March 28, 2025 • 42 mins
Bloomberg’s Caroline Hyde discusses CoreWeave’s IPO with David Snyderman, Senior Managing Partner of Magnetar, which is CoreWeave’s largest equity holder.Plus, why CoreWeave’s CEO said the company’s public market debut wouldn’t have happened without Nvidia. And, Long Journey Venture co-Founders Lee Jacobs and Cyan Banister discuss why they invest in founders with absurd ideas.
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Speaker 1 (00:01):
From the heart of where innovation, money and power collide
in Silicon Valley and beyond. This is Bloomberg Technology with
Caroline Hide and Ed Lovelow.
Speaker 2 (00:26):
Live from New York and Caroline Hyde and this is
Bloomberg Technology coming up. All eyes on Corweed's downsized IPO.
We shared set to begin trading on the NASPAC. We'll
discuss with Magnetar, Corweed's largest equity holder. This is AI
capacity concerns remain yet in the midst of the anxiety.
The race to invest in AI companies has created a
slate of new billionaires. Will highlight them and US and
(00:49):
EU tarras are front and center, with the market share
of Chinese evs punning to a two.
Speaker 3 (00:54):
Year low across Europe.
Speaker 2 (00:55):
But first we check in on these markets, which are
ever more in sell off mode. To end this week
off by almost two percent on the Nasdaq one hundred
and when you're looking at the points drags lower and
the fact that we're back to the worst week since
March the fourteenth, it is the who's who of the
Magnificent seven that drag us down in terms of key
points to the lower it is Amazon Meta, the likes
(01:16):
of Microsoft of course Apple even amongst some of the
biggest drags today.
Speaker 3 (01:22):
But we want to put this in the light of
the IPO that we have.
Speaker 2 (01:24):
Of course, on this day, core Weave, one of its
biggest key clients is Microsoft.
Speaker 3 (01:31):
It's off by more than two percent.
Speaker 2 (01:32):
Amazon, of course key exposure to these hyperscalers, which is
a cures for anxiety in video off by one point
six percent, which invests an awful lot now into core Weave,
but also of course as a supplier of its chips
across the border in the red.
Speaker 3 (01:45):
Let's get too.
Speaker 2 (01:46):
Core Weave after it raised one and a half billion
dollars in its IPO, The shares are expected to begin
training today on the Nasdaq. Look, the latest is that
they priced at forty dollars. We're seeing that perhaps at
the moment they're indicated to open at forty five dollar.
Katie Ruth joins us. Now, this is such a litmus
test not only for the AI trade, but the IPO
(02:07):
trade too.
Speaker 4 (02:08):
Exactly, it's been really tough few years for tech IPOs,
and you know, this is supposed to be the one
that was going to kick off a slate of you know,
maybe seven or eight venture backed IPOs for Q two
and they're all watching this to see how it's going,
and so far it's not going well at all. They
downsize the size of the IPO considerably, and they price
significantly below the range. Both of these things are generally
(02:32):
seen as very negative indicators.
Speaker 2 (02:33):
So instead of raising four billion dollars, which they're originally
aimed to, but just a month ago they raised one
and a half billion, all of this is to continue
to put more AI data centers out there, but also it's.
Speaker 3 (02:46):
About paying down their debt.
Speaker 2 (02:47):
And this is perhaps one of the idiosyncratic risks that
it comes to core Weave because it is a unique
asset to be investing into.
Speaker 4 (02:53):
Sure, and so you know, it's hard to say if
really this is skepticism about core Weave itself or about
the marketing, and so it could be yeah, concerns about
their debt, concerns about you know, maybe even AIM getting overvalued.
I mean, certainly there's a lot of investor enthusiasm about
AI broadly speaking still, but maybe they get maybe they
(03:14):
thought that there would be even more enthusiasm than there is.
You know, it's hard to say what the market's concerns
are right now.
Speaker 3 (03:22):
But you know, I mean.
Speaker 4 (03:23):
It's tied to a heart company like in Video, and
you know it's going public at a time when last
year's tech ipeas actually went fairly well.
Speaker 3 (03:33):
Timing seems to be the brutal issue here.
Speaker 2 (03:36):
In Vidia had to come and step in basically and
say I will take two hundred and.
Speaker 3 (03:40):
Fifty million dollars of this.
Speaker 2 (03:42):
I will secure and put a forty dollars price bottom
in on it because I'm a key client and equally
I'm a key investor. They've got about six percent of
the holding of the equity.
Speaker 3 (03:51):
That is such a bad signal. Who else is impacted
by this?
Speaker 2 (03:55):
Who are the vcs that got in late on this
particular name?
Speaker 4 (03:59):
Well so so Magnetar Hedge Fund is actually the largest
shareholder here.
Speaker 3 (04:03):
People in early didn't they They've been sure, But.
Speaker 4 (04:06):
You also have other names like Koto is involved. But interestingly,
of the top shareholders that I looked at the cap table,
there were no VC names above five percent in that ownership.
And so while it is venture backed, certainly you know
some unusual players here are the owners.
Speaker 2 (04:25):
Some crossover funds, some strategic investors. To say the least,
Katie Ruff such a great job across.
Speaker 3 (04:31):
The venture sphere.
Speaker 2 (04:32):
You want to tune in later to this out for
our conversation with Corweed's largest institutional investor, that is Magnetar.
The senior managing partner, David Snydermann is going to be joining.
Speaker 3 (04:39):
Us to discuss.
Speaker 2 (04:40):
But first let's get back to the markets and what
this signals for epec Oskar Deshkea is with US senior
market analysts at Swiss Quote, all eyes from the public
markets are on this listing, not just private investment that matters,
but the ongoing AI narrative is kind of in the
breach here. Oh, I think we have a technical issue.
Speaker 3 (05:03):
Are you muted?
Speaker 5 (05:07):
Oh?
Speaker 3 (05:08):
How technology fails us at times.
Speaker 2 (05:09):
So we'll get back to Epek in just a moment,
but we want to be discussing with her just how
we've got this pushes and pulls as to ultimately what
the demand side is for AI capacity at the moment, but.
Speaker 3 (05:19):
Also demand side for AI generative products.
Speaker 2 (05:22):
Let's just bring you a tweet that I noticed said post,
as I'll say, coming from one samah Altman, who's been
discussing the fact that we're also rushing to use the
latest formation of CHATCHPT and the image generator that we're seeing,
as he calls it, a melting of.
Speaker 3 (05:36):
GPUs at the moment, so much demand.
Speaker 2 (05:39):
For his compute capacity. Let's get back to epek because
here in lies the quandary for the market. We are
questioning AI infrastructure, whether we're in a bubble, and whether
or not we should therefore be backing call we ive
or not.
Speaker 3 (05:51):
On the other side, you've got Sam Altman.
Speaker 2 (05:53):
Seeing such success for the latest product announcement from chat
GPT that his GPUs are melting.
Speaker 3 (06:00):
So what's your take right now?
Speaker 5 (06:02):
I mean, yes, call.
Speaker 3 (06:03):
Means are pure.
Speaker 5 (06:04):
It's clearly not coming at the right time in terms
of markets at the tite because it's coming at a
time when investors are increasingly worried about whether there is
an over.
Speaker 6 (06:14):
Cell light in AI data centers and AI SELP light overall,
while demand looks like it's not growing as fast as
many have projected. But on the other hand, the news
actually come in and they are encouraging. There is a
great adoption of AI in technology, and this adoption is
(06:34):
also extending towards the non technology focus off the market.
It is also happening in China across.
Speaker 1 (06:40):
The world, so yes, there is.
Speaker 6 (06:42):
There are a lot of doubts about whether the AI
adoption is happening at the desire speed. On one hand,
the big technology companies, they keep ensuring the markets.
Speaker 7 (06:52):
And investors that this is happening, and on the other
hand we see some slowing in the pace of in
the pace what you expects to be a strong realth
in terms of quantity valuation.
Speaker 5 (07:04):
So there are a lot of guts right now that
I bore you as actually going public in the middle
of a jungle of doubt.
Speaker 2 (07:11):
EUPEC will have to leave it there with some technical
difficulty with your sam but we thank you so much
for your perspective. Ipec us a guest care of course,
happy weekend US Swiss quote coming up the tech industry
warning President Trump's tarifs could undermine his own policy agenda.
Jason Oxman from the Information Technology Industry Council is going
to be joining us on that this.
Speaker 3 (07:29):
Is bloomberg technology.
Speaker 2 (07:41):
The tech industry has been warning that trading restrictions on
chips passed during the Biden administration, the so called AI
Diffusion Rule, but it could hurt US companies at the
time when tariff uncertainty is already creating headwinds. Jason Oxman,
President and CEO of the Information Technology Industry Council, is
the person to talk to about this because we know
that Nvidia and Oracle are coming and joining your industry
(08:04):
group at the moment, hoping that you'll help navigate a
policy quandary that's upon us right now. Ultimately, they don't
want the AI diffusion rule. Why is it a bad thing?
Speaker 8 (08:13):
Jason, Well, it's a good concept and the execution is
enormously complex. As you noted, this was a rule that
was adopted in the waning days of the Biden administration,
and under normal circumstances, our communication of the Trump administration
would be that Biden administration rules need to be rethought
and redone and this is one of those examples. The
challenge here is that the concept of denying the Chinese
(08:36):
Communist Party and the Chinese Army access to the latest
generation of AI technology for American companies, well, that's a
good idea, it's a national security issue, and we want
to do it in the right way. But the Biden
administration did it in the wrong way. They did it
without consulting industry, They did it without coming up with
a roadmap for success, and perhaps most importantly, they did
it by punishing American allies around the world by denying
(08:58):
them access to AI technology at the same time. So
what we're asking the Trump administration to do, Let's start over.
