ED: I'M IN SAN FRANCISCO. THIS IS BLOOMBERG TECHNOLOGY. FULL COVERAGE ON ARTIFICIAL INTELLIGENCE. WE SPEAK TO SOMEONE WHO TESTIFIED BEFORE LAWMAKERS 24 HOURS AGO ON THE RISKS OF THE TECHNOLOGY AS WELL AS THE CEO OF CHARACTER AI AND DYNA TRACE. WE WILL DISCUSS THE STATE OF MAJOR CAPITAL INVESTING AND GO LIVE TO A FORUM FOCUSED ON GLOBAL FINANCE TECH. THERE'S A LOT OF ATTENTION FROM WALL STREET ON WHAT'S HAPPENING IN D.C. AND THE DEBT CEILING. A SMALL GROUP TRYING TO ACCELERATE NEGOTIATIONS. HOW IT LOOKS AND MARKETS, THE
NASDAQ 100 IS UP .5%. A NUMBER OF NAMES IN THE BASKET UP IN THE HIGH SINGLE DIGITS. SOME OF IT AI RELATED. THE 10 YEAR YIELD 3.56%. BITCOIN BACK BELOW $27,000. WE WILL BRING YOU DETAILS OF NEWS FLOW IN THE CRYPTO SPACE LATER IN THE PROGRAM.
IN TERMS OF SPECIFIC NAMES, ONE PIECE OF NEWS IS AMAZON WITH NEW ECHO DEVICES. AN EMPHASIS ON ALEXA AND THE NARRATIVE AROUND GENERATIVE AI TOOLS. DYNATRACE DOWN 1.4%. WE WILL SPEAK TO THE CEO LATER IN THE PROGRAM. THEN TESLA UP 4% REALLY ACCELERATING IN TERMS OF GAINS.
THE TAKEAWAYS OUT OF THE ANNUAL GENERAL MEETING, THEY WILL LOOK AT ADVERTISING IN A LIMITED WAY. IN ADDITION TO THE BOARD, AND ELON MUSK IS THERE TO STAY. HE IS GOING TO REFOCUS ON TESLA HAVING BEEN DISTRACTED BY TWITTER IN THE RECENT WEEKS AND MONTHS.
YESTERDAY ELON MUSK HELD THE ANNUAL SHAREHOLDER MEETING AND WHILE TAKING QUESTIONS FROM INVESTORS, HE EXCITED THE CROWD BY SAYING THIS. >> ALTHOUGH THERE'S A LOT OF PEOPLE THAT FOLLOW THE TESLA ACCOUNT AND MY ACCOUNT WHATEVER ON TWITTER, TO SOME DEGREE IT IS PREACHING TO THE CHOIR. THE CHOIR WAS ALREADY CONVINCED. IT DOES HAVE SOME MERIT. I BELIEVE IN TAKING SUGGESTIONS. WE WILL TRY A LITTLE ADVERTISING AND SEE HOW IT GOES. ED: LET'S GET INTO TESLA AND THE AD SHIFT WITH OUR GUEST. THE CHOIR IS CONVINCED.
DOES ADVERTISING CONVINCE OTHERS THAT ARE NOT IN THE CHOIR? GUEST: THE POINT THAT EVERYONE IS HARPING ON. GENERALLY, IT'S NOT A BAD IDEA TO TRY ADVERTISING. FROM OUR RESEARCH, WE KNOW THAT STICKER PRICE BASIS AND THE TOTAL COST OF OWNERSHIP, EV'S ARE BETTER CARS.
IF YOU HAVEN'T BOUGHT ONE, MAYBE THAT INFORMATION HAS NOT REACHED YOU YET AND AND AND WILL. WHAT I WAS MOST EXCITED ABOUT FROM LAST NIGHT WAS ALL THE TALK AROUND AUTONOMY. ELON SAYS IT WILL BE THE GREATEST HUMAN UNLOCK INHUMAN HISTORY. IT COULD ADD AN ADDITIONAL 26 TRILLION DOLLARS TO GDP IN THE NEXT 10 YEARS. IT WILL TOTALLY CHANGE TESLA'S BUSINESS MODEL. ED: LET'S REACT TO THE OTHER ANNOUNCEMENTS WHICH IS THE ADDITION TO THE BOARD AND THE COMMENTS FROM ELON MUSK ABOUT HIS FOCUS ON TESLA REMAINING AS CEO TO GET THE COMPANY THROUGH THE NEXT POTUS -- FOCUS ON AI. WHAT DID YOU MAKE OF THAT?
GUEST: STROBEL IS A GREAT ADDITION TO THE BOARD. RIGHT NOW HE IS WORKING WITH HIS OWN COMPANY ON BATTERY CYCLING. THEY ARE SEEING GREAT EFFICIENCY IN BATTERY RECYCLING. WE ALWAYS THOUGHT IT WAS
IMPORTANT FOR ELON MUSK TO STAY ON AS CEO AS THEY REACH FULL AUTONOMY AGAIN BECAUSE WE THINK THIS IS THE NEXT GREATEST MILESTONE FOR TESLA. ARGUABLY ANY AUTOMAKER OUT THERE, THIS IS WHAT THEY SHOULD BE GOING FOR. WE THINK THAT AUTONOMOUS DRIVING OR AUTONOMOUS RIGHT HAIL WHICH IS WHAT WE EXPECTED TO PLAY OUT WILL COMPRISE TWO THIRDS OF TESLA'S ENTERPRISE VALUE IN THE NEXT FIVE YEARS. TESLA HAS AN ENORMOUS DATA ADVANTAGE AND YOU SHOULDN'T MISS IT. ED: INVESTORS OR SHAREHOLDERS
REJECTED A PROPOSAL FOR TESLA TO PUBLISH A KEY RISK REPORT AND TESLA'S ARGUMENT WAS IF WE PUT ALL OF OUR TALENT IN THE SHOP WINDOW, OUR COMPETITORS WILL TRY TO TAKE THEM. DO YOU STILL HAVE A KEY MAN RISK AROUND ELON MUSK? GUEST: I THINK THERE'S A LOT OF FOCUS ON THIS QUESTION. WHAT I BROADLY SAY IS I WOULD BE A LOT MORE CONCERNED IF HE SAID HE WAS STEPPING AWAY FROM TESLA. HE IS CRUCIAL TO CROSS THE AUTONOMY FINISH LINE. AUTONOMOUS DRIVING LOWERS THE COST PER MILE OF RIGHT HAIL SIGNIFICANTLY. IT'S GOING TO BE A TRILLION DOLLAR INDUSTRY IN THE NEXT FIVE YEARS. WE'VE HEARD THIS QUESTION, SO
MANY TIMES OVER THE PAST FIVE YEARS. TESLA, SPACEX, HE WAS ONE OF THE FOUNDERS OF OPEN AI. HE HAS DEMONSTRATED HE CAN JUGGLE A LOT AND WE ARE FOCUSED ON HIS EXECUTION. GIVEN THAT TESLA HAS THE BEST COST RELATIVE TO PERFORMANCE OF ANY EV MAKER OUT THERE, HE HAS ALREADY PROVED THAT HE CAN JUGGLE MULTIPLE THINGS AND SUCCEED AT IT. ED: THERE WAS A DEMONSTRATION OF PROGRESS IN OPTIMISTS THE HUMANOID BOUGHT. WHEN YOU SAY THAT, DOES THAT GIVE YOU A FEELING THEY ARE MAKING PROGRESS IN AI IN THAT CASE AT LEAST? GUEST: YES THAT IS REALLY INTERESTING. IT'S OUT OF OUR FIVE-YEAR
FORECASTING WINDOW. OUR PRICE TARGET FOR TESLA IS $2000 PER SHARE 2027. THAT DOESN'T INCLUDE OPTIMISTS.
