Bloomberg Businessweek Weekend - May 23rd, 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 Week
Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.

Speaker 1 (00:32):
Hi everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
This week, Cooper Tino Apple has an AI problem. Plus
the world is actually a wash in those not so
rare earth minerals, especially China. But don't count the US out.
As you will hear from the CEO of MP Materials.

Speaker 3 (00:50):
And the language app due Lingo is talking up its
growth and investors are noticing. The CFO featured in the
latest episode of The Chief Future Officer stops by.

Speaker 1 (01:00):
Also, Elon Musk speaks a lot on Tesla sales, being CEO,
plans for future political contributions, and his massive pay package
gets tense at sometimes that's coming up in our next hour.

Speaker 3 (01:13):
All that to come. We begin, though with one of
the week's most read stories. It features exclusive interviews with
Apple insiders about how Apple has been falling short when
it comes to cracking AI.

Speaker 1 (01:24):
This is a crisis. That's how one senior member of
Apple's AI team put it to our team. For all
the details, we caught up with our in house Apple expert,
Mark German. He's the Bloomberg News Managing editor for Global
Consumer Tech.

Speaker 4 (01:36):
Mark.

Speaker 3 (01:36):
I was struck by this. You know, just at the
beginning of your piece, there's a picture of Phil Schiller
introducing Siri back in twenty eleven, and there are these
thought bubbles and it says will it rain? And Cooper Tino,
what's the weather like today? Do I need an umbrella today?
I was shocked to look at the small print and
see that was from twenty eleven, because in my view,
that's kind of what Siri still does.

Speaker 5 (01:58):
Uh yeah, that's the problem.

Speaker 6 (02:01):
That is a problem. Serie was revolutionary fifteen years ago.
It was amazing for its first couple of years because
we let's.

Speaker 5 (02:10):
See, how do I want to say this.

Speaker 6 (02:12):
It wasn't great, but it was still amazing and futuristic
and sci fi and better than everything else. Then Amazon
came around, Google came around, Microsoft came around, and they
just blew Apple out of the water. The technology is
just all legacy technology that they've been using for a
long while now for all intents and purposes, we're not
talking about a serie that's based on the same large
language models and foundation model technology that you're seeing from

(02:34):
open AI and Gemini from Google and you know, in
thropic you name it, and so yeah, they have fallen
way to the way south.

Speaker 3 (02:43):
Well, speaking of Google, there was a big hire there
from twenty eighteen who was supposed to be the guy
who did AI at Apple.

Speaker 6 (02:50):
He was supposed to be the guy who did AI
at Apple, and he's still the guy who does AI
at Apple. That's John gen Andrea. Biggest miss was generative AI.
They seem to have not seen this coming, and if
they did see it coming, they did little to nothing
about it. They really, i'm told, started on the generative
aipath after Craig Fedderigi, the head of software engineering, used

(03:11):
chat GPT to finish some code for a personal project
he was working on over the holiday break. Did they
take this little one week break at the end of December.
He was working on some personal software, as one does,
and he figured out the power, Yeah, figured out figured
out the power of chat GPT and then immediately they
set iOS eighteen for twenty twenty four. This is gonna

(03:33):
be the big AI release for Apple. From a marketing standpoint,
it was. They marketed it really well, AI for the
rest of us, just like the computer for the rest
of us forty years ago. And you know, okay, we're
good that. Yes, other than the other than the marketing,
you know what.

Speaker 5 (03:52):
Let's take a step back in the robotics world.

Speaker 6 (03:56):
In the humanoid robotics world, the fundamental thing that a
humanoid robot has to do is go to your kitchen,
pick up a glass of water, and bring it to
you without dropping it. Okay, Tim almost dropped his water
all over him. So that's where I got the idea
to mention this. The problem isn't so much the iPhone
and the AI capabilities on today's devices. The problem is

(04:17):
is can Apple make AI that's good enough to power
a robot that's not going to spill their water like
Tim right there? It is, And so the worry is
not necessarily about the technology today, but it's the technology
of tomorrow in a decade from now, and so the iPhone,
you know, its rain is going to be over at
some point but that's not really what matters here. I
think that's that's not big picture enough. The big picture

(04:38):
is the next set of stuff. We've seen AI already
lead to the car cancelation in part. There were many
other factors. But if Apple was able to get an
L five car with tiptop AI and great safety features
level five, yep, they would have brought it to market.
So you know, we've already seen AI cost them one
big category. They were supposed to have a big smart

(04:58):
home push this year. It's been delayed. It was supposed
to happen in March. Now it probably won't happen till
the end of this year or next year. The AI
not working cost that. Now they're already having trouble coming
up with use cases for AirPods and watches with camera
and smart glasses with cameras because you need real good
AI to use that. So the iPhone doesn't matter, it's
everything that comes after it.

Speaker 1 (05:19):
So why can't they get this right? Is it personnel?
Is it culture?

Speaker 5 (05:25):
Is it?

Speaker 1 (05:25):
What is it both?

Speaker 6 (05:26):
It's personnel mismanagement, it's culture. Apple's wired in a very
specific way. I get into it in the story. They're
wired to they sit down, they map out what they
want to do, and then they make the investment to
get there. AI sort of works the opposite. You don't
know exactly where you're going to land. It's a little
bit messier, you have to run a little bit faster,

(05:48):
it's a little bit you know, more expensive to pull off.
And so it's just a philosophical product development question, right,
And so Apple has to change.

Speaker 2 (05:57):
AI moves so fast.

Speaker 6 (05:59):
You know, there's a new AI provider or a major
new AI technology on a weekly basis at this point,
even more frequently. But Apple's wired to release one major
software upgrade every year and a smaller software upgrade in
the spring. So they're going to need to move away
from that idea as well if they really want to
stay at pace with the rest of the technology industry.

(06:20):
So AI and Apple, it's just so interesting. It's like
putting two magnets next to each other. They're just going
to push away, right, And so Apple's going to have
to change at a very core level to really be
able to make meaningful change and to have a meaningful
improvement in their GENAI world.

Speaker 3 (06:37):
You know, I'm thinking about this and they're mark when
when you talk about Apple and you know this better
than anyone else. People a common refrain, and I don't
think this is true, but it's that Apple stopped innovating
after Steve Jobs. And you can go and kind of
look at Apple's share price in what has happened with
investors in the way that Tim Cook has led the company.
The concern that I potentially would have in a situation

(07:00):
like this as an observer, is, is this Tim Cook's
legacy here missing?

Speaker 4 (07:04):
AI?

Speaker 6 (07:05):
First of all, I don't agree with the idea that
Apple stopped innovating since Steve Jobs.

Speaker 5 (07:11):
I agree with that. I agree with you.

Speaker 6 (07:12):
No, no, I know you agree.

Speaker 5 (07:14):
If you think about it.

Speaker 6 (07:15):
They basically haven't innovated or done something wholly new since
the iPhone. Right now, are we really expecting that? I
think yes to some extent, But like you look at it,
and like the iPad to the iPhone was like the
vision pro to the iPhone, right, they're both different reincarnations

(07:35):
of that same operating system. You put the Apple Watch
in that category as well, So you have sort of
the central product of the iPhone and you just kept
building and building around it and building it up into
new form factors. And they haven't really done an entirely
new product experience from the ground up, and so you know,
at some point they'll get there, but right now it's
about new form factors. And honestly, I'm not sure Tim Cook,

(08:00):
sure anyone would have done a better job than Tinkcook
over the last fifteen years or so since.

Speaker 5 (08:03):
Steve Jaw has passed away.

Speaker 6 (08:05):
So certainly could have they done a lot better, yes,
but they've also could have done much, much, much worse.

Speaker 1 (08:12):
You I want to ask you, does any of this
matter because you write in the story being late to
a potentially world changing advance isn't necessarily catastrophic for Apple,
but there are risks of being late too.

Speaker 6 (08:22):
Well, it's not catastrophic for Apple because being late implies
that they're going to get there, and so you know,
as long as they're late, it's not catastrophic. But they're
going to need to get there because, like I said,
they're going to miss so many upcoming technological waves if
they don't master this. I said this to someone I
was on the radio with earlier, and they were a
little surprised. But think about it for a minute. You're
going to agree with me. AI is as core of

(08:45):
a technology as the touch screen, right, that's a big
bowl claim, right. So Apple is known for taking core
technologies and pushing them to new form factors. And so
multi touch touch screen, that's the type of touch being
that to do multiple gestures at once. Let's you do
the pinch and the swipe.

Speaker 4 (09:03):
That's called multi touch.

Speaker 6 (09:05):
That was a core technology that allowed them to build
the iPhone and the iPad, all their macs and iPads
and whatever they're releasing these days. The core technology at
the heart of that are their chips, their in house
process or design AI is the core technology that's going
to enable robots the glasses to maybe'll look at cars
again in the future. Who knows, It's not something they're

(09:25):
looking at right now, to be clear. And so they
need to master that court technology to get to the next.