Let's do this again. Let's consult with industry. Let's get
this rule done in the right way.
Speaker 2 (09:07):
Did they really not consult industry at all? Or did
they just consult the wrong people in industry? From your perspective, I.
Speaker 8 (09:14):
Know it's easy for industry to say we weren't consulted properly.
In this case, it is honestly the case that they
did not.
Speaker 9 (09:20):
Consult us at all.
Speaker 8 (09:22):
And this rule was really it was released seven days
before the end of the Biden administration. They really wanted
to rush it out the door. They've been working on
in a while, they ran out of time, and they
did it without consulting industry. And the reason industry consultation
is important is not just because we think we have
good ideas. We do, but it's more important to make
sure that the rule is done correctly so that American
(09:42):
industry is not punished. And the most important goal of
ensuring that America continues to dominate AI worldwide, which is
a key tenet of the Trump administration. That's what we
want to make sure happens when the rule is redone.
Speaker 2 (09:54):
So let's think about a more perfected rule here. As
you say, the ultimate goal of ensuring that very sophisticated
chips doesn't get into Chinese hands, for example, you think
is the right one. How do we get there without
ensure hurting the middle men?
Speaker 3 (10:07):
That there wrong middlemen to hurt.
Speaker 9 (10:10):
Yeah, I think there are two things here.
Speaker 8 (10:11):
One is the way in which the rule was put
place put in place by the Biden administration. It actually
imposes caps on every country in the world and their
ability to get access to AI technology. Seventeen countries in
the EU are in the so called Tier two. There
are three tiers here. Tier three means anybody can get
whatever they want. Tier two means there are restrictions Tier
(10:32):
one and you can't get anything. Tier two, for seventeen
countries in the EU means they're capped on their ability
to buy AI technology from the US. Why not because
we're worried about them, but because we're worried about enforcement mechanisms.
So what the Trump administration could do is work and
negotiate with our allies around the world to make sure
those enforcement mechanisms are in place to deny the Chinese
(10:52):
Communist Party access to this technology. That's the first thing
I think is important. The second thing I think is important,
and again this is why industry consultation is important, is
China is a market that is huge. It's one and
a half billion people. A lot of stuff is made there,
a lot of stuff is sold there. If we deny
China access to all American technology, the only message that
(11:12):
delivers to China and frankly to other countries around the
world is maybe China should make this technology because they're
going to make it available without restriction to the rest
of the world. So we want to make sure we
don't ironically incentivize the Chinese technology industry to start making
inroads and harm American interests around the world as a result.
Speaker 2 (11:30):
Jason has that holes already bolted from what we see
with deep seek. That was in the case of lack
of access to sophisticated chips, they found a workaround.
Speaker 8 (11:39):
Well they did, and I think there are a lot
of questions about deep seak and just how well it
was put together, how functional it is, and whether it
was programmed in part with American technology, and we'll see
more about that going forward. But I think there's no
question that US technology isn't dominant and doesn't continue to
be dominant. The real only open question is how long
will that last? And if we deny American technology companies
(12:02):
access to international markets and partners, that handicaps our ability
to continue positioning the United States as a world.
Speaker 9 (12:08):
Leader in AI.
Speaker 2 (12:09):
Jason, it's not just the AI diffusion rule that has
many investors concerned. It's also just tariffs more bluntly coming
in as a weapon. We've just seen what's being Oh,
I think we've just got some breaking news that I
want to go to that President Trump and indeed now
the leader of Canada, Karney, have agreed to meet after
Canada's election, where.
Speaker 3 (12:29):
Mark Carney is now the leader.
Speaker 2 (12:30):
So just a bit of breaking news there from the
geopolitical front with Trump and Carney meeting, Jason. And this
is to do with that very thing of tariffs. At
the moment, we've seen how autos have been in the
eye of the storm when it comes to Canadian tariffs,
when it comes to Mexican tariffs. But we understand that
semiconductors are going to be coming into place. When we
think of Liberation Day in early April, how much is
(12:52):
that a fixation of the market.
Speaker 8 (12:55):
Well, the President has suggested the semiconductors perhaps won't be
subject to tariffs, and I think that this raises the
broader question of certainty for business.
Speaker 9 (13:01):
That's what business needs.
Speaker 8 (13:03):
It needs certainty. And we're only what nine weeks into
the Trump administration, A lot has happened. He's moving very quickly,
and the tech industry is responding very favorably to the
Trump administration's call, the president's call to bring manufacturing back
to America. The very first business announcement made in the
White House, literally less than twenty four hours after President
Trump's inauguration, was three ITI member companies, SoftBank, Oracle and
(13:26):
Open Ai announcing a five hundred billion dollar manufacturing project
in the United States. We've seen TSMC announce another one
hundred billion dollar investment, Apple five hundred billion dollars. Even
international companies Siemens and Soft and Schneider Electric have announced
hundred multi hundred million dollar investments just in the last
few days.
Speaker 9 (13:44):
So it is happening.
Speaker 8 (13:45):
The tech industry really more than any other industry is
responding to the President's call. But to your question about tariffs,
I think it's really about certainty. Tariffs can be a tool,
and we'd like to see the President continue to exercise
his skill as a business negotiator, which he does very
well well and strike deals and trade deals in particular
are important. Tariffs are paths to trade deals. The President
(14:06):
during his first administration did a terrific job of entering
into trade deals around the world with China, with Mexico,
with Canada, with Japan, and others. We'd like to see
those trade deal negotiations move forward and replace the need
for tariffs so we can have that business certainty and
access to US markets and international markets that American companies need.
Speaker 2 (14:24):
Jason Oxman, thanks so much for joining Usday from the
Information Technology Industry Council.
Speaker 3 (14:30):
Meanwhile, as time now for.
Speaker 2 (14:31):
Talking Tech and First Up, India reveals a two point
seven billion dollar plan to subsidize the production of electronics components,
covering parts using displays and camera modules.
Speaker 3 (14:41):
And some circuit boards.
Speaker 2 (14:42):
The Indian government says the program is expected to attract
ne lyast seven billion dollars in investment and could help
some companies pivot away from China plus shares of Oracle.
They're trading on the downside today along with the rest
of the market. But the US Department and Defense said
it's terminating a plan to use Oracle software in maintaining
its civilian work force as part of the Pentagon's cost
cutting efforts. Defense Secretary Pete Hegseth says the program ran
(15:05):
six years behind schedule and was more than.
Speaker 3 (15:07):
Two or eighty million dollars over budget.
Speaker 2 (15:09):
Speaking on Fox News, Elon Musk says his DOGE team
is well on the way to slash the US deficit,
and we'd out forward to listen who.
Speaker 9 (15:17):
Reduce the deficit by a trillion dollars.
Speaker 10 (15:20):
The government is not efficient and there's a lot of
a lot of waste forward. So we feel confident that
fifteen percent reduction can can be done without affecting any
of the critical government services.
Speaker 2 (15:35):
But the swift action by President Trump and DOGE to
fireworkers cut costs at the IRS, for example, are creating
temptation amongst.
Speaker 3 (15:42):
Taxpayers to cheat. Tax professionals and.
Speaker 2 (15:45):
Former IRS commissioners are sounding the alarm bells, saying the
administration's actions could actually embolden people to commit forward on
their taxes.
Speaker 3 (15:51):
Or simply not paid.
Speaker 2 (16:00):
Chinese EV automakers actually saw a market shared drop to
a two year low in Europe. It'scording to research a
data force, less than seven percent of EV's registered in
February were made in China. That's despite an overall jump
in European EV demand. Blomberg spoke with Secret Devies, director
General of the European Automobile Manufacturer's Association, about the impact
of tariffs on the auto's industry.
Speaker 11 (16:22):
This comes on top of already very challenging times. We're
at a watershed moment or industry in the midst of
a huge transformation and fierce competition, and yeah, this is
very disruptive and we really hope this can still be averted.
Speaker 3 (16:38):
For more, Let's go to Boomberg's Anthony Palazzo.
Speaker 2 (16:41):
Anthony, I thought that Chinese EV makers were being brought
up a storm over in the UK and Europe, but
it seems as though the tarifs having an impact.
Speaker 9 (16:51):
Yes, that's right.
Speaker 12 (16:53):
In with all the news around President Trump and his chariffs,
it's easy to forget that there's trade tension between the
EU and China, and uh yeah, so so the the
Chinese companies have been really making really making an impact
here in Europe.
Speaker 13 (17:13):
Uh.
Speaker 12 (17:14):
They've been doing it for probably the past five years,
and all of that, all of that came to a
halt around the middle of last year when the EU
introduced tariffs on Chinese made electric vehicles.
Speaker 9 (17:30):
And that's put it, that's put a.
Speaker 12 (17:31):
Dent in in that growth and really held it at
a stalling rate for about the last past six months.
And UH for February we see that it's actually gone down.
Speaker 14 (17:43):
UH.
Speaker 9 (17:44):
And as you said, despite.
Speaker 12 (17:48):
An increase in the number of EV's being sold in Europe,
the number of Chinese made EV's has gone down.
