Bloomberg Businessweek Weekend - June 14th, 2025 - Bloomberg Businessweek

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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News.

Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy, plus global business, finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.

Speaker 1 (00:32):
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Another busy week that started with the unrest in California
over the Trump Administration's immigration policies and closed with progress
on trade between the United States and two of its
major trading partners.

Speaker 3 (00:46):
We also spend time at Cisco Live twenty twenty five
in San Diego. We're going to share some of our
favorite conversations from the conference.

Speaker 1 (00:54):
There's a lot of good ones. We're going to start
this hour with trade. US Treasury Secretary Scott Bessend, Commerce
Secretary Howard Lutnik, and US Trade Representative Jamison Greer were
in London early this past week negotiating with officials from
China in the hopes of making a major trade breakthrough.

Speaker 3 (01:12):
The talks lasted around twenty hours, taking up all day
Monday and most of the day on Tuesday before wrapping
up late that night.

Speaker 4 (01:18):
Yeah, it felt like.

Speaker 1 (01:19):
They just kept pushing on and pushing on and pushing on.
We finally did hear from Secretary Lutnik and Trade Representative Greer,
who finally stepped outside close to midnight in London Tuesday
and talked to reporters about the high stakes negotiations and
how the group finally agreed on a plan to move forward.
Here's the US Commerce Secretary.

Speaker 5 (01:39):
First, we had to get sort of the negativity out,
and now we can go forward to try to do
positive trade, growing trade, and beneficial to both China and
to the United States.

Speaker 3 (01:51):
From me, that's Commerce Secretary Howard Lutnick, just moments after
leading trade negotiations in London with Chinese officials.

Speaker 1 (01:58):
The framework the two sides agreed upon is based around
a consensus from meetings in Geneva held last month that
first lowered terriffs between the two countries. At the core
of the talks highly coveted rare earth minerals.

Speaker 3 (02:10):
As negotiations were going on, we wanted to touch base
with an expert on these materials and why they're at
the center of talks between the US and China, we
caught up with Graceland Baskrin, director of the Critical Mineral
Security Program at the Center for Strategic and International Studies.
She helped explain why rare earths are so important.

Speaker 6 (02:28):
First and foremost, rare earths are in everything, and we've
seen that in the last couple of weeks. As companies
have not been able to secure the licenses they need,
we have seen disruptions to manufacturing.

Speaker 7 (02:39):
We've seen it most visibly from the automotive sector.

Speaker 6 (02:42):
For example, Ford actually paused the manufacturing of its Explorer
in Chicago because it.

Speaker 7 (02:48):
Didn't have these rare earths.

Speaker 6 (02:49):
But we have to remember they're in defense technologies, they're
in cancer treatment, they're in MRI scanners, they're in just
about everything electronic. So what we have is both this
huge reliant and there's no significant processing capabilities that exist
operational today, which means that we are wholly dependent on
China for something that we need.

Speaker 8 (03:10):
A lot of.

Speaker 3 (03:11):
Grazlyn, Carol and I spoke to r J. Scaring, the
CEO of Rivian, the ev maker, and we asked them
specifically about rare earths, and partly what he said and
he's been clear that he is working to lobby the
Trump administration. His folks are communicating with them about the
importance of rarest But he also told us, hey, necessities
essentially the mother of invention, and I'm confident that we're
going to be able to do some of this stuff,

(03:32):
at least in the near future without rare earths. Do
you think that's the case? Are we going to be
able from a technological standpoint not to have to rely
on rare earths for some of these things.

Speaker 6 (03:40):
We are going to reduce our reliance. I mean, never
underestimate the power of American innovation. We created a vaccine
for a virus that we didn't know anything about a
year and a half prior to that. So we will
absolutely see I think a reduction in our reliance on
them number one, in terms of how much we need them.
We're starting to create engines without them. However, that is

(04:01):
a process. The second thing we're going to start to
see is more capabilities come online outside of China. We soft,
for example, that Linus is now starting to produce small
scale at its facility in Malaysia.

Speaker 7 (04:13):
The US is kind of trying to warp speed our
own facilities in California and Texas. So innovation is going
to be a huge.

Speaker 6 (04:19):
Part of reducing our reliance and increasing our capabilities.

Speaker 1 (04:23):
All right, but how quickly does all that happen? Because
I think the other thing we followed up with him
our desk Garrent, is that none of this is going
to happen overnight, right, So how long does it take
to kind of make the switch? And then in the meantime,
how much are we still reliant on China or how
long will we probably be relying on China?

Speaker 7 (04:42):
I mean, we're going to be relying on China at
some level in my opinion. I know opinions vary on
this for probably a few years. In terms of being able.

Speaker 6 (04:49):
To meet all of our capabilities, we have to remember
this isn't just a problem of capital. In December twenty
twenty three, China actually banned the export of processing technologies
parts of this supply chain. We actually realized we didn't
even have the technical know how in terms of how
to do those midstream. So one is building the technical
know how and that takes a bit of time, it's expensive.

(05:11):
So realistically, even if we start to be able to
get off take by the end of the year through
domestic capabilities and potentially through non Chinese foreign sources before
we are comfortably reliant on non Chinese capabilities for probably
a few years.

Speaker 3 (05:30):
Gracelyn, how much of this is an environmental story? To
what extent is the processing of rare or something that's
done in China because other countries didn't want to deal
with the environmental consequences of this.

Speaker 6 (05:42):
The environment is no doubt one of the challenge challenges
that has limited other countries from developing the capabilities.

Speaker 7 (05:48):
You know, we use the term nimb not in my
backyard because sometimes.

Speaker 6 (05:52):
We don't want these things in our backyard and we're
very happy for them to be done far away.

Speaker 7 (05:56):
So that was certainly one component. The second thing I
want to add to the environment component.

Speaker 6 (06:01):
Is generally the United States has deprioritized mining over the
better part of several decades. Between the nineteen fifties and
the nineteen nineties, the US was actually the top rare
earth producer in the world. We were the top uranian
producer in the world. We had a Bureau of Mind
that was responsible in government for coordinating all of our
mining activities.

Speaker 7 (06:20):
We closed that in nineteen ninety six.

Speaker 6 (06:22):
We seeded a lot of our advantages to China and
Russia during this time, and that's how they really created
a dominant position where the US once was. So the
environmental challenges certainly slow down permitting and some of these
other dimensions of mining, but we also have to remember
there was a broader government deprioritization of the agenda, which
is how we found ourselves where we are today.

Speaker 1 (06:45):
Well, that's what I was going to ask you. Was
it because the government wasn't prioritizing Was it because companies,
you know, really concerned about the bottom line and profitability
and making money that they said China can do it
more cheaply and more easily for us? Is it because
we didn't have the labor pool? Why was it that
the US went from being a leader to basically, you know,

(07:07):
now it's China as the leader when it comes to
rare earth minerals.

Speaker 6 (07:10):
So if this was a multiple choice exam, all of
the above, I hope would be one option.

Speaker 7 (07:14):
But there's a few things right, So when.

Speaker 6 (07:16):
The government deprioritizes something, it creates a negative signal as
a result of government deprioritizing it, and a lot of
this moving offshore to China, Russia, Australia.

Speaker 7 (07:27):
Over time, then mine engineering.

Speaker 6 (07:29):
Programs have less, you know, less need to produce mine
engineers and other skilled labor for mining operations, so.

Speaker 7 (07:36):
We have a huge workforce shortage here in the United States.

Speaker 6 (07:39):
Along with that, again, it is much cheaper to do
it in China, where there are low environmental standards, where
labor is much cheaper. If you go to a mine
in Montana, you're not going to have a worker making
under one hundred and twenty thousand dollars.

Speaker 7 (07:53):
We don't have to pay.

Speaker 6 (07:54):
A worker in China that same amount, So basically the
overall production.

Speaker 3 (07:59):
Costs fell to That was Graceland Baskren, director of the
Critical Mineral Security Program at the Center for Strategic and
International Studies.

Speaker 1 (08:06):
We should point out after our conversation Bloomberg News reporting
that the Trump administration is developing a plan to use
Cold War era powers to prioritize and fund rare earth
projects it deems critical to national security, and that is
according to people familiar with the matter. You can check
out the entire story find it on the Bloomberg and
at Bloomberg dot com. So while trade talks dominated the

(08:28):
overall news cycle this past week, one top business story
for US was about one of the world's largest marketcap companies,
and yes, it's definitely a household name.

Speaker 3 (08:36):
Apple hosted its annual Worldwide Developers Conference in Cooper Tino,
also known as WWDC. The company unveiled its biggest redesign
of its operating system in years. It's called Liquid Glass.

Speaker 1 (08:49):
Not a big surprise since Bloomberg's Mark Gerrman had reported
a lot of the details in the weeks leading up
to the conference and got to say, investor is not
too impressed as well, as they sent shares of Apple
lower during the event keynote.

Speaker 3 (09:00):
For more on Apple's new look and what we learned
at WWDC, we spoke with Bloomberg Technology co host ed Ludlow,
who was at the conference in Cooper Tino.

Speaker 9 (09:10):
You know, you have to remember this is Apple WWDC.
It is a developers conference. A lot of what is
announces targeted at a group of people who are critically
important in contributing to Apple's ecosystem. But it was almost
kind of like a sell the news kind of event,
both because a lot of what we heard Mark German
had already reported. We all know that, and also because

(09:33):
you know, expectations that Apple at some point is going
to give us a lot more on AI. Those expectations
weren't met clearly.

Speaker 3 (09:40):
Hey, let's stick on the liquid glass portion of this.
My question then, in my question now after it being unveiled,
is is there a learning curve here for consumers? We've
seen mistakes that Apple's made in the past with redesigns
Apple Maps more than a decade ago certainly comes to
mind there. But but is this going to be a
learning curve? Like how different is this going to be
as an experien I mean, they're over a billion iOS

(10:01):
users out there. They're going to have to get used
to those.

Speaker 9 (10:04):
Yes, but a billion iOS users. But you have to
think about it in the aggregate of people that use
a broader Apple ecosystem, so a lot of liquid glasses.
Its piration comes from the work that app we're done
with vision Pro, you know, literally the UI and UX
of that experience using vision Pro, the translucency of it.
And so by making it uniform, you know, having the

(10:25):
same look across iPhone, mac iPad os and vision Pro
and watch, you know, it just makes you more familiar
and I guess open to using the full hardware suite
of products, let alone the software suite of products. But again, like,
this is a stock that's been driven by trade headline,
trade risk, tariff risk. But it's a company who, like

(10:46):
will tell you timetime again that they're just focused on
iteration design, you know, executing on making things beautiful every year.
And the problem is that last year twenty twenty four,
and indeed the year prior when they announced the vision
pro So this event the reason I'm here, all of
us gathered at WWDC, there was much more of a clear,
tangible news catalyst around it. This kind of goes back

(11:08):
to what WWC has always been, which has been for
the people, the community that build for Apple, for the
App store and for all of those devices.