Speaker 5 (09:29):
Era of hardware. Apple's a hardware.

Speaker 6 (09:31):
Company, right, and if they want to continue making the
money they're making, they're going to need to do new hardware.
And the way to do new hardware is to come
up with new core technologies.

Speaker 1 (09:40):
But they hired this guy.

Speaker 7 (09:41):
You even printed it out.

Speaker 4 (09:43):
I love it, Are you kidding?

Speaker 1 (09:45):
But they hired this guy back in twenty eighteen. Yes,
it's almost a decade, but getting close.

Speaker 6 (09:52):
You're right, and that's that's unbelievable. But yeah, yeah, we're
close to a decade since he's been there.

Speaker 5 (09:57):
You're right, all right.

Speaker 1 (09:58):
So from someone who knows this company so well, I mean,
how are you thinking about or who are you watching
or what are you watching? Internally? I mean the company?

Speaker 5 (10:05):
Yeah, obviously listen to you.

Speaker 1 (10:06):
They listen to others, have conversations saying where are you Apple?
When it comes to AI John.

Speaker 6 (10:11):
G Andrea Jgs, he goes by, I don't think he's
long for Apple.

Speaker 8 (10:15):
I is that good.

Speaker 6 (10:17):
I'm not going to opine on whether it's good enough
for a person to no longer be at a company,
but I'll put it this way. They've already stripped him
of all products related responsibility. They removed Siri from him, right,
they remove robotics from him. They're going to probably remove
some more things from him. They want to squish him
down to a role that's entirely focused on large language

(10:38):
model and courts AI technology research, which he's really good at.
And so I mean, if they're taking away seventy five
percent of your remit, you know you may decide that
the writing's on the wall. It's time to get out
of here. I don't think it's going to happen imminently.
I don't think he wants it to happen. But I
think at some point a change will be made, whether
it's because he decided or Apple forces hand. But I

(11:01):
don't expect them to fire him. Apple doesn't do that
for senior executives of that level unless you really do
something bad and for all intentsive purposes. JG's a great guy.
He's very well liked, he's very respected in the machine
learning and AI can can.

Speaker 1 (11:18):
He get them to where they need to be?

Speaker 2 (11:20):
He can be a piece of that puzzle.

Speaker 6 (11:23):
Don't forget Apple is constructed by a functional model. So
you have design teams, you have hardwer engineering teams, you
have software engineering teams that bring together the product at
the end of the day. If you dilute JG to
only focus on AI research, but you have other people
in charge of like AI product development, I think it's
possible that that's a winning formula, but clearly him running

(11:46):
all of AI was not a good formula.

Speaker 3 (11:47):
We only have thirty seconds left. Could Apple acquire its
way out of this? They've partnered with chat GPT Opening Eye.

Speaker 6 (11:53):
Well, first of all, yes, they need to acquire as
much AI talent as possible, but that's also another culture
issue where they have this cultural allergy to integrate large
scale companies. The Beats acquisition internally disaster, the Intel Modem
acquisition for a billion and twenty nineteen disaster. They just
have a terrible track record of taking these humongous companies

(12:17):
and pulling them into Apple. So you know, it's a
cultural thing through and through that they need to make
some shifts on.

Speaker 3 (12:23):
That was Mark German, Bloomberg News, Managing editor for Global
Consumer Tech.

Speaker 1 (12:27):
You're listening to Bloomberg Business Week. Coming up the races
on for rare earth minerals.

Speaker 3 (12:32):
We'll hear about what's already happening in the US with
the CEO of MP Materials. This is Bloomberg.

Speaker 2 (12:42):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.

Speaker 1 (12:56):
Well on Wednesday this past week, Russia's largest oil producer
bought a giant Siberian rare earth deposit, which may become
an area of cooperation with the United States.

Speaker 3 (13:05):
Russia, encouraged by President Trump's talk of economic deals that
could follow a peace agreement with Ukraine, has been working
on a list of projects and assets that officials hope
might interest the US.

Speaker 6 (13:16):
Now.

Speaker 1 (13:16):
This comes as appetite grows in the US for new
sources of critical minerals following China's decision to curb exports
of rare earth materials.

Speaker 3 (13:24):
For more, we went to the experts. This next company
knows all about extraction, refining, manufacturing when it comes to
rare earth minerals from A to Z, and it's happening
right here in the US.

Speaker 1 (13:35):
Jim Latinski is co founder, chairman, and CEO of the
three point three billion dollar rare earth mining company MP Materials.
He joined us along with Bloomberg News Metal Mining Heavy
machinery reporter Jode.

Speaker 3 (13:47):
We started by asking about the boom in the rare
earth mineral industry.

Speaker 9 (13:50):
It's certainly a very exciting time for us as you
as you mentioned, you know, we're the only company in
the world, and that includes Chinese industry, that has the
expertise from the resource all the way through to the magnet.
And what I stress again and again when we think
about rare earths, because it's very topical. A lot of
times people talk about extraction. You know, you hear Ukraine,

(14:12):
Greenland deep sea mining, or even with the President of
South Africa getting you know, a stern dress down in
the Oval Office talking about how he has rare oaths too.
We could have all the rarests in the world, but
if you can't refine them and turn them into magnets,
you don't have a solution for the issue.

Speaker 3 (14:30):
So, Jim, do you have that solution right now? Because
we spoke with Joe a little earlier this year, he
reminded us that it kind of doesn't matter if you
can extract it here in the US. You got to
be able to refine it. And in some cases, with
some of these elements, ninety percent of that is happening
in China. What exactly can you do on the refining

(14:52):
level here in the US, so great question.

Speaker 9 (14:55):
There are two places in the world that you can
refine at scale, the Chinese of influence predominantly China, a
little bit Malaysia, and then in California in Mount Pass, California,
which is our site. We actually I think some people
would be surprised by this, but we refine today more
than half of the concentrate that we produce. So we
are refining at scale as we speak, and expanding that rapidly.

(15:19):
So we have brought this capability back to the United
States of America, and we're the second largest producer of
rare materials in the world today.

Speaker 1 (15:26):
So one thing I just want to follow, because I
think you guys know this world so well, Jim Into,
But I mean when you say refine at scale, what
exactly are you talking about. I'm just saying that people
are listening like, okay, what does that mean?

Speaker 5 (15:38):
You know?

Speaker 9 (15:38):
A simple analogy, Carol would be think of oil and gasoline. Right,
You could get oil out of the ground, but you
can't put it in your car until it's in the
form of gasoline.

Speaker 5 (15:47):
Right, you refine it.

Speaker 9 (15:48):
In this case, you basically take an ore out of
the ground, you concentrate it so it's a highly concentrated
ore with the rareth in it. But then to get
the separated rare earth that you would then turn into
a magnet, refine that concentrated or into an oxide, and
then not to lose the audience. But you take that
ox side, you turn it into a metal and alloy

(16:09):
and then a magnet and so and just last point
on that that I think is really critical. At Mountain
Pass today we not only mine and refine, but we
now send that or to a magnet factory that we
built from scratch at Greenfield in Fort Worth, Texas.

Speaker 5 (16:23):
I'm actually talking.

Speaker 9 (16:23):
To you from our factory and it's on a street
called Independence, So we called Independence, but we are making
auto grade magnets here at our factory in Independence in Texas,
with material that we mine and refine in California. And
we're in the process of scaling up this facility. We
have a foundational contract with General Motors, and so we

(16:44):
will be providing General Motors with magnets at scale at
the end of the year, with material that is mined
and refined in California.

Speaker 7 (16:53):
Jim, I want to kind of get away from the
nerdy science. I know you and I can talk about
that all day, but I do want to talk about
what does matter to the average person here in the USA,
which is you can't do all of this on your own.
You cannot. While you might have the full supply chain,
you cannot be the sole supplier of critical materials, specifically
rare earths and the magnets. You've said that to me
for years. One of the things you said to me

(17:14):
years ago was listen, the point is not overnight being
the sole provider to yourself domestically. It is slowly pulling
market share away from China. What are the kind of
conversations you're having right now on this front, on the
staatecraft front, and maybe you could tell us a little
bit about THEMU You signed with Madden, the Saudi Aribbian

(17:35):
mining company just last week on this front.

Speaker 5 (17:38):
Yeah, sure, thanks, Joe. Well, it's a great question.