Speaker 2 (17:56):
What's interesting is we know Tesla hasn't been benefiting either,
the salesn't been on the downwards to jectory. But is
it local European makers of evs that do well therefore?
Speaker 12 (18:06):
Right, And that's that's the other irony of this whole
situation is that Europeans have largely started to turn her
away from Tesla. They don't like the way Elon Musk
has been conducting himself and UH intervening in German politics
and UH, and so that created.
Speaker 9 (18:24):
An opening in the Chinese automakers.
Speaker 12 (18:27):
By and large have not been able to to fulfill it.
Speaker 9 (18:31):
Uh.
Speaker 12 (18:32):
And at the same time, the European automakers have come
out with some new models. There's some smaller ones made
by Renault, there's a there's a larger one made by.
Speaker 9 (18:46):
By Volkswagen. That's that's really come out and done well.
Speaker 12 (18:50):
And so the local carmakers have have really done well.
Speaker 2 (18:57):
Anthony Platzo, thanks for the update and all things ev Meanwhile,
returning to the White House is dismissing the disclosure of
who the attack plans being exposed in messages through.
Speaker 3 (19:07):
Signal as a glitch.
Speaker 2 (19:08):
But experts are arguing information in those chats could have
given priceless information to foreignniversaries, you know. Most Jake Breiberg
is here to really articulate what is it within these
messages that are clearly detrimental to us and indeed that
spies kind of wait to get their hands on.
Speaker 15 (19:27):
Yeah, it's a good question, and it takes really sort
of a close parting of these messages. It's something we've
seen you know, current and former security officials doing and
one of the most important things that has raised questions,
you know about the security. Here is this reference from
National Security advisor Mike Walls to sort of surveillance or
(19:50):
some type of view into the movements of a particular
HOOTI sort of you know, military.
Speaker 3 (20:00):
Leader, top missile guy.
Speaker 15 (20:01):
Yes, exactly who Waltz refers to as a top missile guy.
Speaker 11 (20:05):
And what.
Speaker 15 (20:08):
He said, as suggests when we talk to current informer
intelligence officials, is that the US had some sort of oversight,
whether it be UH signals intelligence or aerial oversight, or
actually someone on the ground who was observing this person,
and that that's a really valuable clue to foreign adversaries
(20:30):
who might be trying to understand US military operations.
Speaker 2 (20:33):
Meanwhile, Attorney General Panbonni goes on time and time again
to say sensitive information not classified was inadvertently released. We
go back to the technology side of all of this, though,
Is it music to adversaries? Is that signal is being
used whatsoever?
Speaker 15 (20:48):
I think it probably is, especially for this type of
highly sensitive operational information. The thing to understand is that
while signal makes it you know, strong and quite credible,
crolaims about its end to end encryption, where that where
that information ends is on a device, and if that
(21:09):
device is infiltrated, if that device might be in a
foreign country where it can be attacked by foreign spy agencies.
Speaker 3 (21:17):
It's still vulnerable there. It might be.
Speaker 15 (21:19):
Secure in transit, but once it arrives on your phone,
it's still vulnerable. In the way anyone's phone is vulnerable.
Speaker 2 (21:28):
It's a story that's going to continue, and we thank
you for tracking it for us. Jake Riiberg on the
security implications of using that signal device. Welcome back to
Blue Meg Technology. I'm Caroline hid in New York. Let's
get a check on these markets. We are once again
(21:48):
in sell off mode.
Speaker 3 (21:49):
To end this week. It is a down week.
Speaker 2 (21:50):
We're currently off by one point seven percent, but those
declines are accelerating. On this Friday, we're currently off by
almost two percent on the Nasdaq one hundred, Amazon, Microsoft, Apple,
and Video Meta Google basically or who's who of the
magnificent seven are leading us to the downside.
Speaker 3 (22:06):
Very few stocks are currently in the green and.
Speaker 2 (22:08):
This, of course on a key day and test for
the market when it comes to IPO appetite, but also
artificial intelligence appetite.
Speaker 3 (22:16):
Let's get back to core weave and police to say.
Speaker 2 (22:17):
Blue Meg's Ryan Gauld joins us, who has been tracking
this IPO, the intricacies of the pricing that looks like
it's going to price at about maybe forty two dollars
fifty maybe forty five dollars as well. It's indicated at
priced at forty, but might trade higher. But this has
been a torrid time and you've just spoken to the CEO.
Speaker 16 (22:33):
Yeah, So I just got off the phone with Michael
and Trader, the CEO of Core. We've obviously a very
in mentual week to them. I think they're alieved to
kind of get to this point now where you know
that the letters have been signed, they're looking to open shortly,
as you say, indicated forty five ish. Some of the
big takeaways I would say he's saying, Michael and Trader
is saying that you know, we saw yesterday and video
came out, and so that they're going to anchor this
(22:54):
IPO a two hundred and fifty million dollars order without
in video coming in. Mike and Trader says that this
IPO will probably not got over the line, which I
think is quite a statement. I mean, you know, I
think there's obviously a lot to be said here about
them coming in and validating sort of care weave strategy.
They're clearly a big customer, but I think just putting
that out there, it gives you a sense as a
kind of a market dynamic. Ye to have a customer
(23:14):
like in Vidia coming in and saying, Okay, we're going
to get behind you. Without them this out here wouldn't happened.
Speaker 2 (23:20):
I hate to be cynical, but in Video could be
seen to be just protecting a its demand but also
protecting its own investment. They were already a six percent
holder of call Weave, right, I.
Speaker 16 (23:31):
Think that's I think that's probably fair. Yeah, And I
think you know, in a week where in Video has
also been down and under some pressure. I mean, I
don't want to sort of put words in anyone's mouth,
but it's kind of like, you know, let's help out
a friend. That's what it comes across a way in
some way. And I think, you know, just given how
fundamental call Weave or Invidia is to care Weave, I
think it probably makes a lot of sense to them
to have come in with with that kind of statement. Yeah,
(23:53):
but I think you know, there were some other headlines
as well as we talked about this week. I mean,
the Microsoft headlines sort of distancing themselves from some data center.
Speaker 3 (23:59):
Infrastructure from td COW.
Speaker 16 (24:00):
And yet yeah, I mean, you know, it's been a
rough week. It's been bruising, and I think the guys
over at a core Wave are very believed to get
to this moment.
Speaker 2 (24:08):
Perhaps some of the bankers are too. Question is how
the rest of the IPO's unfold ran Gold. It's been
a busy day for him. We thank him for joining us. Meanwhile,
let's just talk about a company that did recently have
an IPO not too long ago, social media platform Reddit.
They can't actually shake off its gloomy sentiment right now.
Shares the company have falling fifty percent from February highs
as it struggles to recover from its earning support that
(24:28):
revealed it lagged in digital advertising among peers. The company
also said it took a hit in traffic due to
changes in Google searchers algorithm. Now, Reddit also faces some
additional scrutiny as as early investors reached the end of
their lockup periods, basically putting further selling pressure on the stock.
We'll see as and when that lockup ends if they
do indeed sell now, the race to invest in AI
(24:49):
companies is actually still on amidst this anxiety about too
much capacity, we're.
Speaker 3 (24:55):
Seeing new billionaires being minted.
Speaker 2 (24:57):
According to analysis from Bloomberg, pid to tell us about
it's Bloomberg's Tom Maloney.
Speaker 3 (25:01):
Put aside Core Weave and the anxiety.
Speaker 2 (25:03):
No matter what, Michael and traitor is now a billionaire,
so as the co founder, and there's a long list
of new AI billionaires.
Speaker 14 (25:10):
Three billionaires, three billionaire founders coming out of core Weave.
And looking at that, we decided to use it as
an opportunity to look at other fortunes being made in
AA right now with these sky higher evaluations. So twenty
nine founders we looked at across eight companies collectively, they
own stakes that are worth or soon to be worth
seventy one billion dollars.
Speaker 2 (25:31):
The who's who of the startup, some of them unsurprising,
some of them like I mean, we know perplexity for examples,
got that sort of evaluation. What's interesting is some of
them are open AI alums setting up their own companies,
not yet.
Speaker 3 (25:43):
Even with products, and they're worth so much money. Maria
Marati for example.
Speaker 14 (25:47):
Yeah, absolutely, you know, I look a couple of these
companies I'd never heard of thinking Machines Lab you just mentioned.
I mean that's a brand new company, no product, Open
Ai alone looking to raise a billion at a nine
billion valuation and then save superintelligence again. Open Ai alums
less than a year old. They're already sitting on a
(26:09):
thirty two billion dollar valuation. So just kind of really
insane numbers out there.
Speaker 2 (26:14):
Clearly there's a lot of love for the use of
Generator AI, even if perhaps the capacity for it is
not being too loved.
Speaker 3 (26:20):
On this day, Tom Maloney, great to have him.
Speaker 2 (26:23):
Meanwhile, coming up, Silicon Valley veterans set their sites on outsiders.
The co founders of Long Journey Ventures join us to
talk about their firm strategy. There's a little bit of
magic apparently. This is Blue met Technology time now for
(26:45):
VC Spotlight. Today we're talking to investors with long histories
in the sector who say they are looking for founders
who don't fit the typical Silicon Valley model. Cyam Banister
Lee Jacobs are co founders of Long Journey Ventures.
Speaker 3 (26:58):
It's got four hund and fifty million dollars.
Speaker 2 (27:00):
Massets under management and a little bit of magic, it seems.
Speaker 3 (27:03):
And I Lee, I start with you, your second believers
in the magically weird. What does a second believe a
bit mean?