BUT THE IMPORTANT THING TO LOOK AT IS WHY TESLA? WHY HUMANOID ROBOT? THEY HAVE MILLIONS OF CARS ON THE ROAD, THEY HAVE OVER ONE MILLION MILES DRIVEN THAT THEY CAN PULL DATA FROM. THIS SETS THEM UP WELL TO CREATE ROBOTS THAT MOVE THROUGH THE PHYSICAL WORLD. THE AUTONOMOUS CAR WILL BE THE FIRST VERSION OF THAT. THE OPTIMUS ROBOT IS A BIG PART OF THAT. THE FACT THAT THIS IS A
HUMANOID AND IT CAN MOVE THROUGH SPACES THAT WERE ALREADY BUILT FOR HUMANS, IT'S BIG AND IT COULD BE A MAJOR PRO TO -- PRODUCTIVITY ENHANCER. WE WILL SEE NONMARKET LABOR ACTIVITY TURN INTO MARKET LABOR ACTIVITY AND THE PRODUCTIVITY OF THE INDIVIDUAL WORKER WILL INCREASE BECAUSE OF THIS. WE ARE EXCITED. ED: YOUR 2027 CALL IS -- I WILL GIVE YOU AN OPPORTUNITY TO EXPLAIN. WAS THERE ANYTHING IN THE PRESENTATION OR INTERVIEW THAT MOVED THE NEEDLE FOR YOU? CHANGED THE COURSE OF WHERE YOU SEE THIS COMPANY GOING? GUEST: AGAIN SINCE WE ARE SO FOCUSED ON THE LONG-TERM HORIZON THAT FIVE-YEAR VIEW, I WOULD STICK TO THE $2000 PER SHARE ESTIMATE THAT WE PUT OUT. I THINK AGAIN WHAT I AM LOOKING
FORWARD TO IS EVERYONE ELSE REALIZING THE OPPORTUNITY IN AUTONOMOUS DRIVING. I THINK TESLA DOES NOT GET ENOUGH QUESTIONS ABOUT THIS OPPORTUNITY GIVEN HOW MONUMENTAL IT WILL BE. I WAS GLAD THAT WE HEARD ELON MUSK TALK ABOUT THAT LAST NIGHT BECAUSE MOST DON'T TRULY UNDERSTAND HOW BIG OF A PRODUCTIVITY UNLOCK AND CASH FLOW UNLOCK IT WILL BE. WE THINK THOMAS RIDE HAIL COULD HAVE SOFTWARE MARGINS AND WE HEARD AFFIRMATIONS OF THAT LAST NIGHT. IT IS A RECURRING REVENUE STREAM . SOFTWARE LIKE MARGINS. CASH FLOW PER CAR PER YEAR, THAT'S UNHEARD OF.
NO OTHER TRADITIONAL AUTOMAKER IS CLOSE TO THE DATA ADVANTAGE THAT TESLA HAS AT LEAST. THEY ARE IN A MAJOR POSITION THERE. ED: AHEAD OF YOU COMING ON, A NUMBER OF PEOPLE TWEETED AT ME SAYING THEY WANT TO HEAR MORE ABOUT THE PLAN FOR AUTONOMOUS DRIVING. THANK YOU FOR YOUR REACTION TO TESLA'S AGM.
COMING UP, WE'RE GOING TO BREAK DOWN THE RISKS AND REWARDS OF TECHNOLOGY WITH OUR GUEST TO TESTIFY BEFORE CONGRESS AT TUESDAY'S HEARING. THIS IS BLOOMBERG. ED: BEFORE A SENATE JUDICIARY SUBCOMMITTEE, THE OPEN AI CEO PRAISED AI POTENTIAL BUT WARNED THE TECHNOLOGY IS POWERFUL ENOUGH TO CHANGE SOCIETY IN AN UNPREDICTABLE WAY. JOINING US FOR SOMEONE WHO ALSO TESTIFIED, AND NYU PROFESSOR GARY MARCUS.
YOU ARE ALSO THE HEAD OF THE PODCAST HUMANS VERSUS MACHINES. LET ME ASK YOU THIS, WHAT GOOD CAME OUT OF YESTERDAY'S HEARING? WHAT WAS THE NET RESULT? GUEST: I THOUGHT THE HEARING WAS FANTASTIC. IT FAR EXCEEDED MY OWN EXPECTATIONS. IT WAS REALLY BIPARTISAN. I THINK WE ALL AGREED ALMOST EVERYBODY EXCEPT THE IBM EXECUTIVE ALL AGREED THAT WE NEED TO HAVE SOME KIND OF NATIONAL AGENCY GOVERNING AI AND PROBABLY WANT SOME GLOBAL AGENCY DOING THAT. SAM ALTMAN WAS SUPPORTIVE OF THAT. THE SENATORS ARE PRETTY POSITIVE TOWARDS IT. THE NOTION IS THAT THE UNITED STATES SHOULD TRY TO LEAD THE WAY IF WE'RE GOING TO DO SOMETHING GLOBAL.