Speaker 9 (17:41):
We've said all along our mission is to restore the
full supply chain to the United States. We've obviously done
that in small scale and we're scaling that up, but
we really want to be part of a broader solution
to eliminate the single point of failure. As you mentioned,
I was in Riad last week as part of the
delegation of business leaders from the United States with the
President and in the presence of the President and Crown

(18:03):
Prince MBS, we signed an MoU with Modern, which is
the Saudi mining company, to explore the process of essentially
building a vertically integrated rare earth magnetics business in Saudi Arabia.
And so what that would mean is we would mine, refine,
and make magnets in the Kingdom. And I think from

(18:24):
from their standpoint, it's a really exciting opportunity to be
to create a mid East hub that could receive feedstock
from from there certainly, but also Africa and some other
places and really position them well geopolitically. But more importantly,
I would also say that, you know, it really solidifies
what we've been saying we are and I think, you know,

(18:46):
each step of the way are showing is that we
are America's national champion. We're the only company in the
world that can provide a solution in house to mine, refine,
and make magnets. And so I think the vertically integrated
approach that we've had is starting to be recognized by
the world as you know, something pretty extraordinary that we've

(19:07):
built inside MP And so it was nice that the
President and the Crown Prince recognized that.

Speaker 5 (19:13):
So, yeah, you know, we'll run that.

Speaker 7 (19:15):
I mean, I mean it's interesting you're very much saying
it's partners, we don't go it alone. It's not just
the United States figuring it out. We'll work with the
trade partners to figure it out. I think another question
I have as you came out of the gates guns
a blazing on your earnings call recently with investors, and
you pointed out, listen, it is very important that we
work at the administration to figure out the solutions to

(19:37):
basically getting a hold of these rarers and these permanent
magnets that are domestically or friendshored produced.

Speaker 5 (19:43):
Can you tell us a little.

Speaker 7 (19:44):
Bit about the kind of conversations you're having with the
administration or even the Defense Department.

Speaker 9 (19:49):
Sure, so, a really important just background context, if we
go back about a month ago to Switzerland with the
trade talks with China.

Speaker 5 (19:59):
At that point, we were and a lot.

Speaker 9 (20:01):
Of people don't know this or maybe don't appreciate this
because you know, we're they're not in necessarily the rare
with magnetics niche, but we were weeks away, in my opinion,
from a shutdowns across our economy in aerospace and in
auto because the Chinese had essentially stopped shipping rare with
magnets and our supply chains were really starting to break down,
and so Obviously, Fortunately we came away with a deal

(20:23):
there and we're not gonna see those kinds of shutdowns.
But we were really close, and that is a leverage
point that the Chinese have in any negotiation. And again,
whatever your view is on the relationship with China, whether
it's you know, sort of going to be a collaborative
relationship moving forward that gets reset or something much worse,
we need to take this leverage point off the table,

(20:45):
you know. That's that's our view at MP. That's what
our mission has been. We've been at this for years.
Is let's make sure that the United States of America
can produce our own rare with magnetics. And the reason Joe,
that that is so important and you mentioned DD is
because as we've seen around the world, physical AI is
the future of warfare. We're talking robotics and drones, and

(21:06):
I think we see that from whether it's Elon Musk
or Jensen Wong talking about the scale of robotics and
how large that industry is going to be. It is
not acceptable for American companies downstream. We're talking about trillions
of dollars of enterprise value. Our great leading companies as
well as our Department of Defense to be relying on
a single point of failure in the Chinese supply chain,

(21:27):
and so we serve a critical role in alleviating that risk.

Speaker 1 (21:31):
All right, So it sounds like you're making the argument
for why the US government should be involved, But is
the government US government? Is there appetite for the US
government to be a partner in rare earth projects and
doing it from A to Z, from mining to processing
to permanent magnet production.

Speaker 9 (21:48):
There is no question that the United States government recognizes this.
And I think that these things take time, but there's
no question that they recognize. And Joe was referencing our
perspective on the earnings call, which is this is actually
very doable. We are, you know, in a very short
period of time away from solving this challenge in a

(22:10):
large scale, and frankly, MP can lead that effort. And
what we said is that MP, you know, we've been
at this for a number of years. We've invested over
a billion dollars of private capital, and you know, since
we went public and then prior to that, we we
had the good fortune, I guess of taking control of
several billion dollars of previously invested capital. So we have
billions of dollars of invested capital, and what we've said

(22:32):
is we'll lead this solution, but it's not fair on
our shareholders to expect them to take the risk. We're
going to need to do this in a capital light
way for MP it should be very rewarding for our
shareholders for being in this position. So, so the to
answer your question, you know there will be movement forward.
In my opinion, I think it's a question of getting

(22:53):
these solutions don't happen overnight, but there's no question that
there are a lot of conversations happening with government and
industry and we're leading those.

Speaker 1 (23:01):
Okay, so it sounds like government's involved, they're listening and
we should maybe stay tuned for news. What kind of
money is needed to be committed to do the proper
buildout in your view, whether it's public private partnership, and
just about thirty seconds on that.

Speaker 9 (23:14):
Yeah, the really simple answer is we're talking single digit billions.
This is a really simple problem to solve. Actually, I
jokingly say for the coffee budget on the F thirty five,
we probably could have solved the rarer issue.

Speaker 5 (23:29):
This is really small.

Speaker 9 (23:30):
Wow, And so I do think that the United States
government is going to step up. I think you're going
to see industry players step up as well, because this
is just it's an issue that affects our national security
and trillions of dollars of enterprise value, and it's actually
a small problem.

Speaker 3 (23:45):
You mentioned that we could do this in a short
period of time, give us years or some sort of
timeline that we could actually move away from a single
point of failure when it comes to this problem.

Speaker 9 (23:57):
Well, we're bringing that online now in Texas. So where
I'm sitting is a factory. You all are welcome to
come see it, and so we'll be making magnets at
scale here at the end of the year. And then
the question is what percentage of the industry do we
need to satisfy to remove this single point of failure risk,
Because we don't need to solve one hundred percent, but
we need to do a material percentage. And so I

(24:18):
think the next step would be for us to lead
a solution where we're building something significantly larger and then rinse,
repeat to add a number of facilities both here and
as we announced with the MoU, potentially in the Saudi
Arabia and other places. So it really is not a
huge issue. It's just an issue that requires capital and execution.

Speaker 7 (24:41):
Right, And I think on that point, like it's not
just going to be you, it does still require a
lot of other actors to come into the space. And
I guess the quick follow up again is what are
we going to see from the government this year in
terms of commitments to help this space, your company and
others build out the supply chain on rare earths and
permanent magnets.

Speaker 9 (25:00):
Well, just to be crystal clear, as we all know,
the capital markets can satisfy this problem if the existential
issue of the industry is off the table, and the
existential issue is Chinese mercantilism, right, is pricing. We've got
to get proper functioning economics, proper functioning market economics for
the price of these materials and the price of the

(25:21):
downstream products. And so those are a variety of ways
that the government can can force that solution. You've heard
a lot of them in the news, and certainly we're
working on them. I think you'll see a variety of
things across investments, tariffs, tax credits, and so there isn't
you know, sort of one fits all solution it's really
going to be a question of, you know, the preferences

(25:42):
of government, and certainly you'd have to get some of
them on here to ask them directly or stay tuned
for you know, a solution that you see us present
one day. But I do think we're going to see
something you know, sooner than later, because we've got to
solve this problem.

Speaker 3 (25:57):
That was Jim Litinski, co founder, chairman, and CEO of
the three point three billion dollar market cap rareth mining company.
It's called MP Materials. He joined us along with a
Bloomberg News metal mining heavy machinery reporter Jo Dell and just.

Speaker 1 (26:09):
To say I'll go to when it comes to rare
earth minerals and so much more. All right, Still head
on Bloomberg Business Week, how learning a new language translates
into a growing business big time over a dual lingo.

Speaker 3 (26:19):
We hear from CFO Matthew Scarupa, the subject of the
latest episode of Bloomberg's Chief Future Officer. This is Bloomberg.

Speaker 2 (26:28):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay 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 Play.

Speaker 1 (26:43):
Bloomberg eleven thirty Dual Lingo plans to use artificial intelligence
to significantly expand its course offerings beyond languages and reach
more learners globally. All according to its Chief financial Officer,
Matt Scarupa. He's featured on the current episode of Chief
Future Officers on Bloomberg Television, which you can get on
the Bloomberg Terminal and on Bloomberg dot com as well.

(27:04):
And Tim you hosted the episode You like you will
get into this company and the CFO, Yeah, we did.

Speaker 3 (27:09):
We talked to AI. We also talked how Dulingo is
betting heavily on global markets. They've got this particular focus
on China, all about the opportunity of teaching people English
as a second language. We also had Matt on Business
Week Daily this week. We started by asking him about
the growth of the language learning company.

Speaker 10 (27:27):
You know, we've done a great job of growing this year.
Our Q one performance was strong top to bottom. We
saw a really strong user growth. That user growth translated
into a really strong top line and bookings and revenue,
and we were able to keep control of costs like
we historically have been able to to expand margins, and

(27:48):
it wasn't just a Q one story. As we guided
on our last earnings call. We believe we're in a
really strong position for the rest of the year. We
feel good about Q two and the rest of the year,
and it's going to continue to come from the same sources.
We're a company that grows primarily organically by word of mouth,
and we expect that to continue.