Speaker 13 (27:11):
Yeah, great question, Thanks for having us. The second believer is, uh, Look,
it takes the founder to have a lot of belief
in themselves and what they're up to, and our role
is to identify that belief and just be right there
next to them at the very earliest stages. We're talking
about backing companies before they really have a product. In
a lot of cases, it's just two people in a room,
(27:34):
and our role as the second believer is to be
there for them and believe and believe with everything we
have and have them build the future that they imagine.
Speaker 2 (27:42):
You have phenomenal background scion coming from Founder's Fund. You
say you were addicted to this early stage investing.
Speaker 3 (27:49):
But you also talk about sort of backing entrepreneurs that are.
Speaker 2 (27:52):
Absurd or have at least absurd and unconventional ideas. I
have ever backed anyone whether idea remains absurd or do
they all end up becoming conventional wisdom?
Speaker 17 (28:03):
Well, obviously you don't get everything right, and so some
things do maintain being absurd, is.
Speaker 3 (28:09):
There eventually, Well, there's.
Speaker 17 (28:13):
A lot of examples that continue to be absurd. You're
basically too early, and you're not right about timing. But
some things, you know, they end up becoming consensus investments
and you end up seeing them on your show on
the Bloomberg Terminals. But we like to get ahead of
it and invest in them early when it's not a thing.
And there hasn't been a term coined for the whole
(28:34):
space yet. Yeah, but eventually it does.
Speaker 2 (28:37):
I mean, Lee, I think of many would have thought
sending gigantic rockets and then you can reuse and even
catch the boosters of would have seemed absurd a long
time ago, but you helped with early checks into the
likes of SpaceX.
Speaker 3 (28:50):
Uber Andrill Lee.
Speaker 2 (28:52):
Is there a consistent factor in the companies that you're backing.
Speaker 9 (28:57):
Yeah.
Speaker 13 (28:59):
All the business is that we back at the stage
when they're really absurd, before they become consensus.
Speaker 9 (29:03):
Are independently derived.
Speaker 13 (29:05):
The founder has followed their own curiosity to something that
no one else sees. I like to say they're in
a room by themselves, and that's a really good sign.
So our job is to be in that room with
them and to show us the future they see. So
Yes andrel and all these businesses that Cyan and us
have all back have were absurd, It sounded crazy, but
(29:27):
now they're here on on on Blueberog TV.
Speaker 9 (29:30):
So yeah, they're they.
Speaker 13 (29:33):
Enter the mainstream over time, and our role is to
be there for them as they as they tell us
the future. So the main theme is just independently derived
and derived with curiosity.
Speaker 5 (29:44):
San.
Speaker 3 (29:45):
We were just seeing a list of portfolios.
Speaker 2 (29:47):
Companies that you've backed in prior funds, Companies that you
back now, I'm interested in Cruso in particular because this
is about data center capacity, AI infrastructure, but doing it
with the climate and mind what drew you to that
company in particular.
Speaker 17 (30:02):
You know, I'm actually going to toss this one to Lee.
I think he deserves most of the credit for Crusoe.
He was the first check into Crusoe ever and saw,
you know, this company before anyone else did. And he
actually brought it to me at Founder's Fund, and it's
how Lee and I actually developed some of our working relationship.
I think it would be best for him to answer this.
He deserves all the credit.
Speaker 3 (30:21):
Lee.
Speaker 2 (30:21):
Go into this moment, given you know, we've got a
day where core Weave is going to the market. Many
are questioning the need for AI infrastructure are you questioning it?
Speaker 9 (30:31):
No, not at all.
Speaker 13 (30:33):
Cruso's a really special business. Yes, we were the second
believers in that business of the earliest stage. What they
saw with Chase and Kully saw initially was a real
need for energy and a real need for actually building
these data centers in very difficult places. And that you know,
Corewave is a great business. We're really excited about the
space in general. We believe Crusoe has a different business
(30:55):
model and a different opportunity ahead of it where they
really focused on energy from day and as we know,
energy is the real bottleneck for what it takes to
build a great AI application and build these data centers.
So we're really we're really thrilled.
Speaker 2 (31:11):
Sin You've built a very unique space within which you work,
you built a unique philosophy on the way you invest,
and you've got your fourth fund, I think is one
hundred and eighty one million dollars in excess of How
are you thinking about where the talent is that you back?
Speaker 3 (31:26):
Are you all about West Coast where you currently sit?
Speaker 2 (31:29):
Are you thinking about outside of that particular area of
Silicon Valley.
Speaker 17 (31:33):
Yeah, we're a location agnostic. We have venture partners all
over the world. We have a venture partner, Pascal Levy Garbua,
who's in France. We have Justin Mayers who's in Austin, Texas.
We're always looking to expand the team. We punch above
our weight for our fund size. You know, magical founders
exist everywhere, and you know what we're looking for people
(31:54):
who are just you know, thinking about how they're going
to fundamentally transform the future for humanity, and they're thinking
about very big ideas and so we like to think
six to seven years ahead. You know, going back to Crusoe,
we identified the energy was going to be needed for
a crypto as well as AI before AI.
Speaker 9 (32:11):
Was even a space.
Speaker 17 (32:12):
And so that's what we're doing right now, is we're
thinking about what comes next. And so while everybody's investing
sort of in the Cambrian explosion of the application layer,
we're thinking about what does this enable six to seven
years from now. And so we're already looking at like,
you know, things like biotechnology, nanotechnology, et cetera. And you know,
you can always count on long journey to be thinking
(32:33):
about the future, because it's a long journey before they
ever end up on NAZAC. You know, we have to
be able to see this idea when it's just a
napkin and a bunch of people in a house potentially,
and give them their first check and believe in them.
Speaker 2 (32:47):
How scarage room, You've got roughly one hundred and thirty
companies yan that you've backed thus far.
Speaker 3 (32:54):
That's a lot.
Speaker 2 (32:55):
And I'm thinking about how you're attracting the LPs into
fund after fund. What do you think is the ability
to weather well has been a tough time in the
VC market.
Speaker 17 (33:05):
Well, we're very differentiated. I think that our LP base
sees that when they look across you know, all of
their fund managers, they're seeing that there's not a lot
of duplication. Because we're looking into the future, we're finding
people that look absurd, and so everybody's passing on them.
And so you know, when you have a crazy idea
about the future. When you think about Uber, when they
went out to pitch Uber, everyone said to me when
(33:28):
I tried to pass that deal on to my co investor,
you know, my colleagues, no one's gonna get in a
stranger's car. If you look at Airbnb, they said, no
one's gonna stay on a stranger's couch. If you look
at Niantic, they said, no one's gonna catch invisible Pokemon.
If you look at SpaceX, they said, no individual in
the private sector deserves to launch rockets in the space
The list goes on and on. So I'm looking for,
you know, one of my ex colleagues, Jeff Lewis, like
(33:50):
to call it a narrative violation, and that's how he
coined it. But that's what I'm looking for. Are you know,
things where I have a firm belief and I can
see future and no one else can. You know, you're
going to get a pricing advantage, And we continuously bat
above average and we're doing incredibly well on our LPC
that and so I know it's a competitive and a
(34:12):
tough landscape to raise right now, but I think our
LPs are very excited and continue to be in what
we're doing.
Speaker 18 (34:19):
Who doesn't love a little bit of absurd sign Minister
Lee Jacobs to the co founders a long journey, Thanks
so much for joining us today.
Speaker 2 (34:34):
Let's return to call Weave's IPO. I'm very pleased to
say we're welcoming David snyderm a managing partner of Magneta.
It is the biggest institutional investor of care Weave long
term backer. I've got to ask today, I mean the timing,
how do you feel about it?
Speaker 19 (34:49):
Well, first, thank you so much for having me, and
this is an exciting day for Magnetar, for our investors,
and especially for our partners sa Core Weave. You know,
for us, this is one step in all long process
and a beginning step in that process of sentiment and timing.
You know, it's really about execution of the company.
Speaker 2 (35:07):
Today and will you therefore remain a long term committed
holder even as it goes public. I know we've exited
a little bit on this particular liquidity moment.
Speaker 19 (35:15):
We actually have not exited at all. We've bought in
every round prior to this, and we remain committed to
the company. You know, this company is they're the gold
standard now for AI infrastructure. So as this transformation happens,
they're the people, they're the picks and shovels of this industry.
You know, when we invested in them, I think that
had twelve million dollars of revenue at the time.
Speaker 3 (35:37):
What year was this?
Speaker 19 (35:38):
This was only four years ago. This year, this past
year was almost two billion of revenue and climbing quickly.
So it's pretty incredible what they've done. It's a great
management team.
Speaker 2 (35:48):
In many ways, the timing hurts because of the narrative
that we get bombarded with Joe Sai.
Speaker 3 (35:54):
Saying there's a bubble in AI capacity.
Speaker 2 (35:56):
We've got TD Cowen trying to point to Microsoft and
moving away from day to send to leases.
Speaker 3 (36:01):
How do you feel about AI capacity right now?
Speaker 19 (36:03):
You know, I'm sorry, we read and hear the same stories,
but it's not what we see in the actual business.
The business itself has insatiable demand. They can't keep up
with the demand of the business, which is why it's
so exciting for us. And you know, I'll walk you
back to how we think about it at Magnetar. You know,
we watch we watch Earninge's reports of all the major
companies and we add up capex. Well, where does the
(36:24):
capex actually go. It goes into these innovative companies like
open ai and then open Ai. You see the revenue traction.