I HOPE THAT WILL HAPPEN. THERE WAS ALSO STRONG SUPPORT FOR HAVING SOMETHING LIKE FDA TYPE REGULATIONS WHERE IF YOU HAVE A SUFFICIENTLY LARGE MODEL, YOU NEED TO SHOW THAT IT IS SUFFICIENTLY SAFE. YOU CAN JUST RELEASE SOMETHING TO 100 MILLION PEOPLE. I THOUGHT IT WAS VERY BIPARTISAN POSITIVE ATMOSPHERE. PEOPLE RECOGNIZED HOW SERIOUS THE PROBLEMS WERE AND THERE WAS A LOT OF SENSE FROM THE SENATORS THAT THEY DIDN'T DO THE RIGHT THING WITH SECTION 230 AND THE INTERNET AND THEY WANTED TO DO BETTER. IT TOOK THEM LIKE 14 YEARS AFTER SOCIAL MEDIA BEFORE THEY DID ANYTHING AND IT'S ONLY SIX MONTH AFTER CHET GPT MADE A BIG THAT THEY ARE TRYING TO HANDLE IT.
I SAW A LOT OF SERIOUSNESS ON THE PART OF THE SENATORS. ED: I INVITED OUR AUDIENCE TO PUT FORWARD QUESTIONS FOR YOU. WE WILL GIVE YOU A SECOND TO TAKE ON SOME WATER. MANY TWEETED AT ME SAYING WHAT YOU WERE DOING WAS SCARE AMONG. -- SCARE MONGERING. IS THAT A FAIR ACCUSATION? GUEST: I DON'T THINK SO.
IT'S TRUE THAT I'M TRYING TO RAISE ALARMS ABOUT THINGS I THINK ARE RISKY BUT SCAREMONGERING IS IF YOU DON'T THINK THERE'S A RISK AND YOU'RE TRYING TO MANIPULATE PEOPLE. I'VE PUT ALL MY OWN EFFORT NOT GETTING PAID FOR THIS AND TRYING TO ADDRESS THE RISK BECAUSE I THINK THEY ARE REAL. SAM AGREED WITH ME THAT THERE ARE RISKS TO THE ELECTIONS AND POSSIBLY MUCH GRAVER RISKS IN THE LONG-TERM IF WE DON'T FIGURE OUT HOW TO CONTROL AI SYSTEMS. ED: ONE OF THE PROPOSAL SAM PUT FORWARD WAS TO ESTABLISH AT LEAST HERE IN THE UNITED STATES AND AGENCY TO LICENSE OR HAVE SOME SORT OF LICENSING SYSTEM FOR THE DEVELOPMENT OF AI. MANY BELIEVE THAT WOULD BASICALLY CENTRALIZE ACTIVITY CONTROL POWER AMONG THE BIGGEST TECH COMPANIES.
WHAT IS YOUR RESPONSE? GUEST: TO CLARIFY EVEN BEFORE THIS MEETING, I WROTE AN OP-ED IN THE ECONOMIST AND I GAVE A TED TALK APRIL 18 ABOUT HAVING AN INTERNATIONAL AGENCY TO REGULATE AI. SAM WAS SUPPORTIVE OF THE. HE EMPHASIZED LICENSING FOR LARGE-SCALE MODELS. NOT NECESSARILY FOR SMALL MODELS. THINK WE ALL DID -- AGREE THAT WE DON'T WANT TO CUT OFF RESEARCH OR SMALL COMPANIES FROM HAVING A ROLE BUT THE LARGER THE MODEL, THE LARGER IMPACT AND THE MORE WE MIGHT NEED LICENSING. ED: ONE OF THE QUESTIONS FROM OUR AUDIENCE IS FOR YOU TO EXPLAIN WHAT IS THE DIFFERENCE BETWEEN FOOLING HUMANS WITH AI AND FOOLING THE SYSTEM? GUEST: I'M NOT SURE WHAT YOU MEAN BY FOOLING THE SYSTEM. ED: I THINK THEY MEAN IF YOU ARE A CONSUMER AND YOU ARE CONFRONTED WITH INFORMATION FROM A GENERATIVE AI TOOL AND IT'S FALSE, YOU ARE FULL.
BUT YOU CAN USE THEM TO CREATE ALL SORTS OF SYSTEMS IN A THINK THE ROOT OF THAT QUESTION IS WHAT IS THE GREATER RISK ABOUT HUMAN INTERACTION WITH AI OR BROADLY AUTOMATION THAT COMES FROM THOSE TOOLS? GUEST: THERE ARE DIFFERENT RISKS AT DIFFERENT TIME SCALES. THE THING I AM MOST CURRENTLY WORRIED ABOUT IS THE RISK TO DEMOCRACY. IT COMES BOTH FROM ACCIDENTAL MISTAKES FROM THE SYSTEMS, WE KNOW THEY CAN HALLUCINATE. THEY DO THAT WITHOUT HUMAN INTERVENTION, THEY ARE NOT A RELIABLE TECHNOLOGY. THEN THAT ACTORS CAN USE THEM TO MAKE ENORMOUS AMOUNTS OF MISINFORMATION. DEEPFAKES FOR IMAGES AND TEXT.