Speaker 3 (28:08):
Hey, Matt, good to have you join us. Thanks for
doing this today, and thanks again for participating with us
for the CFO Show. Ten point three million paid subscribers
as of the end of the first quarter of twenty
twenty five, it's growth of forty percent year over year.
How much can how long can you continue that growth?
I mean, when we're talking the growth at that percentage,

(28:29):
like that's pretty substantial.

Speaker 10 (28:33):
No, I appreciate it was great to do the show
with you, and I look forward to seeing that. In
terms of growth, we've done it for several years. I mean,
we went public in twenty twenty one, and if you
look back from then to now, we've grown the top
line really nicely. So i'd say that you know, you
look back and you think that we have a strong

(28:55):
path going forward as well. I'd also just call out
that the ten point three million sub ubs is great.
We're excited about that. We feel really good about that growth.
But we're also seeing really nice diversification of subscribers. So
we have continued strength in our Family Plan, which is
a subscription where multiple friends and family can join, and

(29:16):
as of the last quarter, seven percent of our subs
we're on our Max tier, which is our highest tier service,
which has features like video call with Lily, and it's
doing really well. So it's a great story not just
on the overall top line numbers, but on how we're
growing the subscribers.

Speaker 1 (29:36):
I mean, that's wild, almost fifty percent year every year growth. Matt,
I am curious, who are these people that are signing up?
How long do they stay with you? And what's the
cost to acquire an individual user?

Speaker 10 (29:49):
Yeah, So one of our core business model advantages is
that when we acquire a user, we acquire them mainly
for free. We do spend on performance marketing and some
brand spend, but it's relatively small as a percentage of revenue,
and so most of our growth comes from people telling
their friends and family that they've had a great and

(30:09):
engaging experience with our app. That's why Luis is so
focused on engagement as a core driver of growth for us,
is that if you have this wonderful, joyful experience, you're
going to tell people about it and they're going to
try it. And then the other way is we have
a really amazing social first marketing strategy where we you know,

(30:31):
insert ourselves into viral moments on online TikTok, Instagram, other platforms,
and users create their own content which goes viral, and
so on any given day, a.

Speaker 4 (30:41):
Lot of what people are talking.

Speaker 10 (30:43):
About on dual Engo isn't generated by us, It's generated
by our you know, beloved fan base.

Speaker 1 (30:49):
You know.

Speaker 10 (30:49):
When you have that type of viser acquisition and it
is global, we're seeing strong user growth around the world.
We get a lot of opportunities to then convert folks
from free subscribe to paid or from free user to
paid subscriber, and they stick around on the platform and
they come back frequently, and so we get multiple chances
to convert them. And while we're doing, while time is progressing,

(31:13):
we're making the subscription product even better and better so
that's how we grow the subscriber base.

Speaker 3 (31:19):
Well, we'll talk a little bit in a minute about
the social first marketing, because something kind of wacky seems
to be happening right now if you look at the
social channels for dou a Lingo. But I'm wondering specifically
mad about growth and about you know, at the end
of the day, the efficacy of the product. And I'm
wondering how you measure to what extent the product actually

(31:41):
resonates and works for people who are trying to learn
English as a second language, for example, to be able
to do business in the US, or to be able
to do business in English. How do you measure that?

Speaker 4 (31:54):
Yeah, well it is core to our mission.

Speaker 10 (31:56):
So our mission is to you know, build the best
education in the world and make it universally available. And
so to do that, we need to prove to our
users and to ourselves that we're teaching really well. We've
had some studies done that show just how efficacious we are.
So you know, if you compare us to learning a
language in a university, we are on par with that.

Speaker 4 (32:19):
You can probably do it faster on dual lingo.

Speaker 10 (32:22):
And you know, there's plenty of evidence we've put on
our website that shows those studies in detail. I think
the bigger evidence is that we're continuing to add features
that just really address some of the core desires of
particularly English learners like you reference they want to practice conversation,
and so what we've done over the past you know
several quarters, is add this feature called video Call with Lily,

(32:45):
where you can practice your conversation with one of our.

Speaker 4 (32:47):
Characters, Lily. She's a bit passive aggressive, she's not impressed.

Speaker 10 (32:52):
I've yet to impress her with my Spanish, and I
don't think I'm going to, but I'm going to keep trying.

Speaker 4 (32:58):
Well, she's the.

Speaker 3 (32:59):
Thing, and yeah, I just want to say, she's over
your right Well, we're looking at pictures of her on
the screen right now. There's also a next she's next
to duo over your right shoulder. So that's the Carol.
That's Lily, who's not impressed you. By the way, in
the last couple of months, has unfortunately become a member
of my family.

Speaker 5 (33:13):
It seems like with doing this with that.

Speaker 1 (33:15):
Acual love, it's passive aggressive.

Speaker 10 (33:17):
Yeah, Lily is not impressed with me, and so that
kind of practice, though, is really helpful for folks.

Speaker 4 (33:25):
Who are trying to learn English. They're trying to.

Speaker 10 (33:27):
Learn how to speak it, and that's what we've been
able to do over the past little bit.

Speaker 3 (33:31):
So you use AI in a few different ways. Lily
is certainly one of them. When you think about the
cost associated with this. You're not using AI that a
platform that you developed actually at dual Lingo, you're outsourcing
the technology. How do you keep those costs in control
because that's pretty expensive tech, Matt, and you know you're
watching the bottom line and you're watching margins here.

Speaker 4 (33:53):
Yeah.

Speaker 10 (33:53):
Absolutely, And you know it comes down to the fact
that we have been using forms of AI, machine learning
and what not for a long time.

Speaker 4 (34:01):
In our company. The lesson you get served up, you.

Speaker 10 (34:06):
Know, has for many many years been based on a
machine learning algorithm. And now with generative AI, with video
call with Lily and in some of our content creation,
we are seeing that there's an amazing advancement in this
technology that helps us do these things much quicker and
more even producing more content that we thought was possible.

Speaker 5 (34:28):
You know.

Speaker 10 (34:28):
For example, you know, it took us about ten years
to create the first hundred courses and then in less
than a year with this new technology, we created more
than one hundred more and so this technology is really powerful.
The good news about it is that the costs are
coming down naturally. You know, we don't have to do
much internally, although we are still doing things to optimize

(34:50):
the costs. But just by the nature of this technology,
we're seeing rapid declines in the cost and we don't
know for sure that that's going to continue. But if
it does, you know, I think that you know, the
use of this will go up and margins will be
will be good.

Speaker 1 (35:06):
I just want to know. I'm one hundred percent Slovak,
and I just want to know how long would it
take me to learn a language with you guys? I
know a few keywords, you know, your parents, your grandparents
teach it, the squear words and all that good stuff. But
how long does it take for someone to learn certain languages?

Speaker 10 (35:21):
Sure, well, you know, I don't know that I've ever
met anyone else or talked to them live on air.
But I am also Slovakian, which is which is quite
the coincidence, But I think, yeah, that's that's a very
nice coincidence. It turns out more will depend on your
ability to put in the time. You're learning a language

(35:44):
takes practice, and that's why we're so focused on engagement.
We want you to enjoy our app and come back
every day because it's going to take time to learn.
So if you're really committed and you want to learn
any language on du or Lingo, and you put in
a bunch of time, you're going to learn it much faster.
And that what the research shows, and so it's really
motivation dependent. What we find is that the hardest thing

(36:06):
about learning a language isn't verb conjugation or grammar or speaking.

Speaker 4 (36:11):
It's your motivation to keep practicing and keep learning.

Speaker 10 (36:14):
And that's why most of our company is geared around
bringing you back every day and making sure you're engaged
in the product, because if you're engaged in the product,
you have a chance to continue to learn.

Speaker 3 (36:25):
Yeah, the gamification, the alerts, the emails like the friends Streak,
all the stuff that brings you back into the program. Matt,
I promise that we would go to this unhinged marketing
and social media strategy because you got to shed some
light on what exactly is happening across duelingos social channels
right now. I checked in on it yesterday and this morning,
and it looks like Duo has been taken hostage. There's

(36:46):
like some sort of hostage video. Everything else has been wiped.

Speaker 10 (36:48):
What can you tell us, Well, I can only tell
you that our owl is truly unhinged.

Speaker 4 (36:56):
You can never predict what that guy is going to do.

Speaker 1 (37:00):
I was like my co host, I'm just gonna tell you, Matt,
never know what he's gonna do. Anyway, go ahead.

Speaker 10 (37:07):
I've only spent a little bit of time with him,
but you know, I kind of can see it. Love
O our AWL mascot earlier this year, right after the
Super Bowl, decided that he was going to fake his
own death and then you know, return and so like,
you just never can predict it. I would just encourage
everyone who's watching and listening to check in again tomorrow.

Speaker 4 (37:26):
You'll you'll get some interesting insight.