You know, they announced I think a couple of days
ago on Bloomberg that they were four billion last year,
and I think it's twelve billion this year and twenty
seven billion next year. I think that's one company in
one sector. You start to add up all of that revenue.
(36:45):
And what people don't understand about compute is it's the
single biggest driver of the expense structure of these companies.
Thirty to seventy percent of revenue goes directly to pay
for compute. Right now, core, we've the old standard for
that market.
Speaker 2 (37:02):
Before I've got to ask you about open AI a
little bit more. But what's so interesting is the way
you've done it is your lending and your background's fixed income,
so you know all about lending your equity provider. Why
go so across the capital structure of a company like
this that ultimately only has a limited amount of ultimate customers.
Speaker 19 (37:20):
The hyperscals sure we well, first, their customer base is
growing quite quickly, so we'll hit on that in a second.
But for Magnetar, what we're really good at is lowering
the cost of capital for capital intensive companies, and so
we haven't been in technology near as much in the past,
but now we're seeing them cross Now technology is capital
(37:41):
intensive technology. For AI to be effective, you need GPUs,
you need energy, and you need real estate.
Speaker 2 (37:49):
Three of the.
Speaker 19 (37:50):
Most capital intensive industries on the planet. And people like
Magnetar can come in and really help companies and partner
with them and lower their cost of capital for us,
where we want to participate across the capital structure of
these companies.
Speaker 2 (38:05):
You mentioned customers. A big lease was signed with open
Ai by Core Weave. Interestingly, open Ai now has exposure
to core Weave shares on the back of that as well.
But I want to bring you the latest post out
of Sam Altman because he's saying, look the frenzy to
get hold of the latest image generation chatupt is quote
GPUs are melting. Tell us about open Ai and your
(38:28):
bet there you are coming in when their valuation is
three hundred billion dollars with a sizeable investment, is it
about one billion you're coming in?
Speaker 19 (38:36):
So that was reported that we're looking at the investment
and we are looking. We love the company, we love management.
They're doing a great job. That's in our investment committee
right now. But we're also looking at many other companies
across the sector, so that investment has not been made
to date.
Speaker 2 (38:53):
Tell us, therefore, where you are looking and where the
value a cruise. You say you're about capital expenditure, so
it must be on the AI infrastructure there and the
large language model air, but everyone's getting excited about the applications.
Speaker 3 (39:03):
Would you go there?
Speaker 1 (39:04):
Yeah?
Speaker 19 (39:05):
For us, we're really focused on capital intensity businesses that
need to drive down their cost of capital. That's where
we can be a value added partner, and we can
be a valuated partner not just to companies, but to
venture firms who aren't used to looking at this type
of capital intensity.
Speaker 2 (39:21):
You've obviously been in CAREW for example, for a long time.
Speaker 3 (39:24):
We have four years and.
Speaker 2 (39:26):
You're going to stay with it through the public markets. Yes,
how do you think they now need and mic and
Trader now needs to talk to the market about insatiable demand.
At the moment, we're worrying a little bit about the
amount of leverage. We're worrying a little bit about ultimately
how they have financial controls. This moment of being public,
what does it mean in terms of how the business
(39:46):
is run.
Speaker 19 (39:47):
Yeah, I think there's been some misconceptions in the marketplace
about the debt load. You know, if we go back
to real capital intensive businesses, people take quarters and bring
it to the bank, and the bank lends them money
to fulfill the orders, and they pay back when the
orders come That's exactly what Mike and his team have
done on their financing journey. And so in order to
(40:07):
get the most efficient cost of capital, if you get
long term contracts which they have with companies like Microsoft
and open Ai, those are readily financiable in the marketplace.
Speaker 3 (40:17):
And Microsoft's not pulling away Micro.
Speaker 19 (40:20):
Not only is Microsoft not pulling away. These are take
or pay contracts. So Microsoft has contracts for many years
and they'll continue to pay every month. You know, It's
in my mind, it's sort of like we go and
release a car, right and of course it appreciates the
day you leave, you leave the lot, but you still
owe for four years on your car lease. And that's
(40:41):
the same thing here. And I think again, these companies
need a ton of compute right now. The best provider
of compute for all of these companies is core Weave.
Speaker 3 (40:53):
I'm so interested in Magneta.
Speaker 2 (40:54):
You're in everything at the moment that's interesting to our audience.
So where do you know focus you just telld us about.
It's about the cappal expenditure element. Are there regions that
you look to what is the next company? What is
the next open ai for you?
Speaker 19 (41:07):
Sure, we have a lot in our pipeline, and we've
made hundreds and hundreds of investments. This is our twenty
year anniversary. But it's really about a consistent, methodical process
to invest. We want to understand assets, we want to
understand cash flows, we want to understand downside scenarios. So
we look a lot different than a normal equity investor.
We're very focused on analyzing assets, the cash flows they produce,
(41:31):
and making sure companies have the right runway.
Speaker 2 (41:35):
Will you promise when it's out of your investment committee
you'll come.
Speaker 3 (41:39):
Back with open AI.
Speaker 9 (41:40):
I'd love to. I'd love to.
Speaker 3 (41:41):
It's great to have you. David Sneiderman, MAGNETI managing partner.
We hope to have him back. Now.
Speaker 2 (41:46):
That does it for this edition of bloombag Technology. You
don't want to forget to check out our podcast. You
can find it on the terminal as well as online
on Apple, Spotify and iHeart from New York from San Francisco,
wishing you a very happy weekend.
Speaker 3 (41:58):
This is bluembg Technology als what he doing haply when
he don't happy, when he don't happen
From the heart of where innovation, money and power collide
in Silicon Valley and beyond. This is Bloomberg Technology with
Caroline Hide and Ed Lovelow.
Speaker 2 (00:26):
Live from New York and Caroline Hyde and this is
Bloomberg Technology coming up. All eyes on Corweed's downsized IPO.
We shared set to begin trading on the NASPAC. We'll
discuss with Magnetar, Corweed's largest equity holder. This is AI
capacity concerns remain yet in the midst of the anxiety.
The race to invest in AI companies has created a
slate of new billionaires. Will highlight them and US and
(00:49):
EU tarras are front and center, with the market share
of Chinese evs punning to a two.
Speaker 3 (00:54):
Year low across Europe.
Speaker 2 (00:55):
But first we check in on these markets, which are
ever more in sell off mode. To end this week
off by almost two percent on the Nasdaq one hundred
and when you're looking at the points drags lower and
the fact that we're back to the worst week since
March the fourteenth, it is the who's who of the
Magnificent seven that drag us down in terms of key
points to the lower it is Amazon Meta, the likes
(01:16):
of Microsoft of course Apple even amongst some of the
biggest drags today.
Speaker 3 (01:22):
But we want to put this in the light of
the IPO that we have.
Speaker 2 (01:24):
Of course, on this day, core Weave, one of its
biggest key clients is Microsoft.
Speaker 3 (01:31):
It's off by more than two percent.
Speaker 2 (01:32):
Amazon, of course key exposure to these hyperscalers, which is
a cures for anxiety in video off by one point
six percent, which invests an awful lot now into core Weave,
but also of course as a supplier of its chips
across the border in the red.
Speaker 3 (01:45):
Let's get too.
Speaker 2 (01:46):
Core Weave after it raised one and a half billion
dollars in its IPO, The shares are expected to begin
training today on the Nasdaq. Look, the latest is that
they priced at forty dollars. We're seeing that perhaps at
the moment they're indicated to open at forty five dollar.
Katie Ruth joins us. Now, this is such a litmus
test not only for the AI trade, but the IPO
(02:07):
trade too.
Speaker 4 (02:08):
Exactly, it's been really tough few years for tech IPOs,
and you know, this is supposed to be the one
that was going to kick off a slate of you know,
maybe seven or eight venture backed IPOs for Q two
and they're all watching this to see how it's going,
and so far it's not going well at all. They
downsize the size of the IPO considerably, and they price
significantly below the range. Both of these things are generally
(02:32):
seen as very negative indicators.
Speaker 2 (02:33):
So instead of raising four billion dollars, which they're originally
aimed to, but just a month ago they raised one
and a half billion, all of this is to continue
to put more AI data centers out there, but also it's.
Speaker 3 (02:46):
About paying down their debt.
Speaker 2 (02:47):
And this is perhaps one of the idiosyncratic risks that
it comes to core Weave because it is a unique
asset to be investing into.
Speaker 4 (02:53):
Sure, and so you know, it's hard to say if
really this is skepticism about core Weave itself or about
the marketing, and so it could be yeah, concerns about
their debt, concerns about you know, maybe even AIM getting overvalued.
I mean, certainly there's a lot of investor enthusiasm about
AI broadly speaking still, but maybe they get maybe they
(03:14):
thought that there would be even more enthusiasm than there is.
You know, it's hard to say what the market's concerns
are right now.
Speaker 3 (03:22):
But you know, I mean.
Speaker 4 (03:23):
It's tied to a heart company like in Video, and
you know it's going public at a time when last
year's tech ipeas actually went fairly well.
Speaker 3 (03:33):
Timing seems to be the brutal issue here.
Speaker 2 (03:36):
In Vidia had to come and step in basically and
say I will take two hundred and.
Speaker 3 (03:40):
Fifty million dollars of this.
Speaker 2 (03:42):
I will secure and put a forty dollars price bottom
in on it because I'm a key client and equally
I'm a key investor. They've got about six percent of
the holding of the equity.