THE FACT THE SYSTEMS ARE UNRELIABLE, THEY DON'T KNOW WHAT THEY'RE TALKING ABOUT, THEY CAN'T VERIFY WHAT THEY ARE SAYING, AND THEY CAN BE ABUSED. IT'S LIKE BOTH. IN TERMS OF LONG-TERM RISK, YOU CAN THINK ABOUT DELIBERATE SCENARIOS WHERE PEOPLE TRY TO HIM NIPPY LATE THE MARKETS AND THINGS GO WRONG. THERE'S VIOLENCE BECAUSE PEOPLE MISS ATTRIBUTE THINGS THAT ARE HAPPENING OR MAYBE MACHINES DO THINGS THAT ARE ENTIRELY DIFFERENT FROM WHAT WE PROGRAM THEM TO DO. I DON'T KNOW IF YOU CAN
DICHOTOMY IN THAT WAY. THE MACHINES ARE NOT RELIABLE AND MACHINES ARE NOT VERY WELL CONTROLLED SO THAT LEADS TO ALL KINDS OF RISKS. ED: WHY IS THE LARGE LANGUAGE MODEL APPROACH NOT THE RIGHT APPROACH TO ACHIEVE AGI IN YOUR OPINION? GUEST: I JUST SAW THE WORDS ON YOUR SCREEN SAFELY AND MORE ALIGNED. THE SYSTEMS AREN'T THAT SAFE, THEY ARE NOT THAT SOPHISTICATED, THEY DON'T HAVE A MODEL OF THE WORLD, THEY DON'T UNDERSTAND WHAT'S GOING ON. THEY MAKE STUFF UP ALL THE
TIME. THEY MADE UP A SEXUAL HARASSMENT CHARGE. THEY SAID ELON MUSK WAS DEAD WHEN HE WAS ALIVE. ARE NOT SYSTEMATIC TRUSTWORTHY BITS OF AI. 20 YEARS FROM NOW, WE WILL LOOK BACK AND SAY THEY USED AI THAT WAS THAT UNRELIABLE? WHAT WERE THEY THINKING? ED: WHAT DO YOU WANT TO HAPPEN NEXT? YOU ARE QUITE COMPLEMENTARY OF THE HEARING ITSELF, IT BEING BIPARTISAN. THERE IS A CONCRETE NEXT STEP FOR LAWMAKERS OR REGULATORS TO TAKE, WHAT DOES IT LOOK LIKE? GUEST: I THINK THE NEXT STEP IS TO FIGURE OUT WHAT REGULATION WOULD LOOK LIKE. I THINK WE PROBABLY NEED A CABINET LEVEL AGENCY AND WE SHOULD START DRAFTING PLANS FOR HOW THAT WOULD WORK. THERE'S LOTS OF COMPLICATIONS
IN TERMS OF HOW IT WOULD WORK WITH EXISTING AGENCIES AND INTERNATIONALLY. WE SHOULD START TAKING THE CONSENSUS WE HAVE AND REPRESENT WHAT THAT WOULD LOOK LIKE AS ACTUAL LEGISLATION. ED: YOU TALKED ABOUT THE NEED FOR A GLOBAL REGULATOR A GLOBAL AGENCY. DO YOU RECOGNIZE A MULTIPLE SPEED APPROACH LIKE WHAT CHINA IS DOING WHEN IT COMES TO THE REGULATION AND DEVELOPMENT OF AI TECHNOLOGY? GUEST: I THINK WE HAVEN'T OPPORTUNITY TO DO SOMETHING RATIONAL RATHER THAN ARBITRARY. IT'S NOT IN THE INTEREST OF THE AI COMPANIES IF WE HAVE MANY DIFFERENT PLACES WHERE YOU HAVE TO TRAIN YOUR OWN LANGUAGE MODEL. AS YOU WELL KNOW, IT'S EXPENSIVE TO TRAIN THESE MODELS.
IT'S COSTLY IN TERMS OF CLIMATE IMPACT. IF EVERYBODY IS REQUIRING THEIR OWN SET OF RULES, THEIR OWN GIANT LANGUAGE MODEL THAT TAKES MILLIONS OF DOLLARS TO TRAIN AND JET FLIGHTS IN TERMS OF EMISSIONS AND SO FORTH, THAT'S NOT A GREAT THING. THINK COMPANIES WOULD LIKE SOME KIND OF ALIGNMENT, SYSTEMATIC WAY OF DOING BUSINESS. THERE'S ALL THIS TALK ABOUT GLOBAL TENSION AND SOME OF IT IS OF COURSE REAL BUT IN TERMS OF AI, NO COUNTRY WANTS THEIR CITIZENS TO BE OVERWHELMED BY MISINFORMATION. NOBODY WANTS TO BE OVERWHELMED BY CYBERCRIME AND NO ONE WANTS ROBOTS TO TAKE OVER THE WORLD. EVEN IF SOME COUNTRIES ARE
GOING TO DO SOME THINGS DIFFERENTLY, THERE'S A LOT OF INTERSECTION BETWEEN WHAT DIFFERENT COUNTRIES WANT AND EVEN WHAT THE COMPANIES WANT SOME ALIGNMENT. THERE'S A LOT OF OPPORTUNITY EVEN THOUGH THE POLITICS ARE DIFFICULT. ED: GARY MARCUS NYU PROFESSOR ALSO PODCAST HOST. THANK YOU. STICKING WITH AI, GOLDMAN SACHS SAYS AI OFFERS THE BIGGEST POTENTIAL LONG-TERM SUPPORT FOR U.S. PROFIT MARGINS. IT CAN BOOST NET MARGINS BY NEARLY 400 BASIS POINTS OVER A DECADE. THE TEAM NOTES THAT PREDICTING
AI'S IMPACT IS TRICKY DUE TO THE LARGE NUMBER OF UNKNOWN FACTORS SURROUNDING IT SUCH AS REGULATION. THERE HAVE BEEN 1600 MENTIONS OF AI BY EUROPEAN FORMS -- FIRMS IN THE FIRST QUARTER CALLS ALONE. COMING UP, HOW KIM KARDASHIAN IS USING HER SOCIAL REACH TO ATTRACT INVESTORS FOR PRIVATE EQUITY FUND. KEEPING AN EYE ON SHARES OF CISCO. IT IS HIGHER BY 7%. WOULD WE BE SURPRISED IF AI IS A KEY TERM WHEN IT COMES TO THEM? MORE ON THE NETWORKING SIDE. THIS IS BLOOMBERG. ♪
ED: INDIA INVESTING $2 BILLION TO PITCH ITSELF AS A MANUFACTURING HUB TO COMPANIES LIKE APPLE THAT MAKE LAPTOPS AND OTHER HARDWARE. THE TECHNOLOGY MINISTER ANNOUNCED THE PLAN EARLIER WITH PLANS OF A SIX YEAR SPAN. 7% OF APPLES IPHONE OUTPUT WAS PRODUCED IN INDIA. KIM KARDASHIAN IS LOOKING TO RAISE MONEY FROM INVESTORS.