Speaker 1 (11:15):
Okay, and that's I guess part of the value of
going to WWDC, right ed, is kind of talking to
some of these developers, feeling the mood about what they
are saying. So what are you hearing from them? These
are the kind of insiders, right So I'm just curious.

Speaker 9 (11:31):
So yeah, we actually did get some AI news, and
that piece of news was that Apple is going to
open up its on device LMS, Apple's own work in
proprietary models to the developer community. The reason that that's
a substantive piece of news is that's exactly how it
works with open ai and Microsoft and Google and the
Gemini teams. A lot of the success they've had in

(11:53):
basically commercializing that technology is to say to developers, have
at it. Here's the underlying model. Use it to make
whatever you want to do better. And that makes the
iOS as an example, more appealing. So that was a
big step forward today.

Speaker 8 (12:08):
But to the.

Speaker 9 (12:08):
Outside of the investor community, all of us that are
consumers that have iPhones, there wasn't something there for us
in that respect. And what was so interesting is that
sort of dropping the stock at the start of the keynote.

Speaker 10 (12:19):
It actually.

Speaker 9 (12:22):
Coincided with Craig Federigi, that the Services software chief, saying
we will have a lot more to talk about with
Siri later, you know, because this had nothing to do
with that the way that one as a consumer interacts
with their phone right now.

Speaker 3 (12:35):
Later, how much later, I mean, our investors and members
of the developer community still waiting for a SERI that
is as smart as some of these virtual assistance that
we've seen from LMS at this point.

Speaker 9 (12:49):
Yeah, it's interesting, like you know, I'm here at WWDC,
but I still was following what German was putting in
the blog in real time, and he made the point
at the end that Craig was kind of at pain
to point out, this is what is new with Apple Intelligence.
Here are all of the things that Apple Intelligence can do,
rather than you're going to have to wait till later
in the year to get more functionality out of it.

(13:10):
On the other hand, like one of the things we
got today was live translation in the I message and
cool context but also through AirPods.

Speaker 8 (13:16):
Right, But I even get.

Speaker 9 (13:18):
Like a sense of deja vous when I was at
metaconnect at last fall. You know, Mark Zuckerberg was there
on stage with his Rayvan Metas demoing exactly the same thing.
You know, the ability to live translate in a nation
like America where many people are bilingual. It's awesome when
you consider the number of people that use an iPhone
and are on the iOS system or macros or iPad os.

(13:38):
But it ain't that new, and all the other technology
companies are doing it as well, and that's kind of
the frustration. It's like, give me the all singing, all
dancing version of Apple Intelligence, which we interact with through
Siri principally, and that's the bit you're going to wait for.
And I didn't answer your question to him because they
didn't say later in the year.

Speaker 3 (13:54):
No, that's it, that's okay, that's okay. I mean, look,
it's a question that you know, nobody really has an
answer for. Maybe Apple doesn't even know at this point.

Speaker 1 (14:02):
Well wait, it's kind of like, hey, Siri, like, what
are you going to get better?

Speaker 3 (14:06):
Okay, Okay, let's not make everyone's phone freak out. Carol Masser, Hey,
ed before we let you go, You've been to a
lot of these events, and as you mentioned, this is
one for the developer community and Apple's app store and
what you can do on an Apple device would be
nothing without the developer community. Have you had a chance
to hear from any developers, to speak to anybody who's

(14:29):
attending this and just get an understanding for what the
vibes are in twenty twenty five when it comes to
the developer community.

Speaker 8 (14:35):
So literally.

Speaker 9 (14:36):
We had a guy called Paul Hudson on the show earlier.
He is the creator of hacking for Swift, Swift being
the platform that many used to code for OS application
and OS software and kind of what we've gone over
is exactly why he was excited that. You know, when
you build for one of the Apple operating systems, you

(14:58):
usually use an Apple tool to do so, and he's
you know, it was pretty jazz and excited. A lot
of people look at Craig federigas like the man, the
rock star, the silver Fox of software, and on stage,
you know, they got what they were asking for to
some sense that like having on device LLM access is
huge for a lot of developers. It just makes their

(15:18):
life in doing something easier. But the root of your
question is the most important bit. We have the App
store today for a reason. It is attractive to consumers,
and there are lots of apps there that are made
by third party developers. You know, I'm trying to think
of a great example that Apple didn't make and someone
else did, but you get the idea. And that's why
all of this kind of update today is tracked because

(15:38):
it adds value to the broader services and ecosystem offering
that Apple has.

Speaker 1 (15:42):
All Right, basic metric, you got Apple shares down nineteen
percent year to date, Look at something like meta it's
actually up nineteen percent year to date. Yeah, what is
it that the investment community really wants to see from
Apple to give it some love.

Speaker 9 (15:57):
So I'm actually just pulling chat GPT up on my
phone because I was talking to chat GBT about this earlier.
Fewer than sixty percent of analysts rate Apple, are by
the lowest among its big tech peers. Apple's AI efforts
are seen as safe by analysts. Reminder, it trades at
twenty seven times earnings, which is slightly off its historic high.
The point is this, so far this year it hasn't traded.
I know, it's just so much fun to like use

(16:19):
this as a tool, you know, in putting data from
the Bloomberg But like, so far this year, that nineteen percent,
it has nothing to do really with the AI stories.
You guys know, it's tariff for risk, the relationship with
the administration and the presidents of the President of the
United States. But the risk going into today and what
was almost confirmed in the early minutes of that keynote
was well, what if AI does become the key risk

(16:40):
of the stock because investors lose patients and they say,
we want to see something more tangible. It's a little
unfair because I don't think we went into today, thinking
we would get anything like that. It was really clear
what we were going to get. It was for the
developer community, and we did get it.

Speaker 3 (16:54):
And we do have some extra time with you, which
were grateful for and you're you know, you work, keep
in the seats warm for you here in the San
Francisco studio. Liquid glass. You know one thing that Apple
is trying to figure out, and I think it's fair
to say every consumer tech company is trying to figure
that out. Is the form factor for the must have

(17:16):
device of the future.

Speaker 10 (17:18):
You've talked a.

Speaker 3 (17:18):
Lot about where humane did not work. We've talked to
you a lot about what we could see from Sam
Altman and Johnny Ives. When it comes to what you
saw with liquid glass, does it give any indication as
to how Apple is thinking about this?

Speaker 8 (17:33):
It does.

Speaker 10 (17:34):
Look.

Speaker 9 (17:34):
Look, what Mark Gumman's reported is that the seventeen generation
of iPhone will have glass curve size with no sort
of screen border, right. And liquid glass is a concept,
the kind of translucency of it, the way that you
whatever is in the almost the foreground of your your
smartphone screen or iPad screen is not interrupted by what's

(17:56):
popping up. We think that there will be some hardware
toiration on that to come. But you do raise a
really good point, which is why have liquid glass uniform
across all devices? Because increasingly it's not the be all
and end all. The thing that's in my right hand
a smartphone. It is that I take messages on my
Apple Watch. Other smart watches are available, I take, you know,

(18:17):
different platforms that I rely on OS for on my MacBook.
Other laptops are available, et cetera. You know, it's just
a way of making it more uniforms. So I think
that there's definitely acknowledgement there. Whether the iPhone seventeen has
the features that Mark reported, we shall wait and see,
but there was certainly a nod to that during the keynote,
even if they didn't explicitly sail by the way, the
next version of the iPhone it's definitely going to leverage

(18:39):
this liquid glass concept.

Speaker 4 (18:40):
Great stuff, ed Thank you so much.

Speaker 1 (18:42):
We know a busy day, early day, Edla though, of course,
co host of Bloomberg Technology out there at Apple headquarters
in Kupertino, California. Of course, at the Worldwide Developers Conference.

Speaker 2 (18:57):
You are listening to the Bloomberg Business Week Daily podcast.
Catch us live weekday afternoons from two to five pm Eastern.
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
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Speaker 1 (19:12):
President Trump's immigration crackdown was definitely top of mind this
past week. The administration's pushed to ramp up arrests and
deportations led to protests bringing up across LA and to
other cities.

Speaker 3 (19:24):
The big push for more arrests means there's a growing
need for detention centers, and in several towns across the country,
private facilities are picking up the slack.

Speaker 1 (19:32):
It's interesting to consider that while some communities, including LA,
are demonstrating how much they dislike the immigration policies, politicians
and leaders and communities that have these private detention centers,
some of them feel differently.

Speaker 3 (19:46):
Bloomberg News Investigations reporter Rachel Adams heard was behind a
big take on the budding deportation economy. She recently joined
Carol and Me to discuss what she learned about these
so called ice towns. Welcome to a Mana's ice towns.
These are communities convinced that their financial survival depends on
locking people up. It's not a new phenomenon. In this

(20:08):
iteration of the classic prison town, though, Carol, many of
the people behind bars haven't been convicted of crimes.

Speaker 1 (20:14):
Let's get to this Bloomberg BusinessWeek story. It is, I
guess you could say, a slice of life in America,
but not necessarily a good one. But let's get into
it with Bloomberg News Investigations reporter Rachel Adams heard she
joins us from our Houston bureau. Rachel, good to have
you here. What is an ice town?

Speaker 11 (20:33):
So, an ice town is a town where the local politicians,
local community is convinced that they need these immigration detention
facilities that operate under these lucrative contracts with ICE in
order to be financially sound. A lot of these towns
they've had a private jail or private prison detention facility

(20:56):
for decades, and with Obama era sentencing reform, the federal
prison population dropped off, and so to keep these facilities profitable,
they signed contracts with ICE. And now we're seeing just
a huge influx in the number of people detained at
those facilities under the Trump administration's, you know, mass deportation agenda.

Speaker 3 (21:18):
So, Rachel, take us too one of these ice towns.
Torrence County, New Mexico.

Speaker 11 (21:24):
Yeah, so we went to Torrance County, New Mexico, and
at the end of March, that's when the County Commission
was voting to extend this contract. And it's a really
rural community. It's one of those areas that used to
be kind of this bustling hub thanks to the New
Mexico Central Railroad. You had people from all over who
would come through towns like Estancia where this detention facility

(21:48):
is located. But then inter State forty is built and
commerce really just drops off. And so during the Reagan administration,
when you're seeing these policies like the War on Drugs
that's massively expanding detention in America, there are these private
prison companies that want to get a piece of that business,

(22:11):
and New Mexico was a great place for that for them.
Because land was cheap, they could build these really big
detention facilities by the standards of the time, and so
that's what happened in Astancia. Corcivic then Corrections Corporation of America,
built a facility outside of town at the time. It's
since been annexed into the town, and things were pretty

(22:35):
good for a while. It employed people. Business was good
for Corcivic, but then around twenty sixteen you had the
federal prisoner population drop off and that's when the facility
ended up closing and Corsific said it was no longer profitable.
And then ICE came in to basically save the day

(22:55):
for Corcivic and offered this contract that guaranteed revenue every
single month whether or not there were any ICE detainees
in those beds, and that's the contract that allows the
facility to operate today.

