COME VISIT 10 YEARS OR 12 YEARS? IT DOES NOT MATTER FOR COMPOUNDING COMPANIES.
CAROLINE: ULTIMATELY THE MARKETS MOVED AWAY FROM THEM. WHAT REOPENS US NEXT TIME? WHAT WE CURRENTLY SEEING VALUE ACCRUED TO THAT IS THE RIGHT THING TO HAVE VALUE ACCRUED TO? >> WHEN THE MARKETS OPEN, I CANNOT PREDICT THE FUTURE BUT I CAN TELL YOU MARKETS LIKE STABILITY. IT MIGHT NOT BE FOR A BIT IF WE ARE NOT KNOWING WHAT IS HAPPENING. NOW WE HAD THE TARIFF SHOCK. THAT WILL SMOOTH OUT. PEOPLE WHO'D BEEN READY SAY WE
ARE COMING BACK IN. NOBODY WANTS TO GO WHEN THE TIDES ARE GOING UP AND DOWN AT THE SAME TIME. I THINK EVENTUALLY IT BECOMES NORMAL. MAYBE THIS WHIPLASH IS
NORMALIZED AND PEOPLE DO NOT CARE. CAROLINE: YOU ARE LOOKING AT PRIVATE MARKET VALUATIONS IMPACTED BY PUBLIC MARKETS. WHAT IS THE 10 YEAR BET? WHAT IS INTERESTING NOW THAT WILL BE INCREDIBLY INTERESTING IN 10 YEARS TIME? >> WE HAVE COMPANIES THAT ARE USING AI TO FIGURE OUT THE NEXT GENERATION OF DRUGS WAVE A COMPANY THAT IS FIGURED OUT HOW TO DO CLINICAL TRIALS USING AI TO FIND BETTER PATIENTS THEY ARE TAKING DRUGS OFF THE MARKET THEMSELVES. THE FOUNDERS ARE AMAZING AND MISSION DRIVEN AND THEY ARE TO RAISE CAPITAL AND HOPEFULLY THEY WILL BE AROUND WHEN EVERYONE ELSE IS GETTING WASHED AWAY. >> I THINK THE HEALTH CARE AND ALSO THE FIRST PHRASE OF AI EVERYONE GETS EXCITED ABOUT, IT FEELS NOT INCREMENTAL.
THE EXCITING STUFF, I THINK IT IS THE CLOUD TIMES. IF YOU ARE BUILDING A COMPANY AND YOU ARE NOT BUILDING ON AWS YOU ARE CRAZY. YOU SHOULD BE USING AI BUT ARE YOU WORKING ON THE BIG PROBLEMS AND ARE YOU WORKING ON NOT INCREMENTAL THINGS BUT THE BIG THINGS THAT WERE NOT POSSIBLE AND THAT IS THE THINGS THAT HAPPENED WITH BIOTECH AND SOME OF THOSE THINGS. THINGS THAT WERE NOT POSSIBLE. CAROLINE: ARE THEY GOING TO BE BUILT ON THE WEST COAST? ARE THEY GOING TO BE BUILT GLOBALLY? >> WE WILL GO WHEREVER GREAT FOUNDERS ARE IN HOPEFULLY THEY COME LOOKING FOR US. THERE IS NO DENYING THE WEST
COAST HAS A LOT OF THE CURRENT TALENT IN AI. I THINK WE WILL GO EVERYWHERE. CAROLINE: SO PLEASED YOU CAME HERE. GREAT TO HAVE CO-IMAGING PARTNERS OF FPV -- THE FOUNDERS AND PARTNERS OF FPV.
COMING UP NEXT, THE LATEST ON CAROLINE: DELIVEROO SHARES ARE SEARCHING AFTER THE BRITISH DELIVERY FIRM DISCLOSED AN ACQUISITION OFFER FROM DOORDASH WHICH WOULD EVALUATE AT 2.6 -- AT $3.6 BILLION. DELIVEROO HAS BEEN A PHENOMENAL TRADE. IT IS WELL OFF THE HIGHS OF WHERE IT USED TO TRADE. WHY WOULD WE SEE DOORDASH WANT TO BE BUYING IN? >> WE THINK THE OFFER FROM DOORDASH IS SOMETHING THAT IS A LONG TIME IN THE MAKING. ACCORDING TO PRESS REPORTS AS EARLY AS 2022 THERE HAS ALREADY BEEN INTEREST FROM DOORDASH TO MERGE WITH DELIVEROO. DOORDASH HAD THIS INTERNATIONAL
EXPANSION AMBITION ALREADY BECAUSE IN 2022 IT MADE A DEAL TO BUY THE FINNISH WHO DELIVERY COMPANY. IT HAS DEMONSTRATED ITS AMBITION TO EXPAND OVERSEAS. ALSO IN 2024 THERE WAS A CHANGE ON THE DELIVEROO SIDE BECAUSE THERE WAS AN EXPIRY OF A DUAL CLASS SHARE STRUCTURE WHICH MEANS THE CEO NO LONGER HELD THE DOMINANT VOTING POWER WHICH PAVED THE WAY FOR CONSOLIDATION SO A FURTHER MERGER DOWN THE ROAD.
WE THINK ACTUALLY IT IS NOT VERY SURPRISING. IT IS SOMETHING A LONG TIME IN THE MAKING. CAROLINE: SHARES HAVE BOUNCED TODAY BUT NOT UP TO THE HIGHS OF THE FULL EXTENT OF THE OFFER. I AM INTERESTED AS TO WHETHER THERE IS ANY CONCERN ABOUT THE CONSOLIDATION WE ARE SEEING THE INDUSTRY AT LARGE BECAUSE PROCESS GROUP HAS BEEN MAKING BIDS FOR OTHER DELIVERY HERO FOR EXAMPLE. >> INDEED. FOR EUROPEAN FOOD DELIVERY
STOCKS, WHETHER JUST EATS OR DELIVEROO OR DELIVER HERO IT IS CLEAR ON THEIR SHARE PRICE CHART THEY HAVE BEEN WELL OFF THERE HOW IT'S OF THREE YEARS AGO -- WELL OFF THE HEIGHTS OF THREE YEARS AGO. THE REASON IT IS CLEAR IS BECAUSE COMPANIES PUMP HUGE INVESTOR CASH AT THAT TIME DURING THE PANDEMIC DAYS AND THE ORDER NUMBERS WERE HIGH. NOW AS WE COME OUT OF THE PANDEMIC PEOPLE DIVE MORE -- PEOPLE DINE MORE IN RESTAURANTS AND THE PEAK IS NO LONGER THERE AND THOSE COMPANIES HAVE TO PIVOT TO PROFITABILITY AND THAT IS WHY WE ARE SEEING LOWER AND LOWER GROWTH. FOR DELIVEROO IS ONLY 7% GROWTH THIS QUARTER.
THAT IS THE EXACT REASON WE ARE SAYING MORE CONSOLIDATIONS HERE. YOU MENTIONED THE PROCESS OFFER FOR JUST EATS. THIS DEAL WE ARE LOOKING AT AS WELL. THESE COMPANIES NEED MORE COMPETITION. THEY DID MORE DEALS TO EASE UP THE COMPETITION. -- THEY NEED MORE DETAILS TO
EASE UP THE COMPETITION.
2025-05-05 07:34