Speaker 3 (37:29):
That's Matt Scarupa, the chief financial officer of Dua Lingo Carol.
What's interesting about this company? It's a tech company. Yeah, Hi,
margins Ai first not based in Silicon Valley. They are
in Pittsburgh. They've got this DNA with Carnegie Mellon University,
Luis van On. That's where he came from. He's been

(37:51):
working with AI for decades. He won a Genius Award
the MacArthur Foundation.

Speaker 1 (37:56):
Genius Aqua with those low achiever types, right.

Speaker 3 (37:58):
Yeah, back in like the early two thousands and two
thousands for his work on AI.

Speaker 1 (38:03):
What struck you about this company? Because you've been talking
about it a lot since you talked to them, the CFO,
the CEO, and did the profile for chief Future Officer,
and you even played around with it big time.

Speaker 3 (38:13):
Oh yeah, I mean I'm now actually hooked. I mean
yeah totally. We language are learning well, learning Spanish with
my son. We do it together every night. And then
we also are using doing chess on the program too.
So they do chess, they do music, they do math.

Speaker 1 (38:28):
All right, everybody. That wraps up our first hour of
the weekend edition of Bloomberg Business Week from Bloomberg radio Head.
In our next hour, he's easily one of the most
talked about individuals of our time, whether he is sending
rockets into space are bringing stranded astronauts home.

Speaker 3 (38:41):
He also drills tunnels, he sends satellites into space. He
disrupted the auto industry. He's even implanted computer interfaces into
a couple brains and yes, he was once known as
President Trump's first buddy.

Speaker 1 (38:55):
Yes, indeed, folks, we are talking about the one and
only the world's richest individual, Elon Musk, who spoke with
our own Michelle Hussein at the Qatar Economic Forum in
Doha this past week. That forum program by Bloomberg News.

Speaker 3 (39:07):
That full conversation up next.

Speaker 2 (39:13):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.

Speaker 1 (39:26):
Plenty ahead in our second hour of the weekend edition
at Bloomberg Business Week, a holiday weekend edition. I should
say so this is something special, and by that when
we say plenty, we really do mean plenty and plenty
from Elon Musk. This past week, he gave a wide
ranging interview to Bloomberg's Michelle Husain at the Qatar Economic Forum,
which was programmed by Bloomberg News.

Speaker 3 (39:47):
They spoke for about forty minutes and really touched on
everything from his political spending, the Department of Government efficiency,
and his relationship with President Trump.

Speaker 1 (39:55):
And of course Michelle started the interview where else, but
on Tesla.

Speaker 8 (39:59):
The company is offered in recent months what you've called blowback.
So what is your plan for turning that around? The
declining sales picture? And by what stage do you think
you're going to be able to turn it around?

Speaker 5 (40:13):
Oh, it's already turned around.

Speaker 8 (40:15):
Give me some evidence for that. I've just been looking
at the sales figures for Europe in April, which show
very significant declines in the big markets.

Speaker 5 (40:24):
Europe is our weakness market. We're stronger everywhere else. So
now our sales are doing well at this point, we
anticipate any any meaningful sales shortfall and the you know
the obviously the stock market recognizes that since we're now
back over a trillion dollars in market cap, so really

(40:47):
the market is aware of the situation. So it's already
turned around.

Speaker 8 (40:50):
But sales still down compared to this time last year
in Europe.

Speaker 5 (40:55):
In Europe, okay, and yes, that's that's true of all manufacturers,
there's no exceptions.

Speaker 8 (41:03):
Does that mean that you're not going to be able?

Speaker 5 (41:05):
Does that mean you're quite weak?

Speaker 8 (41:08):
Okay? But you would acknowledg wouldn't you that what you
are facing? Okay, let's just take it as your What
you are facing is a significant problem. This Tesla is
an incredibly aspirational brand. People identified with it, it saw it,
They saw it as being at the forefront of the
climate crisis. And now people are driving around with stickers
in their cars saying I bought this before we knew
Elon was crazy.

Speaker 5 (41:29):
And there are also people who are by buying it
because Elon's crazy, or however they may view it. So, yes,
we've lost some sales perths on the left, but we've
gained them on the right. The sales numbers at this
point are strong and we've seen no problem with them
had So what I mean? You can just look at

(41:50):
the stock price if you want the best inside information.
The stock market analysts have that and us it wouldn't
be trading near all time highest if it was not,
if things weren't in good Jake, They're fine, don't worry
about it.

Speaker 8 (42:08):
Okay, I was citing sales figures rather than share price. Well,
tell me then, how committed you are to Tesla. Do
you see yourself and are you committed to still being
the chief executive of Tesla in five years time? Yes,
no doubt about that at all.

Speaker 5 (42:24):
Well, no, I might die.

Speaker 8 (42:30):
Okay, sure to that.

Speaker 5 (42:31):
Let me see you if I'm dead. So slight mode.

Speaker 8 (42:34):
Does that mean that the value of your pay doesn't
have any bearing on your decision?

Speaker 5 (42:41):
Well, that's not really sort discussion in this forum. The
I think, obviously there should be a conversation for if
there's something incredible is done, that compensations should match that
something incredible was done. But I'm confident that whatever the

(43:04):
whatever some activist posing as a judge in Delaware happens
to do will not affect the future compensation.

Speaker 8 (43:11):
This is the judge who twice struck down the fifty
six billion dollar pay package that was awarded to you.
I think the value on the basis on the current
value of stock options.

Speaker 5 (43:22):
Yeah, not a judge, Not a judge, the activist who
is cars playing a judge in a Halloween costume.

Speaker 8 (43:30):
Okay, that's your characterization. I think the on the current
value of stock options. I think the.

Speaker 5 (43:36):
Actual justice according to the law, on the current.

Speaker 8 (43:40):
Value of stock options. I think the value of that
pay package stands at about one hundred billion dollars. Are
you saying you are relaxed about the value of your
future pay package? Your decision to be committed to Tesla
for the next five years as long as you are
still with us on this planet is completely independent of pay. No,

(44:01):
it's not independent, So pay is a relevant factor then
to your commitment to Tesla.

Speaker 5 (44:06):
A sufficient voting control such that I cannot be ousted
by activists investors is what matters to me. And I've
said this publicly many times, but let's not have this
whole thing be a discussion of my list pay. It's
not a money thing. It's a reasonable control thing over
the future of the company, especially for building millions, potentially
billions of humanoid robots. I can't be sitting there and

(44:30):
one're going to get tossed out by for political reasons
by activists. That would be unacceptable. That's all that matters. Now,
let's move on.

Speaker 8 (44:38):
Okay, Well just one question, well one question before we
move on to other companies, which is that I wonder
if some of what you've has happened to Tesla in
the last few months, did you take it personally?

Speaker 5 (44:54):
Yes?

Speaker 8 (44:56):
And did it make you regret any of you all
think twice about your political endeavors.

Speaker 5 (45:02):
It is I did what needed to be done.

Speaker 8 (45:05):
Uh.

Speaker 5 (45:05):
The violent antibody reaction and I'm not someone who's ever
committed violence, and yet massive violence was committed against my companies,
massive violence was threatened against me. Who are these people?
Why would they do that? How wrong can they be?

(45:27):
They're on the wrong on the wrong side of history,
and that's an evil thing to do, to go and
damage some pointocent person's car, to threaten to kill me.
What's wrong with these people? I have not harmed anyone,
so something needs to be done about them. And a

(45:49):
number of them are going to prison and they deserve it.

Speaker 8 (45:53):
You're well, you're referring to the attacks on Tesla showrooms,
but I.

Speaker 5 (45:59):
Think, well, it's into showrooms and burning down cars unacceptable.
Those people will go to prison, and the people that
funded them and organized them will also go to prison.

Speaker 11 (46:09):
Don't worry, wouldn't you coming from you, wouldn't you, hm,
wouldn't wouldn't you acknowledge that some of the people who
turned against Tesla in Europe were were upset.

Speaker 8 (46:24):
At your politics, and very few of them would have
been violent in any way. They just objected to what
they saw you say or do politically.

Speaker 5 (46:35):
Well, it's certainly fine to object to political things, but
it's not it's not fine to resort to violence and
hanging someone in effigy and death threats, that's obviously not
okayh you know, that's absurd. That is in no way
justifiable at all in any way, shape or form. And

(46:56):
some of the the legacy media and nonetheless have sort
of justified which is unconscionable. Shame on them.

Speaker 8 (47:02):
Let's talk about your other companies then, in other business
areas SpaceX. I saw that you said in a speech
at the West Point Military Academy recently that the future
of warfare is AI and drones, And obviously defense is
an increasingly booming sector with the state of the world
at the moment, do you see SpaceX moving into weaponized drones?

Speaker 5 (47:30):
You certainly ask interesting questions that are impossible to answer.
So SpaceX is is the space launch leader. So SpaceX
doesn't do drones. SpaceX builds rockets, satellites, and Internet terminals.