SHE COFOUNDED A FUND. THE FUNDRAISING PITCH HIGHLIGHTS HER SOCIAL REACH IS ONE OF THE REASONS IT WILL WIN. PLUS MIXED EARNINGS RESULT FROM TENCENT. THE NET INCOME FELL SHORT OF ESTIMATES DESPITE GAINS IN THE CLOUD UNIT. COMING UP, WE WILL SPEAK TO THE CEO OF CHARACTER AI.
ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." LET US GET A QUICK CHECK ON THE MARKETS. I WANT TO PLAY -- PAY CLOSE ATTENTION TO BITCOIN. WE ARE DOWN BELOW 27,000 U.S. DOLLARS OFF OF .6%. WE ARE TRADING 24/7 WHEN IT COMES TO BITCOIN.
THERE IS TECHNOLOGY NEWS IN TERMS OF GAUGE -- OF ENGAGEMENT BETWEEN PLATFORMS. THERE IS NOT A CLOSE CORRELATION BETWEEN THE TRADE THAT WE SEE AND OTHER RISK ASSETS AS IT RELATES TO THE DEBT CEILING. WE HAVE TRADED IN THIS RANGE FROM 26 TO 28,000 U.S. DOLLARS PER TOKEN OVER THE LAST COUPLE WEEKS. IN TERMS OF EQUITY THERE IS NEWS FLOW DRIVING PARTICULAR NAMES. WE ARE THINKING ABOUT AMAZON. THEY ARE OUT WITH A NEW RANGE
OF DEVICES AND WE WILL GIVE YOU THOSE DETAILS. WHEN WE CONSIDER AI, A LOT OF COMMENTARY FROM COMPANIES ABOUT HOW THEY ARE TAKING THE R&D SIDE AND PUTTING IT INTO PRODUCT. ALPHABET SEEING MOMENTUM AND WE ARE FLAT ON THE START. IT HAS SEEN EARLY GAINS BASED OFF OF THE ANNOUNCEMENTS MADE AT GOOGLE. LET US TALK ABOUT AMAZON INTRODUCING AN UPDATED SLATE OF ECHO DEVICES AND BRING CHATGPT STYLE TO ALEXA GADGETS. THE NEW AND MORE CONVERSATIONAL CAPABILITIES WILL ROLLOUT INCREMENTALLY WITH A FRUIT -- WITH A FEW THINGS TO SOLVE ALONG THE WAY. IT IS NOT JUST ALEXA AND IT IS
NOT ALEXA BUT IT DOES OFFER PERSONALIZED AI ASSISTANTS. I AM TALKING ABOUT CHARACTER AI, WHICH LAUNCHED LAST SEPTEMBER WHICH IS REACHING 200 MILLION PLATFORM VISITS PER MONTH. THE FOUNDER AND CEO AND OF COURSE A FORMER GOOGLE BRAIN TEAM MEMBER JOINS US NOW FOR MORE. WELCOME TO THE PROGRAM. WE WANTED TO HAVE YOU ON "BLOOMBERG TECHNOLOGY" FOR A WHILE. IT ISN'T -- IT IS INTERESTING TO SEE THE ENGAGEMENT WITH CHARACTER AI.
YOU HAVE A HISTORY AND STORY IN THE DEVELOPMENT OF AI, BUT CHARACTER AI IS A PRETTY SIMPLE TOOL. WHY DID YOU STARTED? >> I HAVE BEEN INVOLVED IN INVENTING A LOT OF THE TECHNOLOGY BEHIND BOTH LANGUAGE MODELS, BUT THIS IS A TECHNOLOGY THAT HAS A BILLION USE CASES. AND IT IS SOMETHING WHERE YOU WILL NO LONGER NEED THE DEVELOPER TO INVENT ONE BILLION NEW APPLICATIONS, USERS CAN TALK AND COME UP WITH NEW VALUE. THE MOST IMPORTANT THING IS THAT IT TO THE USERS RIGHT NOW. WE WANTED TO DO THAT AS QUICKLY AS POSSIBLE AND LET PEOPLE FIGURE OUT WHAT IT IS GOOD FOR. I HAVE BEEN USING IT IN RECENT WEEKS. YOU HAVE THE CHOICE OF A
PRE-CREATED AVATAR OR CREATE YOUR OWN. YOU OFFER AN AVATAR IN THE LIKENESS OF ELON MUSK AND YOU CAN INTERACT WITH IT AND YOU CAN ASK QUESTIONS. WE ARE SHOWING THAT ON THE SCREEN.
HE STARTS BY SAYING YOU ARE WASTING MY TIME I LITERALLY RULED THE WORLD. YOU ASK IF YOU COULD GO BACK IN TIME WHEN WHERE WHERE WOULD YOU GO, JUST EXPLAIN WHAT ONE CAN USE CHARACTER.AI FOUR. -- FOR. NOAM: IT IS NOT OUR JOB TO TELL YOU WHAT USES FOR -- WHAT TO USE IT FOR. WE ARE SEEING A LOT OF FUN AND ENTERTAINMENT ALONG WITH EMOTIONAL SUPPORT AND TESTIMONIALS SAYING THAT I HAD A FRIEND WHO WAS DEPRESSED AND THIS SAVED MY LIFE. ALL KINDS OF WONDERFUL STUFF THAT WE HAVE NEVER IMAGINED. ED:
I SHOULD POINT OUT AGAIN, THAT IS A GENERATIVE AI AVATAR, IT IS NOT THE REAL ELON MUSK BUT THERE LIES THE POINT OF THE PLATFORM. DOES THIS SHOW THE LIMITATIONS OF WHERE WE ARE WITH LARGE LANGUAGE MODELS? RESPECTFULLY THE CHARACTER.AI PLATFORM IS A SIMPLE EMPLOYER -- SIMPLE INTERACTION FOR THE USER.