Speaker 1 (23:10):
So just to set the record straight, I mean, these
are facilities that have been around for a long time,
different administrations, correct, Correct, Okay, And the point is too though,
that the conditions aren't great and they're needed in order
to house kind of the roundup that is happening under

(23:31):
this administration.

Speaker 8 (23:32):
Correct.

Speaker 11 (23:33):
So, during the last ten years or I guess five
years since this contract has been in place in Torrents County,
a lot of the people that it was detaining on
behalf of ICE.

Speaker 7 (23:46):
They were recent border crossers.

Speaker 11 (23:48):
These were people who were coming up the border from
Mexico a lot of times into Texas. They were seeking asylum,
and while they were seeking asylum, they had you know,
turned themselves over in a lot of cases, and now
they were in ice detention, being held at the Torrens
County Detention Facility and Astancia. After Trump took office, you
see a really dramatic fall off in the number of

(24:09):
people crossing the border. And so all of a sudden
you have room in the Torrens County Detention Facility. And
so because you have this room, you're seeing ice flying
people from all over the country, a lot of them
coming from New Jersey, from Florida, and they're flown into
the Albuquerque Airport and bust to the Torrents County Detention
Facility and that is where they're being held for months

(24:30):
in a lot of cases. And this facility has had
problems for the last several years, and it's really starting
to kind of come to a head with the increase
in the number of people that is holding under the
Trump administration.

Speaker 3 (24:45):
Okay, well, you describe the facilities at least one of them.

Speaker 8 (24:50):
What was it like?

Speaker 3 (24:51):
What is it like?

Speaker 11 (24:54):
I mean, what we've heard from people who are currently
being detained at the facility is that it's cold, the
food is undercooked, inedible at times. We've heard complaints about
access to medical care. There are a lot of people
who say that they have tried to ask to be
deported because they do not want to spend another day

(25:15):
in iceed attention, but that it's incredibly difficult to get
the attention of any ICE officers because it's all you know,
prison staff, not necessarily anyone who can actually talk to
them about their case. But the most dramatic issue that
we've heard about recently had to do.

Speaker 4 (25:31):
With the water supply.

Speaker 11 (25:33):
This is the desert, it's incredibly dry, and the town
of Astancia was having an issue with one of its
main water pumps, and so that led to water being
intermittently shut off to the facility. We heard that there
were toilets that were overflowing, and that there was feces
on the floor, that the smell was overwhelming. We heard

(25:54):
people say that they had been limited at one point
to two water bottles a day, that they were thirsty.
At one point, the facility brought in trash cans full
of waters to try to flush some of those toilets
to deal with the odor and the hygiene issues, and
someone we talked to said that he had seen people

(26:14):
who were thirsty drink out of those trash cans because
they were so desperate for water. So it sounds like
this is improving over the last few days. We did
hear that ice was on the ground recently, but certainly
it sounds like it has been a rough couple of
weeks inside the detention facility.

Speaker 1 (26:34):
It's interesting because I'm thinking Corcific, right, which is the
company that's been around and is running these facilities, right,
I guess it's close to four deck for four decades.

Speaker 4 (26:43):
It looks like I just.

Speaker 1 (26:45):
Remember that period and like investing like private prisons, everybody
thought it was like this great investment play, but you
got to remember it's people, it's humans. There are conditions.
I am curious, like are these people being held for
due processing? Like who determines the fate of these individuals
is ultimately the federal government.

Speaker 11 (27:05):
I mean a lot of it is held up in
immigration courts, and that's an incredibly slow moving process. So
I'm sure you all know. One of the issues with
these multi state transfers. I mean, people are thousands of
miles away from their families, but they're also far away
from their lawyers. If they had lawyers in Florida, for example,
because their case was there and now all of a sudden,

(27:28):
it's in New Mexico. They have to try to find
a lawyer that can represent them in a different court,
and that isn't always easy to do, especially because these
tend to be more rural areas where pro bono lawyers
are harder to come by, located farther away from the
facilities themselves. So just the act of moving someone to
a facility so far away, it does impact that person's

(27:50):
right to do process.

Speaker 3 (27:51):
There's some context here and sort of like the internal
workings of how these communities feel about these that I
think is really interesting. In your county commissioners and how
county commissioners look at this, you highlight Linda Yamario, who
of the Torrance County Commission, who actually did go inside
one of these facilities, and then you and the team

(28:13):
wrote that she voted to extend the ice contract. Talk
to us a little bit, and it's not really town
gown relations, but it's the way that the community feels
about this and the way that local elected officials feel
about these.

Speaker 11 (28:27):
Yeah, it's really striking to sit in on these County
commission meetings because you know the contract is up for
an extension. Every so often, every several months, but no
matter what, at every meeting which is held, you know,
bi weekly, there are a bunch of lawyers and advocates
and even people who are in detention who record testimonies

(28:51):
that they play to the commissioners during public comment, urging
them to shut down Torrance County Detention Facility for ice detention.
And you have these three commissioners who sit at the
front of the room and they're listening to this and
some of the testimony is in Spanish, and Commissioner how
Tomeo speak Spanish, and so you can kind of watch

(29:11):
her face as she's listening to people describe the conditions
inside the facility, and what she told people at that
meeting in particular was, look, I hear all these concerns,
but I don't know what to trust. And so she
ended up voting to extend it. Sorry I lost my earpiece.
But it's unclear whether she'll do that in October, because

(29:34):
she did go again and say that that things seem
to be going well, but she does still have concerns.

Speaker 4 (29:40):
You know.

Speaker 1 (29:41):
I think it's interesting and what I find fascinating is
that this is a story that's got so many different
angles to it.

Speaker 4 (29:48):
When you think.

Speaker 1 (29:48):
About what these detention centers do for a local economy,
there's that, but there's also then, as we've been talking
about the conditions, and you do wonder about the oversight,
especially in an administration that has been cutting back on some
of the federal spending in different areas. So, you know, Rachel,
when you look at this story and this reporting, I mean,

(30:11):
the cities or the local municipalities in many ways want
them right because it provides jobs, it provides some economic momentum.
At the same time, there are concerns about kind of
who's watching out for what's going. What does Corcivic say
about all of this?

Speaker 11 (30:27):
Yeah, Corcivic talks about how many people they employ locally.
They talk about the salaries and the benefits that they provide.
They you know, say that they I think they said
that they hire or have more than three hundred jobs
related to these facilities in New Mexico. So, I mean,
they definitely see themselves as a major local economic benefit

(30:51):
to the area. And that's you know what we heard
from the Estancia mayor as well. I mean, he talks
a lot about how much of the grocery seats tax
which is New Mexico's version of a sales tax that
course of it contributes to. So it's interesting to hear
kind of the I mean, I think Commissioner how Amos,
Yeah put it with ysinkly when she had like on

(31:13):
the one hound, they're a major employer.

Speaker 1 (31:15):
Yeah, such a great story, so much in there, and
as we said, it's a slice of life in this country.
Bloomberg News Investigations Report Rachel Adams heard Rachel, thank you.

Speaker 10 (31:25):
This is Bloomberg.

Speaker 2 (31:27):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and the Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa played Bloomberg eleven thirty.

Speaker 1 (31:46):
Let's Turn to Healthcare. US Human and Health Services Secretary
Robert F. Kennedy Junior removed every member of the CDC's
Vaccine Advisory Panel in an opinion piece published in The
Wall Street Journal. He said he made the move because
members of the committee were receiving funding directly from pharmaceutical companies,
a claim that so far has not been confirmed.

Speaker 3 (32:07):
With uncertainty at the federal level. We wanted to get
an overview of the industry with an executive who thinks
about the space a lot. We turned at Wendy Barnes.
She's president and CEO of GoodRx. We talked to her
about the headwinds facing her industry and it really ranges
everything from tariffs to the impact of new regulations.

Speaker 1 (32:24):
A lot to talk about. She kicked it off highlighting
a new company initiative aimed at supporting independent pharmacies in
the US. It's called Community Link.

Speaker 12 (32:34):
You know, I would say the company's been on a
multi year journey to best partner with retail pharmacies, with
community pharmacies really being at the top of that list,
and this is really the culmination of that work. And
so what you referenced, the good RX Community Link is
a portal by which community pharmacies sometimes referred to as

(32:55):
independent pharmacies, So think of those as really your non
chain pharmacies. It can be as small as a single pharmacy,
or some community independent pharmacy owners have fifty seventy five
or one hundred locations, but largely they're run independent of
a broader management philosophy and this is our effort to

(33:17):
contract directly with these pharmacies in a cost plus reimbursement
mechanism manner.

Speaker 13 (33:24):
Look, it's not.

Speaker 12 (33:26):
Any new news to you or probably to your listeners
that pharmacies continue to be under reimbursement pressure, and we
believe that they are key partners in our broader mission
to make medications more affordable and accessible for every American.
And so this effort is really one in which we're
trying to bolster reimbursement for those independent pharmacies such that

(33:47):
they can work with us directly. And in addition to that,
we're giving them access to ninety plus brand deals that
we have secured with pharmaceutical manufacturers over the last to
twenty four months, and those continue to grow such that
the reimbursement on those same drugs is favorable to those pharmacies.

(34:08):
It's really no secret that pharmacies have long struggled to
have a favorable margin profile on many brands that they fill,
and this too gives access to those programs for those
independent pharmacies.

Speaker 3 (34:22):
Well, Wendy anecdotally speaking, as the large pharmacies and the
chains have come under pressure, whether it's overstore closures or
different things happening just in the space we've all reported
on what's happened in cities and the way that some
of these pharmacies have closed down in certain cities. Are
you seeing more people go to these independent pharmacies? I mean,

(34:43):
anecdotally speaking, I can say that certainly the way my
family has changed its behavior just thanks to availability and
what pharmacies tend to actually have what we're looking for.
But how have you seen that affect the overall landscape.

Speaker 12 (34:57):
I don't know that we've seen a meaningful ship to
independent from chain. I think there's still a pretty good
mix of grosser versus independent versus chain, and candidly, you know,
mail order slash digital pharmacy.

Speaker 13 (35:10):
I think at the end of the day, what we
see is.

Speaker 12 (35:13):
In the seventy plus odd thousand pharmacy options that we
have as consumers in the US that as a consumer,
you just really want to get your drugs on your
own terms, whether it's mail to your home with your
preferred community pharmacist or at a chain or grosser. And
we pride ourselves on working really with all pharmacy such

(35:34):
that you can get your drugs when and where you
know you desire to do so.

