>> 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. ♪