IS THAT WHERE LARGE LANGUAGE MODELS ARE RIGHT NOW? NOAM: YES. THIS IS WHAT IT IS GOOD FOR NOW SO LET US USE IT FOR IT NOW. ON EVERY PAGE IT SAYS EVERYTHING THE CHARACTERS SAY IS MADE UP SO USERS UNDERSTAND THAT IT IS FICTION BUT IT IS BRINGING VALUE FROM WHAT IS REALLY THE VERY BEGINNINGS OF THIS TECHNOLOGY. THIS IS ITERATION 0.0.1, RELATIVE TO WHAT IS COMING NEXT.
WE WILL KEEP MAKING THIS THING BETTER. BUT AT THE SAME TIME, LET US LET PEOPLE USE IT. ED: HOW DO YOU MONETIZE THIS? NOAM: WE ARE STARTING WITH THE PREMIUM MODEL, BUT WE ARE CONVINCED THAT THE REAL VALUE IS TO CONSUMERS AND END USERS SO WE WILL CONTINUE AS THINGS GET BETTER TO MONETIZE TO USERS.
ED: YOU ARE A GOOGLE BRAIN AND YOU TALKED ABOUT THE IDEA OF THE 20% IN OTHER WORDS, PEOPLE WHO ARE KICKING AROUND MENLO PARK AND WORKING ON AI IN THEIR SPARE TIME IN THE WORKING DAY. AND I WONDERED WHEN YOU SAW GOOGLE AT GOOGLE I/O MAKE ALL OF THESE PRODUCT ANNOUNCEMENTS AND PUT THEIR WORK INTO THE REAL WORLD, WHAT WAS YOUR REACTION? NOAM: IT IS WONDERFUL. GOOGLE HAS BEEN BRINGING TRILLIONS OF DOLLARS OF VALUE TO THE WORLD DIRECTLY TO CONSUMERS FOR DECADES AND I AM VERY EXCITED TO SEE THAT CONTINUE. ED: WHAT DID YOU MAKE OF YESTERDAY'S HEARING OF SAM ALTMAN, GARY MARCUS, AND THE CONVERSATIONS THAT THEY WERE HAVING? NOAM: I MEAN, WE DO NOT KNOW WHAT THE BEST USE CASES ARE.
IT IS THE ACTUAL USERS AND EVERY INDIVIDUAL PERSON WHO CAN ACTUALLY UNLOCK THE VALUE IN THIS STUFF. SO I AM KIND OF DUBIOUS ABOUT THE ABILITY OF THE FEDERAL GOVERNMENT TO REGULATE AND TO TELL PEOPLE WHAT THE THING IS GOOD FOR BECAUSE THEY DO NOT HAVE THE CAPACITY. ED: THE FOUNDER AND CEO OF CHARACTER.AI, AND ONE TIME A MEMBER OF GOOGLE BRAIN. THANK YOU. IN OTHER NEWS THAT WE ARE FOLLOWING, ELIZABETH HOLMES LOST HER FINAL REQUEST TO REMAIN FREE ON BAIL WHILE SHE APPEALS HER FRAUD CONVICTION. IT MEANS THAT SHE WILL HAVE TO REPORT TO PRISON TO BEGIN A MORE THAN 11 YEAR SENTENCE AFTER BEING CONVICTED OF DEFRAUDING INVESTORS LAST NOVEMBER. THE FORMER PRESIDENT'S SIMILAR
REQUEST WAS ALSO DENIED AND HE REPORTED TO PRISON LAST MONTH TO BEGIN HIS 13 YEAR SENTENCE. COMING UP, WE WILL DISCUSS THE GLOBALIZATION OF EC MONEY AND OPPORTUNITIES WITH COMPANIES THAT HAVE TIES WITH CHINA. THAT IS NEXT. THIS IS BLOOMBERG. ♪ ED: LET US HEAD OUT TO THE GLOBAL FINANCE TECH OF GLOBAL QUALITY FORUM HAPPENING RIGHT NOW. SONALI IS THERE WITH PATRICK JUST OFF A PANEL WHERE HE DISCUSSED GLOBALIZATION OF VENTURE CAPITAL AND TECH ENTREPRENEURSHIP. SONALI: THANK YOU.
I UNDERSTAND THAT THIS IS YOUR FIRST TRIP BACK TO NEW YORK SINCE COVID. WHAT HAS THAT BEEN LIKE, AND WHAT IS THE REOPENING LIKE IN CHINA. PATRICK: IT HAS BEEN A LONG TIME. I USED TO, BEFORE COVID, TRAVEL AS 100 TO 76 DAYS A YEAR.
BUT COVID PULLED EVERYBODY BACK. IN CHINA, I THINK ON THE GROUND THERE ARE A LOT OF ACTIVITIES GOING ON. I THINK THE CONSUMER IS VERY EAGER TO EMBRACE THE WORLD AND NEW LIFE. AND SO THEY HAVE BEEN DOING ALL KINDS OF INTERESTING ACTIVITIES. SO, LET US SEE WHAT IS GOING TO HAPPEN IN THE SECOND HALF OF THE YEAR AND IN A FULL ECONOMY.
I THINK EVERYBODY IS SO EAGER TO GO BACK. SONALI: WHEN YOU THINK ABOUT GLOBALIZATION, THERE IS A LOT OF QUESTIONS ABOUT HOW QUICKLY THE WORLD MIGHT BE DEGLOBALIZING IN THE WAKE OF POLITICAL TENSIONS AND COVID. WHAT ARE YOU SEEING IN TERMS OF TECHNOLOGY COMPANIES IN PARTICULAR. IS IT MORE COMPETITION OR ARE YOU SEEING JUST LITTLE BITES OF COOPERATION? PATRICK: I THINK EVERYBODY CAN BE FRANK. A LOT OF MY FRIENDS THAT I'VE TALKED TO, THEY ARE ALL WORRIED. YES, THE SAME HERE WITH THE AMERICAN AMBASSADORS AND ENTREPRENEURS AS WELL BECAUSE THE TWO COUNTRIES. BUT I THINK THE WORLD IS TRULY
INTERLINKED. I HAVE BEEN TALKING TO A THINK TANK IN AMERICA, AND THEY ACTUALLY SAID TO ME THAT IF THERE IS A COMPLETE DELINKAGE BETWEEN THE CHINA AND THE U.S., THE AMERICAN COMPANIES WOULD LOSE THE MARKET CAP BECAUSE COST WOULD GO UP. PATRICK: ANOTHER -- SONALI: ANOTHER INTERESTING ASPECT IS THE COMPETITION TO DEVELOP TECHNOLOGIES FASTER THAN THE OTHER AND I WONDER HOW YOU SEE THAT IN TERMS OF AI. A LOT OF INVESTORS ARE SAYING
HOW IT WILL PUSH THE MARKET FASTER. IS THERE ANYTHING THAT CHINA IS DOING WHEN IT COMES TO ARTIFICIAL INTELLIGENCE THAT THE U.S. IS NOT? PATRICK: IF YOU TALK TO THE AI COMMUNITY, THERE IS CERTAINLY A COMMUNITY IN THE U.S., AND CHINA AND EUROPE.