Speaker 1 (35:38):
Do you see it all that the independent channel is shrinking.
We've certainly seen it with some of the big pharmacy chains, right,
We've talked about it, You've seen the headlines. But I'm
just curious when it comes to independence, Wendy, do you
see any shrinkage in terms of the number of outlets
that are out?

Speaker 7 (35:52):
There are no, you know, I.

Speaker 12 (35:54):
Will say in the numbers that we've looked at over
the last couple of years, there are still a good
number opening any month. I will say in our book,
with the pharmacies that we work with, I haven't seen
significant trinkage. But I think there are certainly other data
sources that would suggest that there are a number of
independent and or community pharmacies that are closing in or

(36:14):
selling their business to other owners.

Speaker 13 (36:17):
But in our particular book, it's held pretty study.

Speaker 3 (36:20):
How have independence traditionally reacted to the program at GoodRx,
because it's our understanding they've been a little skeptical about it.
How do you make sure that they're embracing it rather
than treating it with skepticism.

Speaker 12 (36:31):
Sure, well, I think you know, Look, it's early days,
to be clear, and we're going to be on a
journey here. Communication is going to be the biggest part
of this program, in addition to delivering what we said
we intend to deliver, which is fair economics over the
course of these contractual agreements, as pharmacies agree to contract
with this directly, and that again can all be conveyed

(36:53):
through that portal that we stood up this morning. So
for me, it's really going to be about how we
deliver on the reimbursement mechanism through this partnership, and.

Speaker 13 (37:03):
I think, you know, the ongoing communication.

Speaker 12 (37:05):
Will support how the pharmacy community embraces this over time.
You know, we've certainly been setting out communications early on.

Speaker 13 (37:14):
We've been in dialogue with.

Speaker 12 (37:15):
Many independent pharmacy owners to speak through the program. But
I think at the end of the day, it's really
going to be the outcome of the program and the
economics that we deliver that we'll prove it out over time.

Speaker 1 (37:25):
Well, that's why I want to kind of just dig
a little bit deeper, Wendy. You know, for this to
work for you guys, this new role out, this Community
links program, the economics have to work right for the
independent pharmacy. So I'm just curious what you can tell
us how the economics are different for the pharmacy that
directly contacts with GoodRx versus using maybe one of the

(37:45):
pharmacy benefit managers the PBMs and their networks to dispense
a prescription. What can you tell us more specifically about
the economic advantage for independent pharmacies to use your route
versus going to the PBMs.

Speaker 13 (38:00):
Are happy to do so.

Speaker 12 (38:01):
So it's really the agreement directly with US is rooted
on a NADAK plus reimbursement. So NADAK is one of
multiple benchmarks that is effectively a cost mechanism that stands
for national average drug acquisition cost, and we are negotiating
with independent pharmacies to do this with that predicated as
the baseline plus an amount that keeps them profitable on

(38:25):
filling these claims. So that's really the precursor, if you will,
and or the meat of how this agreement will work,
which again provides favorable economics to these pharmacies. The distinction, Carol,
as you called out to perhaps doing it through a
larger payer, when you think about how it works through
let's just say a larger PBM, there are multiple patient

(38:48):
pay slash cash networks through which an independent pharmacy can participate,
and when they're in that type of an algorithm, for
lack of better description, typically it's going to search for
not necessarily favorable margin for the pharmacy, and so there
would be times in their previous arrangement whereby they may

(39:09):
not always have favorable economics to fill those prescriptions. And
by contracting directly, we are putting terms and conditions in
the agreement that allow them to have certainty around not
only the reimbursement, but also access to drugs that they're
not fulfilling today in patient pay programs. Again, that would
be the list of brands that I mentioned that I

(39:31):
believe are ninety plus at this point that they're going
to have certainty around how they're reimbursed in this direct
engagement through us that they're not getting through their arrangements today.

Speaker 3 (39:41):
Thinking about healthcare in the United States, it is inextricably
bound to politics, and no question, if what the President
calls the Big Beautiful Bill were to pass, we could see,
at least according to the CBO estimates of a dramatic
increase in the number of uninsured almost eight million. What
does that mean for your business and how much your

(40:03):
business comes from Medicaid and uninsured people today.

Speaker 12 (40:06):
So interestingly, of the users who access our pricing on
any given day, roughly ninety percent actually have insurance today.
So I think there's a bit of a misperception that
the overwhelming number of consumers who use us in fact
don't have insurance, which is not the case.

Speaker 13 (40:25):
Having said that, who does.

Speaker 12 (40:27):
Come and look for pricing through our different platforms is
your consumer who's motivated to check for competitive pricing, whether
they have insurance or not, and we continue to be
the number one platform to look for the best price
deal that you can find on any particular medication.

Speaker 13 (40:45):
So as it pertains to.

Speaker 12 (40:47):
What may or may not pass in the bill, whether
it's inclusive of Medicaid cuts which continue to be advanced,
and or other cuts that would put pressure on your
typical how hold income, what we do know is that
those should produce tailwinds for us as a business for
consumers whether they're insured or not, but specifically as it

(41:09):
relates to Medicaid cuts and the number of individuals that
may fall out of coverage, we do believe that that
presents an opportunity for us to continue to support any
American that really is struggling to purchase their medications.

Speaker 1 (41:26):
Wendy just got thirty seconds. You know, the word that
we all use to describe the environment right now is uncertain.
There's a lot coming out, certainly leaders and CEOs, just
in your industry too. You've got write aid doing a bankruptcy.
You know, I think about the macro within your business
and just macro overall. How do you look at the outlook?

Speaker 13 (41:44):
Just quickly, you know the outlook?

Speaker 12 (41:47):
You're right, turbulent is a fair description. Having said that,
businesses that stay the course and have a mission that
makes sense for the consumers in which we serve will
continue to thrive our goal of courses getting medication affordably
and effectively into the hands of every American you need it,
and we believe will be.

Speaker 13 (42:07):
In a position to take advantage.

Speaker 1 (42:09):
Wendy Barnes, President CEO of GoodRx.

Speaker 2 (42:18):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.

Speaker 1 (42:32):
Plenty ahead in our second hour of the weekend edition
of Bloomberg Business Week, including a deep dive into Cisco
Live twenty twenty five, held this past week in San Diego.
Tim and I were there.

Speaker 3 (42:42):
We were broadcasting live with some of Cisco's top experts
and leaders as we unpacked what's next for the company
and how it's navigating the ever evolving world of tech.

Speaker 1 (42:51):
Got to say, it sounds like Cisco is definitely going
into a big new chapter for the company that has
been around for a long time. We want to share
with you a few of our common conversations from the event,
and there's no better place to start with than AI,
which really dominated a lot of our conversations. CISCA recently
announced that it's updating it's networking and security products to
make artificial intelligence networks work better, and we got into

(43:15):
that in more with Cisco's Vice president of Product, AI,
Software and Platform DJ Sampath.

Speaker 3 (43:20):
DJ here, I mean, you look around at any of
the trade floors and like, this is the massive, massive,
and dominant theme here. I want to talk a little
bit about the news that we got earlier today that
Cisco's updating its networking security products to make AI network
speedier and more secure. It's part of this broader push
to capitalize on the AI spending boom. Talk to us

(43:41):
a little bit about what prompted this, and we're going
to speak about it throughout the program because this is
some big news to emerge. But what you're hearing from
customers on the customer front, where we are in the
AI moment, and really what prompted a move such as this.

Speaker 8 (43:52):
Yeah, Tim Carrol, thanks so much for having me. You know,
there's a huge tectonic change that's happening right now.

Speaker 14 (44:00):
If you think about the moment where chat gpt became
and I came into our zeitgeist in November twenty twenty two,
we've now started understanding that AIS here, it's not a buzzword.
We go to chat gpt for a lot of questions
and existential ones like, you know, should I take this job,
should I not take this job?

Speaker 8 (44:14):
A lot of interesting things.

Speaker 14 (44:15):
That you start to see that are being broken down
very systematically by AI as a TOT partner.

Speaker 8 (44:20):
Right.

Speaker 14 (44:20):
But what we're seeing now is that evolution from AI
being an application or a chatbot to an agent agentic AI. Right,
So you've got agents that are autonomously going on and performing.

Speaker 8 (44:31):
Tasks for you. And as you start to think about that.

Speaker 14 (44:34):
What's going to happen as your workforce, which has now
gotten you know, one hundred percent of humans, is going
to be augmented with you know, AI applications, AI agents,
robots and humanoids.

Speaker 8 (44:45):
You know, in fact, you know you're going to start
to see that happen.

Speaker 14 (44:47):
And these these robots and humanoids are going to have
AI models sitting inside of them.

Speaker 8 (44:51):
So what we're.

Speaker 14 (44:52):
Seeing is that you're going to start to see a
lot of change in the way these networks work and
how employees are going to work inside of these organizations.
So so we're we're just tremendously excited about that, and
we're getting ready at Cisco.

Speaker 8 (45:06):
We know it's coming.

Speaker 14 (45:07):
We've we've helped usher in the era of the Internet,
and we're now ready to usher in the era of
AI AGENTIC AI more more specific.

Speaker 1 (45:14):
What's surprising you about kind of the progression? You're right,
it's like two years ago.

Speaker 4 (45:18):
Right, it was like bam.

Speaker 1 (45:19):
But I think for us, like it was just over
the last few months that we have increasingly been using
like chat, GBT, right more aggressive.

Speaker 8 (45:27):
Way use a lot.

Speaker 10 (45:29):
There you go.

Speaker 14 (45:29):
Yeah, here's what I'll tell you. Right in the you know,
in the trenches right now. The speed with which AI
has been moving has been absolutely mind boggling, you know,
the progress that we're starting to see. I'll give you
an example. You mentioned Claude. Claude is an amazing, you know,
piece of uh A software from a model perspective that
it loves you to write code really well. Claude is

(45:51):
one of the top ones that they used to write
new software engineering. A lot of people thought that, you know,
AI is gonna, you know, sort of come for our jobs,
and you know, software engineers are probably not the ones
that it's going to come for. It's going to take
a long time to get there. But guess what, you know,
it's here and it's now, but it's not taking away
the jobs. In fact, every single developer is becoming a
lot more productive using AI. So essentially what's going to

(46:14):
happen is it's not like you're gonna have to worry
about jobs. I think, you know, people that use AI
are gonna you know, take the jobs of people that
don't use AI. So you're going to just start to
see that AI becomes extremely helpful from a productivity perspective.

Speaker 3 (46:27):
You know, I want to go back to agentic ai,
and it's I know, it's something that you think a
lot about. We hear it a lot on from Salesforce
for example. Right now, I still think though, when it
comes to the general consumer, agentic ai is like for
the early adopters right now, it's for the people who
do want to pay two hundred dollars a month, for example,
for a version of chat GPT that will make reservations

(46:49):
for you at a restaurant or help you with travel plans.
What does it look like beyond early adoption.