Speaker 3 (03:51):
That is such a bad signal. Who else is impacted
by this?
Speaker 2 (03:55):
Who are the vcs that got in late on this
particular name?
Speaker 4 (03:59):
Well so so Magnetar Hedge Fund is actually the largest
shareholder here.
Speaker 3 (04:03):
People in early didn't they They've been sure, But.
Speaker 4 (04:06):
You also have other names like Koto is involved. But interestingly,
of the top shareholders that I looked at the cap table,
there were no VC names above five percent in that ownership.
And so while it is venture backed, certainly you know
some unusual players here are the owners.
Speaker 2 (04:25):
Some crossover funds, some strategic investors. To say the least,
Katie Ruff such a great job across.
Speaker 3 (04:31):
The venture sphere.
Speaker 2 (04:32):
You want to tune in later to this out for
our conversation with Corweed's largest institutional investor, that is Magnetar.
The senior managing partner, David Snydermann is going to be joining.
Speaker 3 (04:39):
Us to discuss.
Speaker 2 (04:40):
But first let's get back to the markets and what
this signals for epec Oskar Deshkea is with US senior
market analysts at Swiss Quote, all eyes from the public
markets are on this listing, not just private investment that matters,
but the ongoing AI narrative is kind of in the
breach here. Oh, I think we have a technical issue.
Speaker 3 (05:03):
Are you muted?
Speaker 5 (05:07):
Oh?
Speaker 3 (05:08):
How technology fails us at times.
Speaker 2 (05:09):
So we'll get back to Epek in just a moment,
but we want to be discussing with her just how
we've got this pushes and pulls as to ultimately what
the demand side is for AI capacity at the moment, but.
Speaker 3 (05:19):
Also demand side for AI generative products.
Speaker 2 (05:22):
Let's just bring you a tweet that I noticed said post,
as I'll say, coming from one samah Altman, who's been
discussing the fact that we're also rushing to use the
latest formation of CHATCHPT and the image generator that we're seeing,
as he calls it, a melting of.
Speaker 3 (05:36):
GPUs at the moment, so much demand.
Speaker 2 (05:39):
For his compute capacity. Let's get back to epek because
here in lies the quandary for the market. We are
questioning AI infrastructure, whether we're in a bubble, and whether
or not we should therefore be backing call we ive
or not.
Speaker 3 (05:51):
On the other side, you've got Sam Altman.
Speaker 2 (05:53):
Seeing such success for the latest product announcement from chat
GPT that his GPUs are melting.
Speaker 3 (06:00):
So what's your take right now?
Speaker 5 (06:02):
I mean, yes, call.
Speaker 3 (06:03):
Means are pure.
Speaker 5 (06:04):
It's clearly not coming at the right time in terms
of markets at the tite because it's coming at a
time when investors are increasingly worried about whether there is
an over.
Speaker 6 (06:14):
Cell light in AI data centers and AI SELP light overall,
while demand looks like it's not growing as fast as
many have projected. But on the other hand, the news
actually come in and they are encouraging. There is a
great adoption of AI in technology, and this adoption is
(06:34):
also extending towards the non technology focus off the market.
It is also happening in China across.
Speaker 1 (06:40):
The world, so yes, there is.
Speaker 6 (06:42):
There are a lot of doubts about whether the AI
adoption is happening at the desire speed. On one hand,
the big technology companies, they keep ensuring the markets.
Speaker 7 (06:52):
And investors that this is happening, and on the other
hand we see some slowing in the pace of in
the pace what you expects to be a strong realth
in terms of quantity valuation.
Speaker 5 (07:04):
So there are a lot of guts right now that
I bore you as actually going public in the middle
of a jungle of doubt.
Speaker 2 (07:11):
EUPEC will have to leave it there with some technical
difficulty with your sam but we thank you so much
for your perspective. Ipec us a guest care of course,
happy weekend US Swiss quote coming up the tech industry
warning President Trump's tarifs could undermine his own policy agenda.
Jason Oxman from the Information Technology Industry Council is going
to be joining us on that this.
Speaker 3 (07:29):
Is bloomberg technology.
Speaker 2 (07:41):
The tech industry has been warning that trading restrictions on
chips passed during the Biden administration, the so called AI
Diffusion Rule, but it could hurt US companies at the
time when tariff uncertainty is already creating headwinds. Jason Oxman,
President and CEO of the Information Technology Industry Council, is
the person to talk to about this because we know
that Nvidia and Oracle are coming and joining your industry
(08:04):
group at the moment, hoping that you'll help navigate a
policy quandary that's upon us right now. Ultimately, they don't
want the AI diffusion rule. Why is it a bad thing?
Speaker 8 (08:13):
Jason, Well, it's a good concept and the execution is
enormously complex. As you noted, this was a rule that
was adopted in the waning days of the Biden administration,
and under normal circumstances, our communication of the Trump administration
would be that Biden administration rules need to be rethought
and redone and this is one of those examples. The
challenge here is that the concept of denying the Chinese
(08:36):
Communist Party and the Chinese Army access to the latest
generation of AI technology for American companies, well, that's a
good idea, it's a national security issue, and we want
to do it in the right way. But the Biden
administration did it in the wrong way. They did it
without consulting industry, They did it without coming up with
a roadmap for success, and perhaps most importantly, they did
it by punishing American allies around the world by denying
(08:58):
them access to AI technology at the same time. So
what we're asking the Trump administration to do, Let's start over.
Let's do this again. Let's consult with industry. Let's get
this rule done in the right way.
Speaker 2 (09:07):
Did they really not consult industry at all? Or did
they just consult the wrong people in industry? From your perspective, I.
Speaker 8 (09:14):
Know it's easy for industry to say we weren't consulted properly.
In this case, it is honestly the case that they
did not.
Speaker 9 (09:20):
Consult us at all.
Speaker 8 (09:22):
And this rule was really it was released seven days
before the end of the Biden administration. They really wanted
to rush it out the door. They've been working on
in a while, they ran out of time, and they
did it without consulting industry. And the reason industry consultation
is important is not just because we think we have
good ideas. We do, but it's more important to make
sure that the rule is done correctly so that American
(09:42):
industry is not punished. And the most important goal of
ensuring that America continues to dominate AI worldwide, which is
a key tenet of the Trump administration. That's what we
want to make sure happens when the rule is redone.
Speaker 2 (09:54):
So let's think about a more perfected rule here. As
you say, the ultimate goal of ensuring that very sophisticated
chips doesn't get into Chinese hands, for example, you think
is the right one. How do we get there without
ensure hurting the middle men?
Speaker 3 (10:07):
That there wrong middlemen to hurt.
Speaker 9 (10:10):
Yeah, I think there are two things here.
Speaker 8 (10:11):
One is the way in which the rule was put
place put in place by the Biden administration. It actually
imposes caps on every country in the world and their
ability to get access to AI technology. Seventeen countries in
the EU are in the so called Tier two. There
are three tiers here. Tier three means anybody can get
whatever they want. Tier two means there are restrictions Tier
(10:32):
one and you can't get anything. Tier two, for seventeen
countries in the EU means they're capped on their ability
to buy AI technology from the US. Why not because
we're worried about them, but because we're worried about enforcement mechanisms.
So what the Trump administration could do is work and
negotiate with our allies around the world to make sure
those enforcement mechanisms are in place to deny the Chinese
(10:52):
Communist Party access to this technology. That's the first thing
I think is important. The second thing I think is important,
and again this is why industry consultation is important, is
China is a market that is huge. It's one and
a half billion people. A lot of stuff is made there,
a lot of stuff is sold there. If we deny
China access to all American technology, the only message that
(11:12):
delivers to China and frankly to other countries around the
world is maybe China should make this technology because they're
going to make it available without restriction to the rest
of the world. So we want to make sure we
don't ironically incentivize the Chinese technology industry to start making
inroads and harm American interests around the world as a result.
Speaker 2 (11:30):
Jason has that holes already bolted from what we see
with deep seek. That was in the case of lack
of access to sophisticated chips, they found a workaround.
Speaker 8 (11:39):
Well they did, and I think there are a lot
of questions about deep seak and just how well it
was put together, how functional it is, and whether it
was programmed in part with American technology, and we'll see
more about that going forward. But I think there's no
question that US technology isn't dominant and doesn't continue to
be dominant. The real only open question is how long
will that last? And if we deny American technology companies
(12:02):
access to international markets and partners, that handicaps our ability
to continue positioning the United States as a world.
Speaker 9 (12:08):
Leader in AI.
Speaker 2 (12:09):
Jason, it's not just the AI diffusion rule that has
many investors concerned. It's also just tariffs more bluntly coming
in as a weapon. We've just seen what's being Oh,
I think we've just got some breaking news that I
want to go to that President Trump and indeed now
the leader of Canada, Karney, have agreed to meet after
Canada's election, where.
Speaker 3 (12:29):
Mark Carney is now the leader.
Speaker 2 (12:30):
So just a bit of breaking news there from the
geopolitical front with Trump and Carney meeting, Jason. And this
is to do with that very thing of tariffs. At
the moment, we've seen how autos have been in the
eye of the storm when it comes to Canadian tariffs,
when it comes to Mexican tariffs. But we understand that
semiconductors are going to be coming into place. When we
think of Liberation Day in early April, how much is
(12:52):
that a fixation of the market.