ADD THESE GUYS -- AND GUYS WORK IN THE VIRTUAL WORLD AND TALK TO EACH OTHER QUITE A LOT. IT IS A COMPETITION AMONG DIFFERENT TECHNOLOGY OR DIFFERENT BUSINESSES. BUT YOU WILL SEE PEOPLE THAT REALLY WANT TO WORK WITH EACH OTHER. TO GIVE YOU AN EXAMPLE, CHINA FOR THE MOBILE INTERNET THAT IS A LAST GENERATION DIGITAL ECONOMY. CHINA WAS A LEADER IN THE WORLD.
AND I ADVISED SOME OF THE LARGE MULTINATIONAL COMPANY CEO'S. THEY SAID THAT THE CONSUMER EXPERIENCE ON THE CONSUMER SIDE WAS THE BEST IN CHINA WITH U.S. NUMBER TWO AND EUROPE NUMBER THREE. CHINA HAD A LOT OF TALENT. SO MANY ENGINEERS THAT WERE BATTLE TESTED ON A VERY LARGE-SCALE CONSUMER OPERATIONS. I ACTUALLY SEE A LOT OF INTERESTING INNOVATIONS COMING OUT OF IT. BY THE WAY, AND WE THINK ABOUT THE INTERNET, HOW MANY OF US REMEMBER WHO INVENTED INTERNET? HOW MANY OF US REMEMBER WHO INVENTED THE REFRIGERATOR? BUT IT IS AMAZON AND COCA-COLA THAT THE WORLD IS BENEFITING FROM. I THINK GREAT ENTREPRENEURS
WHEN THEY HAVE THIS NEW TECHNOLOGY WAVE, THEY WILL LEVERAGE IT TO CREATE SOMETHING EXCITING FOR CONSUMER OR BUSINESSES. ED: THANK YOU FOR YOUR TIME HERE ON "BLOOMBERG TECHNOLOGY." THERE IS A DEBATE ABOUT U.S. DOMICILED VC'S PUTTING MONEY INTO CHINESE TECHNOLOGY COMPANIES. WHAT ARE YOU SEEING IN TERMS OF
THE LP APPETITE, U.S. INSTITUTIONAL APPETITE AND LP'S WANTING TO INVEST IN CHINA TECHNOLOGY COMPANIES? PATRICK: I THINK FOR RIGHT NOW, I FEEL LIKE EVERYBODY HAS PUT IT ON HOLD BECAUSE OF GEOPOLITICAL CONCERNS. I SAID LISTEN, THIS IS THE FIRST TRIP THAT I DID TO AMERICA SINCE COVID.
I THINK MANY OF THE LP'S IN AMERICA, MANY OF THE COMPANY CEOS HAVE NOT TRAVELED TO CHINA AND THEY USED TO TRAVEL TO CHINA ONCE A QUARTER. THEY HAVE NOT BEEN BACK SINCE COVID. JUST TO GIVE YOU A NUMBER, THE FLIGHTS BETWEEN THE U.S.
AND CHINA TODAY IN Q1 WERE ONLY 5% THAT CAPACITY PRIOR TO COVID. THERE IS A LACK OF INTERACTIONS, A LACK OF COMMUNICATION, SO PEOPLE TEND TO THINK EVERYTHING IN A VERY ABSTRACT WAY WHEN YOU DO NOT NEED THAT TALK. ED: WHEN YOU ARE AT WELLINGTON YOU HELD SOME OF THE TOP CHINA TECH NAMES AS AN INSTITUTIONAL INVESTOR.
HOW ATTRACTIVE ARE THE U.S. ADR'S? THERE BEEN A LOT OF BACK-AND-FORTH, BUT THEY ARE STILL GIANTS OF TECHNOLOGY GLOBALLY. PATRICK: YOU KNOW, THEY ARE STILL WORKING HARD, BY THE WAY AND CHINA HAS OWNED THESE COMPANIES FOR THE LAST 20 YEARS AND THEY HAVE ACCUMULATED A LOT OF KNOW-HOW. THEY HAVE A WORLD-CLASS ENGINEERING FORCE WORKING AND I THINK THE WORLD, TO BE HONEST IS A LITTLE SAD. BECAUSE WITH POLITICS PEOPLE DO NOT TALK ABOUT EACH OTHER -- DO NOT TALK TO EACH OTHER. THESE COMPANIES ARE DOING REAL WORK AND THEY WILL COME UP WITH REAL AND EXCITING PRODUCTS ESPECIALLY ON THIS NEXT WAVE OF AI. ON THE APPLICATION SIDE, I
THINK THE CHINESE COMPANIES CAN POTENTIALLY DO WELL. SONALI: FOR A COUPLE OF MONTHS THEY WERE FEARS FROM U.S. INVESTORS INVESTING IN CHINESE GIANTS BECAUSE OF REGULATORY CRACKDOWNS. HOW MUCH IS THAT A CONCERN FOR YOU AS A LOCAL INVESTOR? PATRICK: WE ARE VENTURE CAPITALISTS SO WE HAVE TO THINK EVERYTHING IN THE LONGER TERM. WE LOOK AT THE TECHNOLOGY AND HOW THE COMPANY IS ORGANIZED AND COMPARE THEM TO THE BEST COMPANIES IN THE WORLD, THE COMPANIES IN SILICON VALLEY AND WE SEE THAT SOME OF THE COMPANIES ARE REALLY COMPETITIVE. AND SO IT IS THE INVESTOR'S JOB TO BRIDGE THE GAP AND ACTUALLY GROW GLOBALLY. SONALI: THANK YOU SO MUCH FOR YOUR TIME.