Speaker 14 (46:55):
Yeah, I'll talk about the you know, one of the
key things that you'll you'll notice is that the rate
of which things move, Like, you know, if you go
back to just using the chatbot, the very first time
you use chat gpd'd had a knowledge cut off, right,
you can only get information from like twenty twenty one.
And then they opened it up to being able to
do live web searches, right that is actually you know,
teaching a model how to use the tool, and then

(47:16):
you saw that it went from just being able to
do a search to like, hey, you can now start
to connect.

Speaker 8 (47:21):
These models to your emails.

Speaker 14 (47:23):
You can now start connecting these models to your salesforce
and instance, and then slowly it's expanding. It's now connecting
into your Google Docs and your Microsoft Office, you.

Speaker 8 (47:31):
Know, environments very quickly.

Speaker 14 (47:33):
Or what you're seeing is that you know, we're in
this in this exponent of like the speed with which
things are moving, and we're just at that beginning part
of that exponent So you're right. Sometimes it feels like
some of these things are very early from a consumer perspective,
but if you started thinking about what's happening inside of
the enterprises, the enterprises are starting to adopt AI a
whole lot faster because they need to maintain the competitive edge.

(47:54):
But a key thing for them to be able to
adopt AI is security.

Speaker 8 (47:57):
Is safety and security You've got to make sure.

Speaker 1 (48:00):
Well, that's what I was going to say, because in
order for you really to kind of max at the
potential of it, you've got to open it up right
to kind of all your different systems.

Speaker 4 (48:07):
So how do you make sure that that is really
really secure?

Speaker 14 (48:11):
And that's top of mind when it comes to a
gentic AI because you are now saying, hey, you're going
to allow these agents to execute tasks on your.

Speaker 8 (48:18):
Behalf all the way to completion.

Speaker 14 (48:20):
So which means you've got to make sure you know
you're thinking about safety and security. And now I'll talk
about what we launched earlier this year at Cisco. We
had a product called Cisco AI Defense. Knowing that this
is going to be top of mind for a lot
of enterprisis, we build a technology that does you know,
provide you with the visibility of all.

Speaker 8 (48:36):
Of these agents, gives you.

Speaker 14 (48:37):
The ability to validate these models, to make sure these
models are not vulmotable.

Speaker 8 (48:41):
Because here's what happens.

Speaker 14 (48:42):
Right if you go back to the age of the Internet,
when the Internet came out, the attacker started doing a
whole lot of interesting things. They would do the dial
up service attacks and DDAs and so on and so forth.
We're starting to see similar types of things happen with
AI applications. So we've got to make sure that we're
protecting against attacks, new types of attacks like prompt injection
attacks and so on and so forth.

Speaker 3 (49:00):
What okay, So what about the type of attack where
this is a little scary, but I think this is
what's happening, where we are mimicked, our voices are mimicked,
and perhaps a loved one is called and AI is
able to pretend that we're in a situation that requires
the help from a loved one. I mean this could happen,
This could happen.

Speaker 8 (49:20):
No, absolutely, like you know it's happening now.

Speaker 14 (49:22):
Just to be very clear, because spam in phishing attacks
with AI can become really really normally, like you're going
to see a lot more of these attacks. That cost
to do those attacks are going to drop dramatically, which
means you've got to use AI to be able to
you know, defend as well. It's not just about using
AI for attacking, you use AI for defending. So there
are two parts to this. You want to make sure

(49:44):
you're securing the use of AI, and you also want
to make sure that you're using AI to make security better.

Speaker 8 (49:49):
And at Cisco we're doing both simultaneously.

Speaker 4 (49:52):
So what's the thing that keeps you up at night?

Speaker 1 (49:54):
Like, I just do think about some of this is happening,
Like we've moved so quickly. It seems like all of
a sudden from generative to agentic AI, and I think
people are just catching up to be like what is
this all about? So what is it that kind of
worries you as things move so fast?

Speaker 8 (50:09):
I think.

Speaker 14 (50:09):
I think one of the one of the biggest things is,
you know, there's always this feeling like we're not moving
fast enough, you know.

Speaker 4 (50:15):
Because do you feel the pressure from customers.

Speaker 14 (50:17):
I think at this point in time, everybody's feeling the
pressure when you talk to anybody that is in AI
that the rate at which AI is moving, everybody's just
trying to make sure that they're they're they're keeping up
with the advances that's happening across the entire ecosystem.

Speaker 3 (50:30):
Hey, DJ, I'm curious about the fragmentation in the security
market right now, and I'm wondering how you see Cisco
potentially playing a role when it comes to consolidating all
the features and the functions that are out there.

Speaker 14 (50:45):
You're you know, this is a top of mind issue
for a lot of cisows, you know, chief information security
officers that are looking to consolidate a lot of the
different point products that are there inside of their ecosystem. Cisco,
as you know, you know, with the acquisition of spun
because one of the largest security companies on the planet
at this point, and we've taken a very intentional approach
to consolidating a lot of these things into a single

(51:06):
pane of glass.

Speaker 8 (51:07):
What we launched earlier this year was something called.

Speaker 14 (51:10):
Security Cloud Control, and this is a consolidation effort. You know,
you don't have to worry about each and every single
point products instead of your ecosystem, but you bring it
all together and you use AI assistance to be able
to manage all of these products. So, you know, we're
entering into that AI and agentic era. You've got to
have those capabilities so that the defenders have the advantage

(51:30):
over the attackers that are cloning your whits and doing
those fishing attacks. You really need to give the defenders
an advantage, and that's really what we're doing at siscoll.

Speaker 1 (51:38):
You know. One of the things, you know, when we
look at kind of the universe, your competitors as well,
and when investors think of networks security, they often think
of palolp On Networks and some other players that are
out there, especially when it comes to the firewall space.
I'm just curious, are there products dj or software that
can kind of change market perception, investor perceptions and market
share dynamics.

Speaker 14 (51:59):
Absolutely one of the key things about you know, the
way you're starting to see these attacks evolved, especially in
the age of you know, AI and agentic era, you
got to realize that one of the core enforcement points
for stopping all of these bad actors and bad attacks
is in the network.

Speaker 8 (52:13):
Now, when you take that security and the profits of
security that.

Speaker 14 (52:16):
We have and refuse it into the fabric of the network,
that's when you're really moving the needl And so when
you think about Cisco, you see that we bring both
of these.

Speaker 8 (52:25):
You know, we've been doing networking for the past forty.

Speaker 4 (52:26):
Years long time.

Speaker 14 (52:27):
We've been doing security for a pretty long time too.
But when you start to combine those two things in
a single place, man, like we've got we're miles ahead
of everybody else that's out.

Speaker 4 (52:37):
There thirty seconds.

Speaker 1 (52:38):
What's surprising you that you're hearing at this event, like
we're just blown away and the conversation just get about
thirty seconds, Like what are you hearing as kind of
a dynamic narrative.

Speaker 14 (52:47):
One of the core things that I'm seeing that's that's
really surprising is the number of customers that are implementing
AI infrastructure projects inside of their own enterprise environments. They
realize that AI cannot be somebody else's AI. AI has
to be their own and they want to run this
inside of their own data centers, and that to me
is very welcome, and I'm very happily surprised by that

(53:08):
because we're ready.

Speaker 8 (53:09):
To help them.

Speaker 1 (53:10):
So that means a lot of on site on premise, right,
It's exactly right.

Speaker 4 (53:13):
It's not all up in the cloud.

Speaker 14 (53:15):
Not all up in the cloud, because they have lots
and lots of this data that's proprietary that's sitting inside
of their own environments that they're not quite ready to
push it into the pod.

Speaker 4 (53:22):
Which I think is surprising. But like here, it's happening. DJ,
thank you so much. Great way to kick off our
coverage here.

Speaker 8 (53:27):
Thank you, Carol. Thanks dam.

Speaker 1 (53:28):
DJ Sampath, Senior vice president of Cisco's AI Software Platform Group.

Speaker 2 (53:33):
This is the Bloomberg Business Week Daily podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and the Android Auto with the Bloomberg Business app.
You can also listen live on Amazon Alexa from our
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Speaker 1 (53:51):
We are across the country. We're on the West Coast,
staying here. Some great conversations here at Cisco Live twenty
twenty five. There's so much happening around Tim and me,
and we've got a great guest to kind of get
into some of the enterprise connectivity issues collaboration, because that's
what he oversees.

Speaker 3 (54:09):
Honor Rock Deingra is Senior vice president and General Manager
of the Enterprise Connectivity and Collaboration Group at Cisco. He's
also founding executive sponsor of Cisco's Responsible AI Initiative, which
means we're going to talk a little AI as well.
I want to talk you. You ever see this diverse portfolio
of collaboration tools that are all under Cisco's umbrella. When
you think about what collaboration in the workplace means right

(54:30):
now with a distributed workforce, with some people working from home,
some people at the office, all at the same time,
what's the one solution that can bring them all together?

Speaker 15 (54:40):
Thank you for having me Tim on the program.

Speaker 16 (54:42):
So when you think about collaboration, it's more than just
the tools you used to meet with people or to
call people.

Speaker 15 (54:47):
You know, obviously those are the essential tools.

Speaker 16 (54:49):
Where it starts with foundational technology, which is the network
you want to make sure that everyone can connect seamlessly
and securely to the network first, no.

Speaker 15 (54:57):
Matter where they're working from.

Speaker 16 (54:59):
And you know, our definitely of the workplace is quite expansive,
and we talk about a regular office, we talk about
a retail store, a factory floor, or your home or
your car.

Speaker 15 (55:07):
Wherever you work from is a workplace.

Speaker 16 (55:09):
And so it starts with foundational elements of connectivity and
then once you're connected, then it's all about delivering the
best possible experience. And so one of the things that
Cisco has been innovating in is this concept of distance zero.

Speaker 15 (55:20):
And the idea is very simple.

Speaker 16 (55:22):
When you're meeting with other people who are not in
the same room with you, it should feel like there's
no distance between you. And so we've been working on technology,
whether that is video conferencing technology, whether that is services
that we deliver to amazing experiences that bring people closer to.

Speaker 3 (55:35):
What's the biggest hiccup that prevents people from actually experiencing
distance zero? Is it connectivity issues?

Speaker 16 (55:42):
So I think it's a mix of things, right, So, first,
this connectivity has to be rock solid, and you know,
when you're thinking about the diversity of spaces that we're
talking about, sometimes you don't have a solid Wi Fi
in a conference like this, it can be very tricky Hotel.

Speaker 3 (55:54):
As an example, like getting gay dropped on right the
computer with spine the phone was and it was like
it was actually really really hard to work.

Speaker 16 (56:04):
Yeah, we take connectivity for granted, but it's actually still
very complex, and especially for people who build and manage
these networks, the complexity is only growing with emergence of
AI agents and digital.

Speaker 15 (56:16):
Workers in the workplace, It's only going to get more complicated.
So we're ready focused on how do we deliver amazing.