Speaker 8 (12:55):
Well, the President has suggested the semiconductors perhaps won't be
subject to tariffs, and I think that this raises the
broader question of certainty for business.
Speaker 9 (13:01):
That's what business needs.
Speaker 8 (13:03):
It needs certainty. And we're only what nine weeks into
the Trump administration, A lot has happened. He's moving very quickly,
and the tech industry is responding very favorably to the
Trump administration's call, the president's call to bring manufacturing back
to America. The very first business announcement made in the
White House, literally less than twenty four hours after President
Trump's inauguration, was three ITI member companies, SoftBank, Oracle and
(13:26):
Open Ai announcing a five hundred billion dollar manufacturing project
in the United States. We've seen TSMC announce another one
hundred billion dollar investment, Apple five hundred billion dollars. Even
international companies Siemens and Soft and Schneider Electric have announced
hundred multi hundred million dollar investments just in the last
few days.
Speaker 9 (13:44):
So it is happening.
Speaker 8 (13:45):
The tech industry really more than any other industry is
responding to the President's call. But to your question about tariffs,
I think it's really about certainty. Tariffs can be a tool,
and we'd like to see the President continue to exercise
his skill as a business negotiator, which he does very
well well and strike deals and trade deals in particular
are important. Tariffs are paths to trade deals. The President
(14:06):
during his first administration did a terrific job of entering
into trade deals around the world with China, with Mexico,
with Canada, with Japan, and others. We'd like to see
those trade deal negotiations move forward and replace the need
for tariffs so we can have that business certainty and
access to US markets and international markets that American companies need.
Speaker 2 (14:24):
Jason Oxman, thanks so much for joining Usday from the
Information Technology Industry Council.
Speaker 3 (14:30):
Meanwhile, as time now for.
Speaker 2 (14:31):
Talking Tech and First Up, India reveals a two point
seven billion dollar plan to subsidize the production of electronics components,
covering parts using displays and camera modules.
Speaker 3 (14:41):
And some circuit boards.
Speaker 2 (14:42):
The Indian government says the program is expected to attract
ne lyast seven billion dollars in investment and could help
some companies pivot away from China plus shares of Oracle.
They're trading on the downside today along with the rest
of the market. But the US Department and Defense said
it's terminating a plan to use Oracle software in maintaining
its civilian work force as part of the Pentagon's cost
cutting efforts. Defense Secretary Pete Hegseth says the program ran
(15:05):
six years behind schedule and was more than.
Speaker 3 (15:07):
Two or eighty million dollars over budget.
Speaker 2 (15:09):
Speaking on Fox News, Elon Musk says his DOGE team
is well on the way to slash the US deficit,
and we'd out forward to listen who.
Speaker 9 (15:17):
Reduce the deficit by a trillion dollars.
Speaker 10 (15:20):
The government is not efficient and there's a lot of
a lot of waste forward. So we feel confident that
fifteen percent reduction can can be done without affecting any
of the critical government services.
Speaker 2 (15:35):
But the swift action by President Trump and DOGE to
fireworkers cut costs at the IRS, for example, are creating
temptation amongst.
Speaker 3 (15:42):
Taxpayers to cheat. Tax professionals and.
Speaker 2 (15:45):
Former IRS commissioners are sounding the alarm bells, saying the
administration's actions could actually embolden people to commit forward on
their taxes.
Speaker 3 (15:51):
Or simply not paid.
Speaker 2 (16:00):
Chinese EV automakers actually saw a market shared drop to
a two year low in Europe. It'scording to research a
data force, less than seven percent of EV's registered in
February were made in China. That's despite an overall jump
in European EV demand. Blomberg spoke with Secret Devies, director
General of the European Automobile Manufacturer's Association, about the impact
of tariffs on the auto's industry.
Speaker 11 (16:22):
This comes on top of already very challenging times. We're
at a watershed moment or industry in the midst of
a huge transformation and fierce competition, and yeah, this is
very disruptive and we really hope this can still be averted.
Speaker 3 (16:38):
For more, Let's go to Boomberg's Anthony Palazzo.
Speaker 2 (16:41):
Anthony, I thought that Chinese EV makers were being brought
up a storm over in the UK and Europe, but
it seems as though the tarifs having an impact.
Speaker 9 (16:51):
Yes, that's right.
Speaker 12 (16:53):
In with all the news around President Trump and his chariffs,
it's easy to forget that there's trade tension between the
EU and China, and uh yeah, so so the the
Chinese companies have been really making really making an impact
here in Europe.
Speaker 13 (17:13):
Uh.
Speaker 12 (17:14):
They've been doing it for probably the past five years,
and all of that, all of that came to a
halt around the middle of last year when the EU
introduced tariffs on Chinese made electric vehicles.
Speaker 9 (17:30):
And that's put it, that's put a.
Speaker 12 (17:31):
Dent in in that growth and really held it at
a stalling rate for about the last past six months.
And UH for February we see that it's actually gone down.
Speaker 14 (17:43):
UH.
Speaker 9 (17:44):
And as you said, despite.
Speaker 12 (17:48):
An increase in the number of EV's being sold in Europe,
the number of Chinese made EV's has gone down.
Speaker 2 (17:56):
What's interesting is we know Tesla hasn't been benefiting either,
the salesn't been on the downwards to jectory. But is
it local European makers of evs that do well therefore?
Speaker 12 (18:06):
Right, And that's that's the other irony of this whole
situation is that Europeans have largely started to turn her
away from Tesla. They don't like the way Elon Musk
has been conducting himself and UH intervening in German politics
and UH, and so that created.
Speaker 9 (18:24):
An opening in the Chinese automakers.
Speaker 12 (18:27):
By and large have not been able to to fulfill it.
Speaker 9 (18:31):
Uh.
Speaker 12 (18:32):
And at the same time, the European automakers have come
out with some new models. There's some smaller ones made
by Renault, there's a there's a larger one made by.
Speaker 9 (18:46):
By Volkswagen. That's that's really come out and done well.
Speaker 12 (18:50):
And so the local carmakers have have really done well.
Speaker 2 (18:57):
Anthony Platzo, thanks for the update and all things ev Meanwhile,
returning to the White House is dismissing the disclosure of
who the attack plans being exposed in messages through.
Speaker 3 (19:07):
Signal as a glitch.
Speaker 2 (19:08):
But experts are arguing information in those chats could have
given priceless information to foreignniversaries, you know. Most Jake Breiberg
is here to really articulate what is it within these
messages that are clearly detrimental to us and indeed that
spies kind of wait to get their hands on.
Speaker 15 (19:27):
Yeah, it's a good question, and it takes really sort
of a close parting of these messages. It's something we've
seen you know, current and former security officials doing and
one of the most important things that has raised questions,
you know about the security. Here is this reference from
National Security advisor Mike Walls to sort of surveillance or
(19:50):
some type of view into the movements of a particular
HOOTI sort of you know, military.
Speaker 3 (20:00):
Leader, top missile guy.
Speaker 15 (20:01):
Yes, exactly who Waltz refers to as a top missile guy.
Speaker 11 (20:05):
And what.
Speaker 15 (20:08):
He said, as suggests when we talk to current informer
intelligence officials, is that the US had some sort of oversight,
whether it be UH signals intelligence or aerial oversight, or
actually someone on the ground who was observing this person,
and that that's a really valuable clue to foreign adversaries
(20:30):
who might be trying to understand US military operations.
Speaker 2 (20:33):
Meanwhile, Attorney General Panbonni goes on time and time again
to say sensitive information not classified was inadvertently released. We
go back to the technology side of all of this, though,
Is it music to adversaries? Is that signal is being
used whatsoever?
Speaker 15 (20:48):
I think it probably is, especially for this type of
highly sensitive operational information. The thing to understand is that
while signal makes it you know, strong and quite credible,
crolaims about its end to end encryption, where that where
that information ends is on a device, and if that
(21:09):
device is infiltrated, if that device might be in a
foreign country where it can be attacked by foreign spy agencies.
Speaker 3 (21:17):
It's still vulnerable there. It might be.
Speaker 15 (21:19):
Secure in transit, but once it arrives on your phone,
it's still vulnerable. In the way anyone's phone is vulnerable.
Speaker 2 (21:28):
It's a story that's going to continue, and we thank
you for tracking it for us. Jake Riiberg on the
security implications of using that signal device. Welcome back to
Blue Meg Technology. I'm Caroline hid in New York. Let's
get a check on these markets. We are once again
(21:48):
in sell off mode.
Speaker 3 (21:49):
To end this week. It is a down week.
Speaker 2 (21:50):
We're currently off by one point seven percent, but those
declines are accelerating. On this Friday, we're currently off by
almost two percent on the Nasdaq one hundred, Amazon, Microsoft, Apple,
and Video Meta Google basically or who's who of the
magnificent seven are leading us to the downside.
Speaker 3 (22:06):
Very few stocks are currently in the green and.
Speaker 2 (22:08):
This, of course on a key day and test for
the market when it comes to IPO appetite, but also
artificial intelligence appetite.
Speaker 3 (22:16):
Let's get back to core weave and police to say.
Speaker 2 (22:17):
Blue Meg's Ryan Gauld joins us, who has been tracking
this IPO, the intricacies of the pricing that looks like
it's going to price at about maybe forty two dollars
fifty maybe forty five dollars as well. It's indicated at
priced at forty, but might trade higher. But this has
been a torrid time and you've just spoken to the CEO.