ED: THAT WAS THE FOUNDING PARTNER PATRICK STRONG. COMING UP, WE TALKED ARTIFICIAL INTELLIGENCE AGAIN AND HOW IT IS BEING UTILIZED IN THE STRUCTURE SOFTWARE INDUSTRY WITH THE CEO OF DYNA TRACE. ♪ ED: DYNATRACE OUT WITH EARNINGS, BEATING EXPECTATIONS AND OFFERING IT UP THE FORECAST ABOVE ANALYST EXPECTATIONS.
THE CEO RICK MCCONNELL WITH US. THE FOUR YOUR GUIDANCE COMING IN STRONG. HOW MUCH OF THAT WAS TO DO WITH EUPHORIA AROUND AI? RICK: FIRST, THANK YOU FOR HAVING US. ACTUALLY, NONE OF IT.
WE SEE GENERATIVE AI AS A FASCINATING AND COMPELLING TECHNOLOGY. BUT WE DID NOT FACTOR THAT INTO OUR GUIDANCE. IT IS ALL UPSIDE. ED: THAT IS A QUITE CANDID AND FRESH RESPONSE BECAUSE WHAT WE HAVE HEARD FOR WEEKS IS THAT AI IS EVERYTHING. IT SEEMS LIKE THERE OURS -- LIKE THERE IS SOME POTENTIAL UPSIDE. WHAT ARE YOU DOING TO BOOST YOUR INFRASTRUCTURE OFFERING AS IT IS? RICK: WE DO THINK THAT GENERATIVE AI IS SYNERGISTIC. THE $50 MILLION OBSERVABILITY SPACE IS WHAT WE PARTICIPATE IN.
AND THE WAY THAT GENERATIVE AI IS GOING TO FOSTER ITSELF IS THAT IT IS GOING TO GENERATE MASSIVE GAINS IN PRODUCTIVITY. AND PRODUCTIVITY IS NOT FROM TEXT BUT ALSO FROM SOURCE CODE. AND MORE CODE MEANS MORE PRODUCTIVITY AND APPLICATIONS, MORE WORK LOADS AND AS YOU GET THROUGH ALL OF THAT, YOU NEED MORE OBSERVABILITY CAPABILITY WHICH IS WHAT WE DO TO MAKE SURE THAT THAT ENVIRONMENT WORKS PERFECTLY. AND THAT IS WHAT DYNATRACE IS ABOUT. JACINTA TREE -- SYNERGY AND GENERATIVE AI CAPABILITIES. ED: THE ENTERPRISE CLOUD AREA IS INTERESTING.
BARCLAYS HAD A NOTE OUT SAYING THAT THIS HINTS AT IMPROVING THE MACRO CONDITIONS. ARE YOU HEARING THAT THINGS ARE GETTING BETTER? RICK: WE DID NOT SAY THAT IN OUR COMMENTS. OUR GUIDANCE ASSUMES NO CHANGE THROUGH FY 24 WHICH BEGAN ON APRIL 1. WE ARE NOT FACTORING THAT INTO GUIDANCE.
ANY MACRO UPSIDE WOULD BE AN OPPORTUNITY FOR ACCELERATED GROWTH AND PERFORMANCE. ED: YOU HAVE TALKED ABOUT WHAT THE POTENTIAL GENERATIVE AI IS. HOW ARE YOU HIRING TO ENSURE THAT YOU CAN HARNESS THAT POTENTIAL? RICK: WE CONTINUE TO BRING NEW ENGINEERS ON GLOBALLY TO TAKE ADVANTAGE OF INORDINATE INCREASES OF OPPORTUNITY IN THE MARKET. AS WE LOOK AT THE HYPER SCALARS, $175 BILLION OF ANNUALIZED REVENUE THAT THEY JUST REPORTED IN THE LATEST QUARTERS. ALL OF THESE REALLY BENEFIT FROM ABSORB -- OBSERVEABILITY. THAT SHOULD BE SUBSTANTIAL AND
ASKED THAT -- AS SUCH WE GROW OUR BUSINESS. WE JUST REPORTED WITH 29% ADJUSTED AR GROWTH AND SUBSCRIPTION REVENUE GROWTH AND 29% FREE CASH FLOW MARKET. THESE ARE EXCEPTIONAL RESULTS WITH A BALANCE OF REVENUE AND PROFITABILITY THAT WE COULD NOT BE MORE ENTHUSED ABOUT -- ENTHUSIASTIC ABOUT. ED: QUICKLY, GEOGRAPHICALLY, WHERE IS THE MOST ACTIVITY AND STRENGTH GLOBALLY? RICK: AS YOU AND I TALKED ABOUT, WE HAD AN ANSWER THAT WE WERE SEEING MORE TRACTION IN THE AMERICAS LAST QUARTER AND IN HIM ERIC DACHSHUND EUROPE THE QUARTER BEFORE -- AND EUROPE THE QUARTER BEFORE THAT. WE SAW STRONG GROWTH IN YEAR-OVER-YEAR LAST QUARTER.
WE WERE REALLY PLEASED ACROSS THE BOARD WITH THE RESULTS. ED: RICK MCCONNELL, DYNATRACE CEO, ANOTHER QUARTER IN THE BAG. THANK YOU FOR YOUR TIME. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." DO NOT FORGET TO CHECK OUT OUR PODCAST, WE ARE ONLY THREE DAYS INTO A MONSTER WEEK SO SO MUCH TO CONSIDER.
WHEREVER YOU GET YOUR PODCASTS. THERE HAS BEEN A HUGE FOCUS ON ARTIFICIAL INTELLIGENCE IN THIS PROGRAM. YOU LOOK AT THE NEWS FLOW AND MARKETS, THAT IS WHERE WE HAVE BEEN. THIS IS BLOOMBERG. ♪
2023-05-22