Speaker 16 (56:21):
Experiences for people who are connecting, but how do you
make it easier for it to manage it all under ug.

Speaker 1 (56:26):
Our networks generally ready for AI or would you say no, I.

Speaker 16 (56:32):
Would say they're not ready right now. And here's why
I say that. Look, everyone can feel that this is
transformittive technology and we're at the beginning of a major
technology shift. When you look back at other technology disruptions,
you know, the beginning of the Internet, mobile devices, cloud computing,
it causus to take a step back and reimagine how
network should be built and managed. And AI is much

(56:54):
bigger than that. When you think about the proliferation of
AI agents in the workforce, digital work that are doing
human like work. You know, they're communicating and doing work
like us, but at machine speed and scale. So the
networks have to really deal with an influx of much
bigger traffic patterns and security soface cities that are exploding there.

Speaker 4 (57:15):
Well, one thing I want to ask you. I know
we're like we bought, although we're like dying to ask questions.
I am curious.

Speaker 1 (57:20):
About because we keep thinking about the Capex spand right
and all that is AI, But I'm also thinking about
are they not going to do the spend because they're
worried about the power being there for all the AI?
And I use the term AI loosely. Right, there's a
lot going on, but is the power not necessarily there
and the systems there? We keep doing some reporting on

(57:40):
that front that's going to slow some of that spend.

Speaker 16 (57:43):
So I think, first of all, I think this is
going to be a central technology. This is almost like
if you ask someone to do you want connection to
the Internet, of course the answer is yes.

Speaker 15 (57:51):
So this is not going to be optional.

Speaker 16 (57:53):
Organizations have to figure out how to enable their workforce
with AI tooling, But how do you do that in
a scalable fashion? That's really the question. And I think
there are two parts to this power equation. So one
is for training models. These large data centers that are
being built out around the world to create these models,
they are very power hungry. But when you think about
deploying your applications in your office environment, you have to

(58:15):
make sure that even there you're building scalable and devices
that are power efficient, and that's what we're focused on
with the number of new product announcements that we made here.
These network devices, whether there's the switches or routers or
wireless access points, they're built to be very efficient from
a follow consumption point of view.

Speaker 3 (58:33):
Because you over see this portfolio of tools that are
meant for helping collaboration across different areas, you must have
some really cool statistics when it comes to who's working
from home, who's returning to the office. We've been talking
a lot about this, even five years in past COVID.
Even in London, for example, many banks are facing a
shortage of desks because of a real estate squeeze, but

(58:56):
they're trying to get people to come back into the office,
so there's this tension happening there. What are the patterns
that you're seeing emerge in different parts of the world
right now when it comes to return to the office, Yeah.

Speaker 15 (59:04):
So I think most companies have settled into a rhythm.

Speaker 16 (59:07):
Most companies have people coming back into the office at
least part of the week. Now, it varies quite a
bit across the globe, and it also depends on the
organizational culture. But what we're seeing is most companies that are
back in the office is two to three days a week,
at least in the United States, there is generally a
culture of remote work and hybrid work, much more than
what we see in the rest of the world. But

(59:27):
even here, most companies have settled.

Speaker 15 (59:29):
Into a rhythm.

Speaker 16 (59:30):
Now, what's essential is even if people are in the
office that's three days a week, there are other people
who are remote, and you might be working outside of
for the organization with partners and customers. So there's always
going to be people who are remote who are not
in the same room as yourself. And this is why
at Cisco we are very focused on how to build
the right technology so it feels like there's no distance
between you.

Speaker 1 (59:49):
So mobility within the enterprise, is it going to impact
more the people who are working from home already or
is it going to be more influential on the people
back at the office.

Speaker 16 (59:58):
I think it's both, right. I think it is really
a hierarchy of needs for employees.

Speaker 10 (01:00:02):
Right.

Speaker 16 (01:00:03):
It starts with if I'm in the office or in
my home office, do I have the tools, the basic
tools to get my job done? So that's number one, right,
And that's where connectivity and you know, meeting tools and
things like that come up. But after that, it's how
do I collaborate with my team? How do I get
more creative? How do I actually get creative work done
when we may or may not be in the same room.
And if I get to the office, I want to

(01:00:24):
make sure it's worth my commute to the office that
I can find a desk to sit with my team,
I can find a confrom room when I needed.

Speaker 15 (01:00:32):
The enquirement has to be very supportive. If I'm going
to make the strip through the office.

Speaker 1 (01:00:35):
I think about kind of the connectivity, connectivity that we
have as we go from office to office. Right, whether
it's printers, I mean, something basic, but we can it works,
but exactly we pop into a system or and.

Speaker 3 (01:00:44):
Everything I try to do to make it not working.

Speaker 4 (01:00:47):
Able to remote access like it is pretty amazing.

Speaker 3 (01:00:50):
It's a reason why they have us practice that stuff
serious requirement. Hey, we don't have a ton of time
with you, but I want to talk a little bit
about AI in a couple of different context One about
AI embedded in WebEx and call center products and sort
of the progress that you're making there if you're able
to monetize it. And then I want to get to
save AI in just a second. But first talk with
WebEx and the collaboration for it.

Speaker 16 (01:01:09):
Right, So WebEx really has kind of two parts of
the portfolio. One is really focused on meetings and callings
and things like that, and that's where AI is really
an assistant for you. It can generate meeting summarys, it
can take notes for you, it can do things for
you in the contact center space, in the customer experience space.
We have now new AI based agents. These agents are
completely autonomous. They can talk to a human as a human.

Speaker 4 (01:01:32):
It's pretty crazy.

Speaker 15 (01:01:33):
So they are voice.

Speaker 16 (01:01:34):
Enabled, but if you want to chat with it, of course,
you know, chatbots have been around for a long time.

Speaker 15 (01:01:39):
What's different about these agents now is they can.

Speaker 16 (01:01:41):
Actually take actions, so they'll understand your intent and you know,
if you say, look, hey, I want to reschedule my
doctor's appointment, They'll go ahead and do that for you,
send your notification as a confirmation. And we're seeing a
tremendous demand for this technology and this is starting to
make a lot of difference in the customer service ex fegion.

Speaker 1 (01:01:56):
So they're not going to get added TODE when I
call my doctor's office and.

Speaker 4 (01:01:58):
Like they have.

Speaker 3 (01:02:00):
It's like the Seinfeld where you know, like your folder
has been flagged already, so you get directly.

Speaker 4 (01:02:04):
I definitely have been flagged in a good way and
in a bad way.

Speaker 1 (01:02:07):
Public I want to ask you though, during COVID you
mentioned WebEx. I mean, why didn't you guys take better
advantage or more advantage during COVID. Do you just talk
to us a little bit about during the lockdowns be
you know, just like Zoom did.

Speaker 13 (01:02:22):
Yeah.

Speaker 16 (01:02:22):
So, I think our focus has always been helping large
enterprises connect their employees and we were very successful in
that space and we continue to do that. CISCOULD never
really took this COVID as an opportunity to go into consumers.
We did make WebEx available for free to lots of governments.
Charitable organization educational institute. So we did that, but our

(01:02:44):
focus was very much around being an enterprise product.

Speaker 15 (01:02:48):
Now, when you think.

Speaker 16 (01:02:49):
About where we've come along with the event of AI
with autonomous agents as part of the WebEx and all
of the stuff that I was talking about earlier about
distance zero and conference room, I believe that the product
has come up very long way and it's amazing, and
so you actually have to see to believe it. A
lot of people don't haven't experienced it in a while,
so I would encourage anyone to take a look and
see how far we've come.

Speaker 3 (01:03:10):
I mentioned that you're founding executive sponsor Cisco's Responsible AI Initiative, Right,
what is responsible AI and what's irresponsible AI? And I
want you to answer the irresponsible part first.

Speaker 16 (01:03:21):
Yeah, So when we started this journey several years ago,
generative AI is obviously the you know, the trend right now,
but we started this even before people are talking about
GENERTI VII. The idea really was how do you make
sure that bias doesn't creep into AI systems, that if
AI is starting to make autonomous decisions that are consequential,
that those.

Speaker 15 (01:03:40):
Are done in a responsible way. And how do you
put guardrails around those systems.

Speaker 16 (01:03:44):
When we are building technology, how do we make sure
this technology is used more for good than for the
various reasons. So that's really the genesis of that program,
and then we came up with a few principles and
then that translated into development guidelines for our peak.

Speaker 3 (01:03:57):
Can you, I mean, when you look across the landscape,
can give us examples of AI that's not responsible, something
that can concerns you out there?

Speaker 16 (01:04:04):
Well, I'll tell you, Like these systems that are starting
to show up in workplaces right now, they are not
very deterministic. You know, they're powered by language models that
can hallucinate, so they can say bad things, they can
make things up.

Speaker 3 (01:04:16):
And so you're talking about deployment of potentially tools that
everybody knows about across enterprises and not living up to
the expectations that the customers have.

Speaker 16 (01:04:29):
I'll give you yes, and I'll give you a couple
of examples. So imagine if there was an automated system
that was approving your mortgage application and that system just
decided to decline your application for reasons that are not
even explainable because this algorithm is a black boss.

Speaker 15 (01:04:43):
Well, that is not very good. So you want to
make sure that there's a way to protect against that.

Speaker 16 (01:04:47):
Or imagine hate speech creeping into this chatbot that you're
interfacing with. There's in a customer service scenario, how do
you protect against those things? You can't do that if
you haven't systematically thought about being responsible with these systems,
and that is where that program comes in Handy.

Speaker 3 (01:05:01):
I don't know how you feel about this, but it
seems like people accept answers from lms in a way
they didn't accept answers from Google. From Google in the
early part of search. Do you feel that way?

Speaker 16 (01:05:15):
I think yes, And I think there's also emerging research
that people are nicer to AI than they are two people,
which is interesting.

Speaker 1 (01:05:21):
I think they like feel like they're like this relationship
with this thing.

Speaker 3 (01:05:25):
Something'll be pushing back on chat gip too.

Speaker 1 (01:05:27):
Yeah, I'm often cross referencing, like going somewhere else and
like checking out that.

Speaker 16 (01:05:31):
This is why it is really important that we build trustworthy,
worthy systems, and then we go out of our way
to make sure that you can trust the response that
are getting out of these systems.

Speaker 15 (01:05:39):
This is why these programs are critical.

Speaker 1 (01:05:41):
Anor like I think about right, So we Google and
we do trust our responses and there are reviews, Like
there's different ways of kind of checking on it.

Speaker 4 (01:05:50):
What will be the gut check on llms? Will there
be rating systems? Will there be like so, how does
that progress?

Speaker 9 (01:05:57):
Right?