(47:51):
So SpaceX has a a very dominant position in space launch.
So of the mass launch to orbit the year, SpaceX
will probably do ninety percent, China will do the half
of the remaining amounts, so of five percent, and the
rest of the world, including the rest of the US,

(48:11):
will do about five percent, so SpaceX will do about
ten times as much as the rest of the world combined,
or twenty times as much as China, which is in
China is doing actually a very impressive job. The reason
for this is that we're putting it into orbit. The
largest satellite constellation the walls I've seen by far, so
I think at this point about maybe approaching eighty percent

(48:32):
of all active satellites in orbit are SpaceX and they're
providing high vand with global connectivity throughout the world. In fact,
this connection is on a SpaceX connection. So I think
this is a very good thing because it means that
we can provide low cost my bandwidth Internet to pots
the world that don't have it or it's very expensive.

(48:54):
And I think the single biggest thing you can do
to lift people out of poverty and help them is
giving them an Internet connection, because once you have the
Internet connection, you can learn anything for free on the Internet,
and you can also sell your goods and services to
the global market. And once you have knowledge by the

(49:15):
Internet and the ability to engage in commerce, that this
is going to greatly improve quality of life from people
throughout the world. And it has, and i'd just like
to think anyone in the audience who may have been
helpful and you know, with starlink and getting it to
approved in their country. And I think it's doing a

(49:35):
lot of good in the countries that have approved it,
which is I think this point one hundred and thirty
countries are very happy with it. I don't currently into
spaceally getting into the weapons business. That's certainly that's not
an aspiration. Were frequent, we're frequently asked to do weapons programs,
but we have does a lot of client.

Speaker 8 (49:54):
Do you envisage SpaceX or indeed, starlink is a separate
end city publicly listing in the near future or at all.

Speaker 5 (50:05):
It's possible that starlink may go public at some point
in the future.

Speaker 8 (50:11):
And what would be the what would be the time frame,
what kind of time frame you consider?

Speaker 5 (50:17):
I mean no rush, I mean no rush to your public.
The public is I guess a way to you know,
potentially make more money, but at the expense of a
lot of public company overhead and inevitably a whole bunch
of lawsuits which are very annoying. So there's really something
needs to be done about the share shareholder shareholder derovative

(50:39):
lawsuits in the US because it allows plaintiffs law firms
who don't represent the shareholders to pretend that they represent
the shareholders by getting a puppet plaintiff for a few
shares to initiate a massive lawsuit against the company, and
the irony being that extreme irony that even if the

(51:00):
class they purport to represent were to vote that they
don't want the lawsuit, the lawsuit will still continue. So
how can it be a class action representing a class
if the class what against it? And that's the bizarre
situation we've got in the US that needs into a
dire need for form. As anyone's running public company, you've
experienced this, it's an absurd situation that needs to change,

(51:23):
will be really helped with frivolous lawsuits.

Speaker 3 (51:26):
That was Elon Musk with Bloomberg's Michelle Hussain at the
Katar Economic Forum.

Speaker 1 (51:30):
You're listening to Bloomberg business Week. Coming up more from
our Elon Musk interview, focusing on things like artificial intelligence
and yes, his battle with open AI.

Speaker 3 (51:39):
That's next. This is Bloomberg.

Speaker 2 (51:42):
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 (52:01):
We bring you more now from our interview with the
world's richest man, Elon Musk. This past week, Elon spoke
remotely at the Qatar Economic Forum, which was programmed by
Bloomberg News.

Speaker 3 (52:10):
We pick up with Elon addressing his lawsuit against open
Ai after the company announced plans to restructure as a
for profit business. He was part of the conversation with
Bloomberg's Michelle Is saying.

Speaker 5 (52:20):
Look, I came up with the name open ai as
an open source and as a nonprofit, and I funded
AI OPENINGI for the first roughly fifty million dollars. And
it was intended to be a nonprofit, open source company,
and now is they're trying to change that for their
own financial benefit into a for profit company that is

(52:43):
closed source. So this would be like, let's say you
funded a nonprofit to help preserve the Amazon rainforest, but
instead of doing that, they became a lumber company, chopped
down the forest and sold the word. He'd be like
wait a second, that's not what I funded. That's open AI.

Speaker 8 (52:59):
They've made some to their corporate instructure, though, haven't they
since in recognition of of what you've said?

Speaker 5 (53:06):
And now that's just what they told the media.

Speaker 8 (53:09):
Okay, part they have part they have partly walked back
their plan to restructure the business. I guess that's made
no difference to how you feel about it. So you
determined to see them in court of course. Okay, Well
that's certainly going to be one to watch. I also
wanted to ask you about AI and regulation because when

(53:30):
you were here last talking to John Micklethwaite, you had
some pretty strong words about the risk that AI poses
and you said that you really felt what the US
was missing was a federal AI regulator, that you know,
something along lines of the Food and Drug Administration or
the Federal Aviation Administration. Now you're clearly now in a

(53:51):
zone where you're more on the cutting regulation side than
wanting new regulators. So has your view changed on the
need for an AI regulator?

Speaker 5 (54:00):
Well, something, I don't think there should be regulators. You
think of regulators like referees on the on the field
in sports. There should be some number of referees, but
that you shouldn't have so many referees that you can't
kick the ball without hitting one. In many in most
fields in the US, the regulatory burden has grown over
time to the point where it's like having more referees

(54:24):
than players on the field. And this is a natural
consequence of an extended period of prosperity. It's very important
to appropriate appreciate this. This has happened throughout history. When
you have an extended period of prosperity with no existential war,
there's no there's no cleansing function for the for unnecessary

(54:44):
laws and regulations. So what happens is that every year
more laws and more regulations are pasted, because you know,
legislators are going to legislate, regulators are going to regulate,
and you will get the steady pile of more and
more laws and regulations over time until everything is illegal.
And let me give you an example of a truly

(55:05):
absurd situation. Under the Biden administration, SpaceX was sued for
not hiring asylum seekers in the US. Now, the problem
is it's actually illegal for SpaceX under itard in National
Traffic and Arms regulations to hire anyone who is not
a permanent resident of the United States, because the premise

(55:27):
being that they will take advanced rocket technology and return
to their home country if they're not a permanent resident.
So we're simultaneously in a situation where it's illegal to
hire slum SEUs and is also illegal to hire asylum seekers,
and the Biden's partner of justice chose to prosecute us
despite both paths being illegal. Down if you do, down

(55:49):
if you don't.

Speaker 8 (55:50):
Well, my question was specifically about a regulator for AI,
which you said three years ago was needed, and you
said we need to be proactive on the regulation of
AI rather than reactive. Have you changed your mind on.

Speaker 5 (56:03):
That, No, of course not. What I'm saying is that
there should be some referees on the field, a few referees,
but you shouldn't have a field jam packed with referees
such that you could not kick a ball in any
direction without hitting one. So the fields that have been
around for a long time, such as automotive aerospace, if

(56:26):
the sort of food and drug industries are overregulated, but
the new fields like artificial intelligence are underregulated. In fact,
there is no regulator at all, so they should be
Do you still think that yes, I'm simply saying, which
I think is just basic common sense, that you want
to have at least you want to have a few

(56:46):
referees in the field. You don't want to have an
army of referees, but you want to have a few
referees on any given field, in any given sport or
any given arena, industrial arena, to ensure help that public
safety is taken care of. But your already have, so
there's there's a proper number of referees. Like I said,

(57:08):
it's actually very easy to visualize this when compared to sports.
If the whole field is packed with referees, that would
look absurd. But if there were no referees at all,
your game is not going to be as good.

Speaker 8 (57:20):
Okay, So let's then talk about your new world, your
your role advising government. You are in this unique and
unprecedented position of having billions of dollars worth of contracts
with the federal government yourself, mostly through SpaceX, and also
now an insider's knowledge of it because of Dot. Can

(57:41):
you see that there is a conflict of interest or
a potential conflict of interest in broad terms, just through
that very fact, I don't think so.

Speaker 5 (57:51):
Actually, there have been many advisors throughout history and the
US government and others who have had economic interests, And
I absolutely an advisor. I don't have a formal power,
and that's a president can choose to accept my advice
or not, and that's that's how it goes. If there's

(58:12):
a single contract that any of my companies that have
received that people think is somehow not was awarded improperly,
it would immediately be front page news, to say the least.
And if if I hadn't mentioned it, certainly my competitors would.
So if you're not seeing that, then the clearly is

(58:33):
not a conflict to interest.

Speaker 8 (58:35):
The Yeah, there's another way though to look at it.
That For example, you have many competitors, whether it's companies
like Boeing or companies who would like to do more
of the kind of work you do for NASA Blue
Origin Rocket Lab. And because DOGE is in every federal
government department, you or people who work for DOGE and

(58:58):
you are the driving force behind it, have an insight
into those companies' affairs and those companies' relationships with the
federal government.