Speaker 16 (01:05:58):
So, one of the things that we are doing here
at Cisco earlier in the year, we announced a product
called AI Defense, and the idea is very simple. First,
it starts with observing how people are using these applications,
and a second, you can start to put some guardrails
so you can start to sanitize the inputs that people
are getting to these large legit models. You can also
do the same thing in the other way around. So
for example, you wanted to protect people from hate speech,

(01:06:20):
you can put those type of guardrails. You wanted to
make sure that these models are not hallucinating and not
giving you wrong answers, you can start to put guards
around that. And so you will see a lot of
these tools emerged and the models themselves are getting better
with these type of productions.

Speaker 15 (01:06:36):
But I think there's always going to be a.

Speaker 16 (01:06:37):
Need to have tools that you can control as an
organization that not only comply with the law of the land,
but also with your have values, with your policies, and
so it's important to have those types of tools.

Speaker 3 (01:06:47):
Yeah, it's interesting. So I spent a lot of time
with chatchipt, a lot of time with anthropics Claude. And
you know one thing that I've noticed about Claude, and
this is Sonnet for it says, well playing with it's
like pull this up and says Claude can make mistakes,
Please double check responses, whereas there's no, there's not necessarily
that same disc that's after every answer with claud You

(01:07:09):
don't have that same answer with chat GPT, with Quad,
they won't generate images for you.

Speaker 4 (01:07:14):
Do we have it with even like Google.

Speaker 3 (01:07:16):
With Google's AI feature.

Speaker 4 (01:07:19):
Like normal search?

Speaker 3 (01:07:20):
Well normally, but I feel like that's just in our
DNA as people who search for things like I feel
like I feel like Internet culture, we are taught to
be skeptical of what you find on the Internet. Yeah,
we're not necessarily taught to be skeptical of the answers
that these lms are giving us. Is that wrong?

Speaker 16 (01:07:37):
Well, I think there are different companies who are taking
different approaches. So do you just pointed out with what
you saw on Claude? So I think there is a
need to drive more of illness, that you should not
blindly trust what you get out of these systems, and
you should always have sort of a skeptical mindset for
for these type of things. But companies who are putting
these disclaimers, I think they are doing the right thing
by making the making the user of challenges.

Speaker 3 (01:08:00):
We're speaking with anurag Denngra, senior vice president and the
general manager of the Enterprise Connectivity and Collaboration Group at Cisco.

Speaker 1 (01:08:06):
So I'm just thinking, you know, our audience is a
smart one. It's an investor audience. I mean when you
think about you know, when they're looking at companies who
are embracing AI and building out their infrastructure, what do
they want to see from their companies to make sure
that they are doing that well. So, like, what's your
thinking about what businesses should be doing to create safe,
secure AI infrastructure?

Speaker 16 (01:08:28):
Right, So the first thing I'll say is you want
to make sure that your infrastructure is ready to deploy
AI at scale, because this is being the different Deploying
AI could be the difference between you being a leader
in your space and being irrelevant, and so it is
very important to start with what do I need in terms.

Speaker 15 (01:08:44):
Of network connectivity.

Speaker 16 (01:08:46):
How do I have scalable networks that are not just
ready for the traffic that you're running on them today,
but the use case that AI is going to unlock tomorrow.

Speaker 15 (01:08:54):
How do you secure it?

Speaker 16 (01:08:56):
This is why all the announcements that we made here
at Cisco I are really about AI, the secure networking products,
scalable devices, security at the core of the network.

Speaker 15 (01:09:04):
So that's number one.

Speaker 16 (01:09:05):
Second, with applications like AI defens that I was talking
about earlier, Yeah, the start to put guard rails around safe.

Speaker 15 (01:09:11):
And secure use of AI.

Speaker 16 (01:09:12):
And then if you are in the business of building applications,
building products, then I would encourage every company to think
about how you're gonna protect your systems. How are you
gonna make sure that your systems are used for good.
This is where programs like the Responsible I program come
in interplay.

Speaker 1 (01:09:25):
I feel like, especially with publicly health companies, will be
like a whole new section, like when they either report
or something right like that we will be dealing with
to get an idea of how safe and secure their
systems are.

Speaker 16 (01:09:36):
Yeah, I think in some ways it's gonna be like security. Yeah,
and you know, As these these challenges become more more
well known, As companies become more aware, they're start to
demand systems that can provide the visibility on what's happening
with the use of these sools.

Speaker 1 (01:09:52):
It's definitely a new world order, but really fascinating. An Eric,
Thank you so much, covered so much ground. Thank you,
Thank you, good luck for having good luck at the
good luck at the Steve Rakdingras, Senior Vice President, General Manager,
Enterprise Connectivity and Collaboration.

Speaker 4 (01:10:05):
Here at Cisco Live twenty twenty five, you.

Speaker 2 (01:10:12):
Are listening to the Bloomberg Business Weekdaily podcast. Catch us
Live weekday afternoons from two to five pm Eastern. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us Live on YouTube.

Speaker 3 (01:10:26):
We're highlighting some of our favorite conversations from Cisco Live
twenty twenty five.

Speaker 4 (01:10:31):
Now.

Speaker 1 (01:10:31):
As President chief Product Officer at Cisco G two, Patel
is responsible for charting the path forward for the company
through all the changes and the growth of artificial intelligence.
It's a lot.

Speaker 3 (01:10:42):
We spoke to him at the conference about everything going
on at Cisco, including why the event itself is so important.

Speaker 10 (01:10:48):
Look, these are our customers.

Speaker 17 (01:10:50):
There are partners and their companies who are considering buying
Cisco technology, and one of the things that we want
to make sure that we're very clear with is what
are the core problems we're sol and what are the
key innovations that we're making. And we want to make
sure that we can provide that to them and have
them talk to the technical experts so that they can
actually learn about the products and you know, you know,

(01:11:11):
kind of pressure testimony they're here. We're in a really
interesting place right now because we're in the next era
of AI. So we've past two and a half years
since chat GPT came about. We had this kind of
seismic shift that happened in the industry, and we have
these chatbots that could intelligently answer questions that we.

Speaker 10 (01:11:30):
Had, and we're now going to this next.

Speaker 17 (01:11:33):
Era where there's going to be agents that can conduct
tasks and jobs fully autonomously on our behalf that initially
they'll start working by themselves for a couple hours, and
then over time they might be a couple couple of
days and then a couple of months and a couple
of quarters, and the possibility of the kinds of problems
we can solve are so amazing, and we want to
make sure that we provide the infrastructure to make that happen.

Speaker 3 (01:11:55):
So are you talking about with the agentic solutions that
you're talking about are you talking about in France specifically.

Speaker 10 (01:12:01):
Correct.

Speaker 17 (01:12:01):
So we've been working on, you know, working with people
on making sure that we can provide the infrastructure for
training for the past couple of years.

Speaker 3 (01:12:10):
And that's where a lot of the that's where a
lot of the spendspen in, a lot of the spend,
a lot of the rewarding by shareholders of certain companies,
no question.

Speaker 10 (01:12:19):
Has been to date.

Speaker 17 (01:12:20):
But now what you're starting to see is the demand
signal for inferencing is going up quite a bit. And
if you think about what's happening and inferencing, when you
just had an interactive mode where you would ask a chat,
bought a question, well what happened is you would have
spikes of peaks that you would get on compute usage
and on data center usage. When you have an agent

(01:12:41):
and that agent is fully autonomously and proactively working on
something and they're just kind of cranking away and there's
not just one agent, there's tons of agents working together.
What you see is a sustained demand for inferencing capacity,
and it's persistent inferencing that's needed. So your infrastructures kind
of assumptions, the amount of netw bandwidth you need, the
amount of you know, kind of safety and security that

(01:13:03):
needs to be in play is very, very different. And
so right now we're working with a lot of the
governments who want to make sure that they have sovereign
data centers all throughout the world.

Speaker 10 (01:13:14):
We are also working.

Speaker 4 (01:13:15):
With That's a big demand push right now, isn't it huge?

Speaker 17 (01:13:18):
Huge menbuss I was in the Middle East, Yeah, just
a couple of weeks ago, and we announced partnerships with
Humane and Saudi Arabia. We announced partnerships at G forty
two at Stargate UAEE, And the reason for this is
because there's an insatiable demand right now. If you think
about what's the constraint in AI today, it's infrastructure and
it's safety and security where people have to trust these

(01:13:40):
systems otherwise they're not going to use them.

Speaker 10 (01:13:42):
And so those are the two big constraints.

Speaker 17 (01:13:44):
And of course the third one is a skills gap
where you have to keep training people up. But the
first two are pretty material and imagine if we had
a world where infrastructure was not a constraint. Imagine all
the problems we could solve that we're currently not able
to solve because of the constraint of infrastructure.

Speaker 1 (01:14:00):
But some of those constraints are serious to you too,
And I think about you as you guys are ramping
up and building out and providing what customers need, whether
it's enough power to do it all, how are you
guys kind of balancing that you're doing what you need
to be doing, but making sure everything else is there
to support it.

Speaker 17 (01:14:16):
I mean, if you think about the large constraints, they
compute their power because GPUs are power hungry, and then
there's network bandwidth, and then there's safety and security, like
those are the four kind of high level buckets. If
you think about power, what we are trying to do
is make sure that we can have the lowest amount
of latency, the highest performance, and the most power efficiency

(01:14:38):
because how long it takes for a packet to get
to the GPU to get processed right really matters. And
if you have idle time on a GPU, that's actually
not a good thing. You want to make sure that
you're keeping the GPU utilization high and so we need
to make sure that we have power efficiency. Every killer
water power we save is a killer water power you
can give to the GPU, and then we meet need

(01:15:00):
to make sure that the backups keep flowing.

Speaker 4 (01:15:01):
So capability and efficiency, you're constantly like balancing.

Speaker 10 (01:15:04):
Constantly balancing it, right, Yeah, absolutely.

Speaker 1 (01:15:07):
Because you've got to make sure it's efficient, otherwise it's
not going to be financially going to make sense.

Speaker 17 (01:15:11):
That's exactly right, because if you if you don't have
the right level of power efficiency. But for firstly, all
of the data centers that are getting built right now,
you we are running out of data centers to build
in certain.

Speaker 10 (01:15:21):
Geographies because you don't have enough powers.

Speaker 17 (01:15:23):
You actually tend to go to where the power is,
and data centers are getting built where the power is.

Speaker 10 (01:15:27):
So it's a very important commodity.

Speaker 4 (01:15:29):
Is that true globally?

Speaker 10 (01:15:30):
Yeah, it's absolutely.

Speaker 1 (01:15:32):
The data set like running out of places to run
data centers because of lack of power.

Speaker 17 (01:15:35):
Yeah, you just need you need to be not too
far from the power so that you're you know, the
the entropy is less and how that works.

Speaker 3 (01:15:43):
You're good, Carol. Enthusiasm between the two of you, that
holistic questions that I want to make.

Speaker 4 (01:15:48):
We said we can go as long with you two
as you will give us.