Speaker 5 (59:07):
Now, all we do is we review the organization to
see if the organization has departments that are no longer relevant.
And then are the contracts that are being awarded good
value for money? In fact, frankly, the bar is not
particularly high. Is there any value money in a contract?

(59:29):
And if there's if there isn't, then we make recommendations
to the secretary. The secretary can choose to take those
actions or not take those actions, and that's it. And
then any action that that is as a function of
DOGE is posted to the DOGE website and to the
DOGE dog govt at dog handle on the x platform.

(59:50):
So it's it's complete transparency. And I have not seen
any case where the best min not has even been
an accusation of conflict because it is completely and utterly transparent.
That's it.

Speaker 8 (01:00:05):
And what about the international dimension. Now, let's think about Starlink.
Starlink is obviously a very very good internet service. It's
sought after all over the world. It's critical to the
frontline in Ukraine. It has also had more contracts coming
its way, and there is some evidence that companies are
allowing access to it because they want to be close

(01:00:26):
to the Trump administration and send the right signal. So
Bloomberg broke news today that the South African government is
working around the rules on black ownership in order to
allow starlinkin and that is being done on the eve
of the visit the President Ramaposa is going to make
to the White House. Do you recognize that as a
conflict of interest?

Speaker 5 (01:00:46):
Now? Of course, first of all, you should be questioning
why is there why the racist laws in South Africa.
That's the first problem. That's what you should be attacking.
It's improper for the racist laws in South Africa. The
whole idea with what Nelson Madella, who was a great man,
proposed was that all races should be on an equal
footing in South Africa. That's the right thing to do,

(01:01:06):
not to replace one set of racist laws with another
set of racist laws, which is utterly wrong and improver.
So that's that's the deal, that all races should be
tweet equally and there should be no preference given to
one or the other, whereas there are now one hundred
and forty laws in South Africa that give that basically

(01:01:29):
give strong preference to you if you're black South African
and not otherwise. And so now I'm in the subsided
situation where I was born in South Africa but cannot
get a license to operates in starlink because I'm not black.

Speaker 8 (01:01:41):
Well, it looks like that's about It looks looks like
that right, It looks like that's about to change.

Speaker 5 (01:01:47):
I just asked you a question. Please answer. Does that
seem right to you? Well?

Speaker 8 (01:01:51):
Those rules were designed to bring Those rules were designed
to bring about an era of more economic equality in
South Africa, and it looks like the government has found
a way around those rules for you.

Speaker 5 (01:02:04):
Ask your question?

Speaker 8 (01:02:06):
Is this is your interview?

Speaker 5 (01:02:07):
Everyone wants to hear from your question, yes or no?

Speaker 8 (01:02:10):
Not for me to answer. I have got a question
for you about about your government works and the amount
of savings.

Speaker 5 (01:02:19):
Do you like raceless loves?

Speaker 8 (01:02:22):
This is not for me to answer. Come on now,
you wouldn't be trying to dodge a question.

Speaker 5 (01:02:27):
Do you have to answer this question? Answer you answer mine?

Speaker 8 (01:02:31):
I say, I think if you I'm sure you can
have that conversation directly with the South African government if
you want to. I want to ask you about the
total believe. I want to ask you about the total allound.
I want to ask you about the total amount that
you're planning to save through Doge's work before the election,
you said it was going to be at least two trillion.

(01:02:51):
The number currently on doze dog gov is one hundred
and seventy billion dollars. That's a big change. What happened
to the two.

Speaker 5 (01:03:00):
Trillion or do you expect it to happen immediately?

Speaker 8 (01:03:03):
Well? Is it going to happen because those is supposed
to run till next July.

Speaker 5 (01:03:08):
I mean your question is episode in this fundamental premise?
Are you assuming that on day you know, within a
few months this an instant two trillion saved?

Speaker 8 (01:03:17):
No, I'm not sure. I'm just asking you, is that
still your aim?

Speaker 4 (01:03:19):
Then?

Speaker 8 (01:03:19):
Is it still your aim to get the amount of time?

Speaker 5 (01:03:22):
Have we not made good progress given the amount of time?

Speaker 8 (01:03:25):
That's exactly what I'm asking. So, is it's still your
aim to go from one hundred and seventy billion to
two trillion?

Speaker 5 (01:03:32):
The ability of those to operate is this function of
whether the government and this includes the Congress, is willing
to take our advice. We're not the dictators of the government.
We are the advisors, and so we can advise. And
the progress who made thus far I think is incredible.
Those team has done incredible work. But the magnitude of

(01:03:57):
the savings is proportionate to the support we get from
Congress and from the executive branch of the government in general.
So we're not the dictators. We are the advisors. But
thus far for advisors with the George team, to their credit,

(01:04:18):
has made incredible progress.

Speaker 3 (01:04:20):
That was Elon Musk with Bloomberg's Michelle Lusain at the
Guitar Economic Forum. The full conversation is on the Bloomberg
podcast page on YouTube. Also check out the annotated transcript. Yeah,
it's really really cool. It has really good contexts. You
can get it at Bloomberg dot com and also on
the Bloomberg terminal.

Speaker 1 (01:04:36):
You're listening to Bloomberg Business Week coming up even more
from our Elon Musk interview, focusing on Elon's plans to
listen up everyone pull back on his political spending.

Speaker 3 (01:04:46):
Okay, we'll see TV with the Brain of Salt.

Speaker 4 (01:04:49):
That's next.

Speaker 3 (01:04:50):
This is Bloomberg.

Speaker 2 (01:04:56):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and the Android Auto with the Bloomberg
Business app, or watch us live on YouTube.

Speaker 1 (01:05:10):
Let's get back to our interview with the world's richest man,
Elon Musk this past week. As we've been noting, he
spoke remotely at the Guitar Economic Form, which was programmed
by Bloomberg News.

Speaker 3 (01:05:20):
We pick up with Elon addressing his recent time in
Washington and putting together the Department of Government Efficiency. Here's
part of the conversation with Bloomberg's Mishalie Saint Dosh.

Speaker 5 (01:05:29):
Is an advisory group. We are doing the best we
can as an advisory group. The progress made thus far
as an advisory group is excellent. I don't think any
advisory group has done better in the history of advisory
groups of the government. But we do not make the laws,
nor do we control the judiciary, nor do we control
the executive branch. We are simply advisors. In that context,

(01:05:52):
we are doing very well. Beyond that, we cannot we
cannot take action beyond that because we are not some
sort of imperial dictator of the government. There are three
branches of government that art some degree opposed to that
level of cost savings. Unless let's not criticize whether there's

(01:06:12):
four trillion. Instead look at the fact that that our
sixty billion has been saved and more we save two.

Speaker 8 (01:06:19):
And as I said, I think everyone can agree that
cutting waste and indeed fraud in any government and being
responsible with taxpayers money is a very good thing. Finally, political,
your political influence. I wondered whether you have decided yet
how much you're going to spend on the upcoming mid terms.

(01:06:40):
You spent a lot more money on the last US
election than you envisaged when you were speaking here three
years ago. Are you going to continue to spend at
that kind of level on future elections?

Speaker 5 (01:06:52):
I think in terms of political spending, I'm going to
do a lot less in the future.

Speaker 8 (01:06:58):
And why is that?

Speaker 5 (01:07:00):
I think I've done enough?

Speaker 8 (01:07:04):
Is it? Is it because of blowback?

Speaker 5 (01:07:07):
Well, if I see a reason to do political spending
in the future, I will do it. I don't currently
see reason.

Speaker 8 (01:07:14):
What about political influence beyond the US? How often do
you speak to President Putin?

Speaker 5 (01:07:20):
I don't speak to President Putin.

Speaker 8 (01:07:23):
You've never spoken to President Putin.

Speaker 5 (01:07:26):
I was on a video caller with him once about
five years ago. That's the only that's the only speak
president President Putin. Oh, you must I get it.

Speaker 8 (01:07:35):
Speak. Actually, I've heard you. I've heard you speak about it,
for example, in your West Point speech. You said, oh,
I challenged President Putin to uh to was it an
arm wrestle? And I know the Wall Street Journal has
reported your reported conversations. If you're if you're saying they
haven't happened other than once, I'll take that as red.

Speaker 5 (01:07:53):
Is there a worse publication on the face of the
earth than the Wall Street Journal. I wouldn't use that
tolign up my cage for character things that that newspaper
is the worst newspaper in the world. You know, if
there's one newspaper that should be pro capitalist, it's the
one with Wall Street in the name. But it isn't.
So I have the very lowest opinion of the Wall

(01:08:15):
Street Journal. Absolute answers, and you clearly have believed the
tripe that you've written. That you've written in those papers.

Speaker 8 (01:08:21):
I read, I read very widely, and I'm putting these
questions to you so that you have an opportunity to
respond to them, which you are and for which we're
all grateful to hear your responses.

Speaker 5 (01:08:31):
You mentioned to be challenging. I did so on the
X platform. I challenged Vladimir Putin to single, but I
didn't talk to him. That was a post on the
X platform. That's why.

Speaker 8 (01:08:43):
That's why I asked you, and you've and you've clarified
and explained, thank you. That's that's why I was asking
whether you have had reported conversations, and you've said you have.

Speaker 5 (01:08:52):
Ad okay, legacy media lize.

Speaker 8 (01:08:57):
Okay, listen. I actually thought I might give Grock the
last word, because when I ask Rock what your hardest
challenge is, it said the strain of managing multiple high
stake ventures made financial, regulatory and public relations crises. And
I wondered whether you recognize that characterization and whether you

(01:09:17):
do think that this is a pivotal year in your life.

Speaker 5 (01:09:22):
Well, every has been somewhat pivotal, and this one's no different.
I mean in terms of interesting things that hopefully our
coverers this year, the getting Starship to be fully reusable,
so that we catch both the booster and the ship,
which will be the first fully reusable orbital rocket ever

(01:09:42):
in history, which is the essential breakthrough necessarily to make
life multiplanetary and ultimately become a space faring civilization. We've
got neural link which is now helped by patients restore
capability using the telefty implant, where they're able to control
the computers by thinking, we'll be doing our first patient

(01:10:04):
to restore bland resource site with our blind site implant,
which is the at the end of the show early
next In fact, that that first patient might be in UEE,
since we have a relationship with YOUE and the Cleveland
CMIC there. I think what's running on the AI front,
we are close to what you might call AGI or
digital superintelligence. We are seeing an explosion of digital super intelligence.

Speaker 3 (01:10:28):
Here was Elon Musk talking about pulling back on political
spending with Bloomberg's Michelle Assan at the Qatar Economic Forum.
We've got Max Chafkin with us. He's the co host
of the new Bloomberg podcast, Everybody's Business. He's also the
co host of the not so new podcast but still
pretty great podcast. It's called Elon Egg. I'm glad that's
what we played because that's getting a lot of attention

(01:10:49):
right now. And I heard that, and I went back
to Elon's Twitter from March of twenty twenty four, and
that's when he posted on X this is overgo. I
will not contribute to either political candidate. And we all
saw what happened. A few months later, My point is
he says stuff and doesn't necessarily commit to it.

Speaker 12 (01:11:11):
Yeah, and even here he's building himself an out Right,
he's saying less money, which you'd kind of expect anyway, Right,
midterms are not as expensive as presidential years, So like,
it would be very surprising if he dropped another three
hundred million dollars, which is roughly what he spent in
twenty twenty four, on twenty twenty six. And he's also saying,

(01:11:33):
you know, I would It's I don't see a reason now,
but if I did see a reason in the future,
I could I see this as a public negotiation. Right,
this is the audience here, well, aren't There are several
different audiences. One of course is Tesla shareholders trying to say, like, look,
I'm I'm focused on the company. I'm not getting sucked
into Washington, going to try to deal with some of

(01:11:54):
the brand damage that my political presidence has caused. But
of course the other audience is Republicans. Right, He's putting
it out there that if they want money from him,
they're going to have to do stuff. And you know,
there's lots of stuff that has happened in Washington since
Donald Trump took office. That I think has made Elon
Musk really happy. But Elon Musk is a very long
list and not all those things have happened. There are

(01:12:16):
lots of opportunities for him to get contracts. You know,
the Golden Dome as you're discussing like that's a potential
revenue source for SpaceX. There are lots of areas that
Elon Musk stands to benefit. You also have this in
the bill right now, like they're plan cutting these EV subsidies. Now,
we will see where that ends up. But if those

(01:12:38):
EV subsidies are cut completely, that could really hurt Tesla.
So I think I think it's to his advantage to say, hey,
I'm you know, I'm not a gimme for twenty twenty six.

Speaker 4 (01:12:48):
You have to win my support.

Speaker 1 (01:12:49):
Talk to us about robotaxis. Elon told CNBC that Tesla
plans to begin operating a fleet of about ten self
driving robotaxis in Austin next month, before growing to one
thousand VA within a few months. His words, sending the
company stock story.

Speaker 12 (01:13:04):
So the robotaxi thing, I think part of the challenge.
One of the challenges for Tesla is there's so much
sort of assumed in the stock. The Tesla bulls basically
believe that almost overnight they're going to be able to
turn this thing into a massive, massive business. And I
think everything we know from the history of other companies

(01:13:27):
trying to launch these robotaxi things, and I'm thinking particularly
of Waimo, Google's driverless car division, which has been doing
this for like ten years and has really struggled to commercialize,
is that it's going to take a long time. And
when you look closely at what Musk is saying is
going to happen in Austin, if you are not paying
that close attention, if you're just sort of buying this,
like on robin Hood, you hear Elon must say, you know,

(01:13:47):
robotax going to heal over the world. You think they're
going to turn this on they're going to be huge fleets.
It's going to be very small.

Speaker 5 (01:13:54):
You know.

Speaker 12 (01:13:54):
On the during the earnings call, we learned something like
ten to twenty robotaxis with tel operation. So that's people,
you know, sitting in command centers making sure the cars
don't hit anybody.

Speaker 3 (01:14:04):
That's going to be curely. What Weimo does by any
means no, it's it's.

Speaker 12 (01:14:08):
Closer to it's maybe what weimo did you know years ago,
and it's just it's a realization.

Speaker 5 (01:14:13):
I think that this is going to take a long time.

Speaker 12 (01:14:15):
So I don't know. Elon Musk has this kind of
amazing ability to spin stories about the future to get
people excited about the future.

Speaker 7 (01:14:23):
And he may be able to do that.

Speaker 12 (01:14:24):
But like Tesla stock has gone up a lot in
recent weeks, you know, I know some of that has
to do with you know, terriff expectations and so on,
but this is a very valuable company relative to the
number of cars it sales.

Speaker 3 (01:14:36):
Max in the interview that he gave to our team
at the Guitar Economic Form, he was asked about protesters
or the Tesla brand damage, and what he answered was
he said, quote, they're on the wrong side of history
and that's an evil thing to do. That's referring to
people damaging Tesla cars and showrooms. Something needs to be
done about them, and a number of them are going

(01:14:57):
to prison and they deserve it. It seems like he's
certainly there were reports of damage to Tesla vehicles and
damage to test Tesla' shrooms, but there have also been
these protests that have been happening at Tesla showrooms all
over the country, especially during his work with Doge, that
we're not violent. Yeah, it seems like he's He's also
in the past talked about these people being part of

(01:15:19):
some bigger movement. He's referred to them online as being paid.
Have we seen any evidence of that.

Speaker 12 (01:15:25):
No, there's no evidence, no good evidence that the people
who are showing up at these Tesla protests are paid.
You know, I would say that there's a he's conflating
a couple of different things. But you know, and having talked,
we did a podcast episode on Eline a week and
a half ago with a former Tesla sales manager, and
who he's talking about is like, the real danger is

(01:15:47):
not these protesters, not somebody's showing up to a protest.
It's just somebody not buying. And and like that is
a thing that even if you remove the protests, the
protests are of course not good for the brand. They're
an expression of unhappiness and so on. It doesn't lead
to good headlines. Obviously protests can sometimes get out of hand.
But also it's just a lot of people, I think

(01:16:08):
do not want to be associated associate their car with
something this controversial. And what he was saying is that
when Musk started, what this Tesla manager was saying is
that when must started getting involved in politics a couple
of years ago, they had people come into the Tesla
stores and argue and say, you know, I like the car,
but I don't like this. You know, still very engaged.
And what he said what changed as Musk became more

(01:16:30):
and more engaged is they just stopped coming. They just decided,
you know, screw this, Like I don't want to be
associated with something this controversial. And when you look at
what's happening in the sales, like that's what's showing up.
It's not the protesters, it's just the people not buying.
And that's the thing that's going to be hard to
turn around, I think.

Speaker 3 (01:16:46):
Our thanks to Max Chafkin, co host of the new
Bloomberg podcast Everybody's Business of corresponding for Bloomberg Business we Can,
co host of the Elon Inc.

Speaker 5 (01:16:54):
Podcast.

Speaker 1 (01:16:55):
He's a busy dude, but he is definitely a go
to when it comes to Elon Musk. And that wraps
up the weekend. A Bloomberg Business Week from Bloomberg Radio.
Thank you so much everyone for joining us.

Speaker 3 (01:17:04):
I'm Tim Stenerbeck and I'm Carol Masser.

Speaker 1 (01:17:06):
Have a good and safe weekend.

Speaker 2 (01:17:08):
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

(01:17:28):
and always on the Bloomberg terminal

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Bloomberg Businessweek Weekend - May 23rd, 2025

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