Speaker 10 (01:15:51):
Yes, that is as long as you want.

Speaker 3 (01:15:52):
That is the answer. Can you talk a little bit
about the relationship that you have with in video, Yes,
because I think a lot of in best of trying
to understand from a customer perspective, from just a relationship perspective,
what can you tell us?

Speaker 17 (01:16:07):
So we have enjoyed a very meaningful partnership with them
for the past six years. You know, we six years
ago we decided that we're going to use the nvidio
chip sets and our video conferencing devices, and that made
those devices very you know, kind of AI ready, and
now what you see is a lot of kind of
sophisticated AI capabilities are uploaded on the device itself, so

(01:16:29):
that even if the device integrates for a third party
like Microsoft Teams, they can benefit.

Speaker 10 (01:16:34):
From the innovations that we've made. So that's been a
great partnership.

Speaker 17 (01:16:37):
What we did in the past few months, though, is
we have doubled down on the partnership with data centers,
and so we had announced that we have a AI
factory and secure AI factory, which is basically what Nvidia
has as a reference architecture, which is a suggested model
mode of how companies should think about building out their infrastructure.

Speaker 10 (01:16:57):
And for the very first time they had a non Nvidia.

Speaker 17 (01:17:01):
Silicon provider that was actually part of that reference architecture,
who was Cisco, And we were the first one of
those that they actually incorporated into their architecture. Why is
that important because customers look to nvidio to say, hey,
what does your reference architecture look like? And now Cisco
is part of that reference architecture. So that was the
first thing. But what we've also done and what we

(01:17:23):
announced today was our safety and security capabilities are pretty sophisticated,
and we want to make sure that we actually tie
that with Nvidia's you know, kind of efforts around if
you're building an open source model and an application with
an Nemo framework, we can now validate that model with Cisco.

(01:17:44):
And so we aren't just helping with Nvidia and building
a secure AI factory with the infrastructure and a full stack,
but we're also helping.

Speaker 10 (01:17:51):
But how do you keep it secure and how do
you keep it safe?

Speaker 17 (01:17:54):
And so because one of the challenges that you have
is if people don't trust their AI systems, they're not
going to use them, and so we want to make
sure that people are trusting them.

Speaker 4 (01:18:02):
We're talking with G. Two Patel, President and chief Product
officer at Cisco.

Speaker 1 (01:18:06):
We're here at Cisco Live twenty twenty five. What's the
productive conversation around So much focus is on, especially when
it comes tot Nvidia in their demand for tips, the
hyper scalers, how much they are doing to get an
idea of where we are in the AI race. But
I'm also you know, you talk to you folks, and
it's a lot of on premise build out.

Speaker 4 (01:18:25):
So what's the Yeah, are both okay?

Speaker 1 (01:18:28):
So what's the mix in terms of how we see
this continue to grow?

Speaker 17 (01:18:31):
So I think the way that you will see this
progress forward is there's three or four different models that
will be out there. Firstly, one of the very counterintuitive
things is hyperscalers are going to grow very rapidly, Private
data centers are going to grow very rapidly, and neo clouds,
which are actually AI specialists, are going to grow very opidly, and.

Speaker 10 (01:18:52):
So our service providers.

Speaker 17 (01:18:53):
So when there's you know, kind of a rising tide,
all boats rise, and that's what's happening right now.

Speaker 10 (01:18:59):
Now. What is happening that's unique with.

Speaker 17 (01:19:03):
You know, data sovereignty and with you know kind of
nationalistic behaviors that are kind of progressing from from a
geopolitical standpoint, is there's more and more of an acceleration
of demand of private data centers.

Speaker 3 (01:19:16):
Yeah, we talked about this on prem on prem.

Speaker 10 (01:19:18):
And specifically for infancing, I think for training.

Speaker 3 (01:19:21):
That's interesting.

Speaker 10 (01:19:21):
You know people might go to the cloud.

Speaker 3 (01:19:23):
Brother, do you see that as being part of a
government regulation, a sovereignty issue or is it more an
individual on an individual company basis.

Speaker 17 (01:19:30):
It's actually a combination of issues. It's you know, there's
a sovereignty issue. There's also a data proximity issue. There
might also be some companies who have enough scale where
the scale itself might give them an advantage that they're like, hey,
I don't need to go pay someone something. I might
want to have some some of the workloads on my
own premise. And so it's a combination of multiple issues.
But what you are seeing is there's this kind of
upsurge of demand and acceleration. The good news for us

(01:19:52):
is we help the largest of hyperscalers with intra Cluster communication.
You know, on on the networking side, we are also
working with neocloud providers and then and then we've had
relationships with service providers for the past couple of decades,
and now what you're starting to see is a resurgence
of demand on the enterprise that we know really really well.

(01:20:14):
We've actually been working with enterprise data centers for the
past forty years and now we are actually starting to
see a massive resurgence because of AI inferencing demand and.

Speaker 10 (01:20:23):
The agentic workflows.

Speaker 17 (01:20:25):
When every company is starting to rethink their workflows, whether
it be a BB a healthcare company, or a bank
or a financial services or insurance company, every workflow is
getting reimagined. Infrastructure is going to be built out everywhere,
and we want to make sure that we are the
common networking substrate and we are the common security and
safety kind of provider across the board.

Speaker 4 (01:20:45):
So G two.

Speaker 1 (01:20:45):
In an environment where we constantly are talking about an
uncertain environment because there's stuff coming at us even today
as we kind of continue to watch the negotiations between
US and Chinese officials over in London, how would you
describe demand the CAPEX spend that you are seeing, whether
it's the hyperscalers, whether it's those folks building their enterprise systems,
like the different buckets that you play into.

Speaker 10 (01:21:06):
The demand signal is stronger than an ever.

Speaker 17 (01:21:09):
I've never seen anything, you know, stronger on the demand
signal side, because you've you've got trillions of dollars that
are going to be flowing in for these data center
buildout capacities.

Speaker 10 (01:21:21):
So the demand signal is very strong.

Speaker 17 (01:21:22):
It's actually also happening globally, so it's not just happening
in the US. You're starting to see demand in the
Middle East, You're starting to see it in Europe, You're
going to start to see it in Asia. And one
of the things that's important for America is we want
to make sure that American technologies are being utilized in
all these data center buildouts because that's good for America
and that's good for the world. Frankly, and so you know,

(01:21:44):
Cisco and Nvidia and open AI and others and all
of our partners, I think a MD it's extremely important
that we all work together to make sure that these
these kind of data center buildouts happen with our technology.

Speaker 3 (01:21:57):
You know, you're you're shocking me with the just the
striking magnitude of these investments. It's what is what is
not being Where's money not being spent as a result,
as budgets get reallocated toward infrastructure, what's not getting money.

Speaker 10 (01:22:15):
I think what you'll find is the.

Speaker 17 (01:22:18):
In the short term, you actually have to take certain
amount of dollars from existing projects and move them towards AI.
And almost every company is doing that this and you know,
I'm going to take twenty percent out for my existing
projects move.

Speaker 10 (01:22:30):
Them towards AI.

Speaker 17 (01:22:32):
Over time, what you find is AI will get so
much productivity that those twenty percent of the projects will
get rehydrated. Because if you think about like, for example,
we're one of the first partners with OpenAI on their
codex project, which is the autonomous software Engineer. It's no
longer where you just have an autocomplete where you can
have an individual developer that gets productive.

Speaker 10 (01:22:53):
You can actually now tell an agent or.

Speaker 17 (01:22:55):
A group of agents, go solve a really hard problem
for me and come back to me in a couple
of weeks, and we'll be able to actually have a
world that we are living in in relatively short you know,
kind of time horizons where it'll be able to solve
that problem and come back to you, and you'll still
have the human in the loop that will be able
to observe and that will be able to do things.
But imagine what that does for the constraint we have

(01:23:17):
twenty seven thousand engineers. I've never felt more constrained in
my life about the ideas I have compared to the
resources I have to prosecute those ideas. And we will
actually get to a point where we can unlock those
ideas in a very different way.

Speaker 3 (01:23:29):
What I was just gonna say. We could go on
forever with G two, but apparently his team is telling
us that you have to go speak there's even speaking gate.

Speaker 10 (01:23:36):
Keep going.

Speaker 3 (01:23:37):
Oh, he doesn't want to do it. He wants to
hang out.

Speaker 8 (01:23:41):
With us, and you guys an't too fun.

Speaker 3 (01:23:44):
Hey, we're gonna get in trouble if we if we
do that, well.

Speaker 4 (01:23:47):
I mean I'm gonna go go.

Speaker 1 (01:23:49):
I mean, I mean we're just kind of blown away
every day, like what we are learning about this and
how it's impacting our world. I mean, I don't know
six months from now, a year from like, how should
we be thinking about how dramatically this will impact everything?

Speaker 17 (01:24:02):
I think, firstly, your imagination will be challenged quite a
bit because humans have a very hard time thinking exponentially
for a sustained period of time.

Speaker 10 (01:24:11):
And this curve is exponential.

Speaker 17 (01:24:14):
And when it's exponential, it's not happening in a single dimension,
it's happening across multiple dimensions all at once. And so
if you think about it six months or twelve months
or eighteen months from now, no longer are you just
going to be thinking about this as a more efficient
way for getting an answer. But you will have companions
and sidekicks and a staff of people that are digital

(01:24:35):
workers that can get a job done that you would
have otherwise not had a time to do. And one
important area to talk about is a lot of people
worry about ISAI I going to take my job? I
actually worry more about people that use AI really well.

Speaker 10 (01:24:50):
There's a higher risk of them taking your job than
AI taking your job, noted, you know.

Speaker 17 (01:24:55):
And the other piece that I worry I also think
about is if you actually have there's no one that
I know that comes home every day and says, you
know what, I've gotten everything done on my checklist, right,
And so the reality is is when you there's eighty
percent of the work that we do probably doesn't get
checked off because we don't have time to do it.

(01:25:16):
Now AI agents will start doing that. And then the
final category that's the most exciting is it's AI will
be able to do things that we were not able
to do because it'll have original insights that don't exist
in the human corpus of knowledge.

Speaker 10 (01:25:28):
And that's the area of AI, but I think is
the most under hyped. G Two, we got to leave
it there.

Speaker 3 (01:25:34):
Your crew is about to come on set, and where.

Speaker 4 (01:25:35):
You're to go and just where you know.

Speaker 1 (01:25:38):
I have a companion inside can but I'm ready for
my AI companion.

Speaker 3 (01:25:42):
Inside than product officer as let's go here at Cisco
Live twenty twenty five.

Speaker 2 (01:25:49):
This is the Bloomberg Business Week daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube

(01:26:10):
and always on the Bloomberg terminal

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Bloomberg Businessweek Weekend - June 14th, 2025

Episode Transcript

Hosts And Creators

Tim Stenovec

Carol Massar

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