Speaker 16 (22:33):
Yeah, So I just got off the phone with Michael
and Trader, the CEO of Core. We've obviously a very
in mentual week to them. I think they're alieved to
kind of get to this point now where you know
that the letters have been signed, they're looking to open shortly,
as you say, indicated forty five ish. Some of the
big takeaways I would say he's saying, Michael and Trader
is saying that you know, we saw yesterday and video
came out, and so that they're going to anchor this
(22:54):
IPO a two hundred and fifty million dollars order without
in video coming in. Mike and Trader says that this
IPO will probably not got over the line, which I
think is quite a statement. I mean, you know, I
think there's obviously a lot to be said here about
them coming in and validating sort of care weave strategy.
They're clearly a big customer, but I think just putting
that out there, it gives you a sense as a
kind of a market dynamic. Ye to have a customer
(23:14):
like in Vidia coming in and saying, Okay, we're going
to get behind you. Without them this out here wouldn't happened.
Speaker 2 (23:20):
I hate to be cynical, but in Video could be
seen to be just protecting a its demand but also
protecting its own investment. They were already a six percent
holder of call Weave, right, I.
Speaker 16 (23:31):
Think that's I think that's probably fair. Yeah, And I
think you know, in a week where in Video has
also been down and under some pressure. I mean, I
don't want to sort of put words in anyone's mouth,
but it's kind of like, you know, let's help out
a friend. That's what it comes across a way in
some way. And I think, you know, just given how
fundamental call Weave or Invidia is to care Weave, I
think it probably makes a lot of sense to them
to have come in with with that kind of statement. Yeah,
(23:53):
but I think you know, there were some other headlines
as well as we talked about this week. I mean,
the Microsoft headlines sort of distancing themselves from some data center.
Speaker 3 (23:59):
Infrastructure from td COW.
Speaker 16 (24:00):
And yet yeah, I mean, you know, it's been a
rough week. It's been bruising, and I think the guys
over at a core Wave are very believed to get
to this moment.
Speaker 2 (24:08):
Perhaps some of the bankers are too. Question is how
the rest of the IPO's unfold ran Gold. It's been
a busy day for him. We thank him for joining us. Meanwhile,
let's just talk about a company that did recently have
an IPO not too long ago, social media platform Reddit.
They can't actually shake off its gloomy sentiment right now.
Shares the company have falling fifty percent from February highs
as it struggles to recover from its earning support that
(24:28):
revealed it lagged in digital advertising among peers. The company
also said it took a hit in traffic due to
changes in Google searchers algorithm. Now, Reddit also faces some
additional scrutiny as as early investors reached the end of
their lockup periods, basically putting further selling pressure on the stock.
We'll see as and when that lockup ends if they
do indeed sell now, the race to invest in AI
(24:49):
companies is actually still on amidst this anxiety about too
much capacity, we're.
Speaker 3 (24:55):
Seeing new billionaires being minted.
Speaker 2 (24:57):
According to analysis from Bloomberg, pid to tell us about
it's Bloomberg's Tom Maloney.
Speaker 3 (25:01):
Put aside Core Weave and the anxiety.
Speaker 2 (25:03):
No matter what, Michael and traitor is now a billionaire,
so as the co founder, and there's a long list
of new AI billionaires.
Speaker 14 (25:10):
Three billionaires, three billionaire founders coming out of core Weave.
And looking at that, we decided to use it as
an opportunity to look at other fortunes being made in
AA right now with these sky higher evaluations. So twenty
nine founders we looked at across eight companies collectively, they
own stakes that are worth or soon to be worth
seventy one billion dollars.
Speaker 2 (25:31):
The who's who of the startup, some of them unsurprising,
some of them like I mean, we know perplexity for examples,
got that sort of evaluation. What's interesting is some of
them are open AI alums setting up their own companies,
not yet.
Speaker 3 (25:43):
Even with products, and they're worth so much money. Maria
Marati for example.
Speaker 14 (25:47):
Yeah, absolutely, you know, I look a couple of these
companies I'd never heard of thinking Machines Lab you just mentioned.
I mean that's a brand new company, no product, Open
Ai alone looking to raise a billion at a nine
billion valuation and then save superintelligence again. Open Ai alums
less than a year old. They're already sitting on a
(26:09):
thirty two billion dollar valuation. So just kind of really
insane numbers out there.
Speaker 2 (26:14):
Clearly there's a lot of love for the use of
Generator AI, even if perhaps the capacity for it is
not being too loved.
Speaker 3 (26:20):
On this day, Tom Maloney, great to have him.
Speaker 2 (26:23):
Meanwhile, coming up, Silicon Valley veterans set their sites on outsiders.
The co founders of Long Journey Ventures join us to
talk about their firm strategy. There's a little bit of
magic apparently. This is Blue met Technology time now for
(26:45):
VC Spotlight. Today we're talking to investors with long histories
in the sector who say they are looking for founders
who don't fit the typical Silicon Valley model. Cyam Banister
Lee Jacobs are co founders of Long Journey Ventures.
Speaker 3 (26:58):
It's got four hund and fifty million dollars.
Speaker 2 (27:00):
Massets under management and a little bit of magic, it seems.
Speaker 3 (27:03):
And I Lee, I start with you, your second believers
in the magically weird. What does a second believe a
bit mean?
Speaker 13 (27:11):
Yeah, great question, Thanks for having us. The second believer is, uh, Look,
it takes the founder to have a lot of belief
in themselves and what they're up to, and our role
is to identify that belief and just be right there
next to them at the very earliest stages. We're talking
about backing companies before they really have a product. In
a lot of cases, it's just two people in a room,
(27:34):
and our role as the second believer is to be
there for them and believe and believe with everything we
have and have them build the future that they imagine.
Speaker 2 (27:42):
You have phenomenal background scion coming from Founder's Fund. You
say you were addicted to this early stage investing.
Speaker 3 (27:49):
But you also talk about sort of backing entrepreneurs that are.
Speaker 2 (27:52):
Absurd or have at least absurd and unconventional ideas. I
have ever backed anyone whether idea remains absurd or do
they all end up becoming conventional wisdom?
Speaker 17 (28:03):
Well, obviously you don't get everything right, and so some
things do maintain being absurd, is.
Speaker 3 (28:09):
There eventually, Well, there's.
Speaker 17 (28:13):
A lot of examples that continue to be absurd. You're
basically too early, and you're not right about timing. But
some things, you know, they end up becoming consensus investments
and you end up seeing them on your show on
the Bloomberg Terminals. But we like to get ahead of
it and invest in them early when it's not a thing.
And there hasn't been a term coined for the whole
(28:34):
space yet. Yeah, but eventually it does.
Speaker 2 (28:37):
I mean, Lee, I think of many would have thought
sending gigantic rockets and then you can reuse and even
catch the boosters of would have seemed absurd a long
time ago, but you helped with early checks into the
likes of SpaceX.
Speaker 3 (28:50):
Uber Andrill Lee.
Speaker 2 (28:52):
Is there a consistent factor in the companies that you're backing.
Speaker 9 (28:57):
Yeah.
Speaker 13 (28:59):
All the business is that we back at the stage
when they're really absurd, before they become consensus.
Speaker 9 (29:03):
Are independently derived.
Speaker 13 (29:05):
The founder has followed their own curiosity to something that
no one else sees. I like to say they're in
a room by themselves, and that's a really good sign.
So our job is to be in that room with
them and to show us the future they see. So
Yes andrel and all these businesses that Cyan and us
have all back have were absurd, It sounded crazy, but
(29:27):
now they're here on on on Blueberog TV.
Speaker 9 (29:30):
So yeah, they're they.
Speaker 13 (29:33):
Enter the mainstream over time, and our role is to
be there for them as they as they tell us
the future. So the main theme is just independently derived
and derived with curiosity.
Speaker 5 (29:44):
San.
Speaker 3 (29:45):
We were just seeing a list of portfolios.
Speaker 2 (29:47):
Companies that you've backed in prior funds, Companies that you
back now, I'm interested in Cruso in particular because this
is about data center capacity, AI infrastructure, but doing it
with the climate and mind what drew you to that
company in particular.
Speaker 17 (30:02):
You know, I'm actually going to toss this one to Lee.
I think he deserves most of the credit for Crusoe.
He was the first check into Crusoe ever and saw,
you know, this company before anyone else did. And he
actually brought it to me at Founder's Fund, and it's
how Lee and I actually developed some of our working relationship.
I think it would be best for him to answer this.
He deserves all the credit.
Speaker 3 (30:21):
Lee.
Speaker 2 (30:21):
Go into this moment, given you know, we've got a
day where core Weave is going to the market. Many
are questioning the need for AI infrastructure are you questioning it?
Speaker 9 (30:31):
No, not at all.
Speaker 13 (30:33):
Cruso's a really special business. Yes, we were the second
believers in that business of the earliest stage. What they
saw with Chase and Kully saw initially was a real
need for energy and a real need for actually building
these data centers in very difficult places. And that you know,
Corewave is a great business. We're really excited about the
space in general. We believe Crusoe has a different business
(30:55):
model and a different opportunity ahead of it where they
really focused on energy from day and as we know,
energy is the real bottleneck for what it takes to
build a great AI application and build these data centers.
So we're really we're really thrilled.
Speaker 2 (31:11):
Sin You've built a very unique space within which you work,
you built a unique philosophy on the way you invest,
and you've got your fourth fund, I think is one
hundred and eighty one million dollars in excess of How
are you thinking about where the talent is that you back?
Speaker 3 (31:26):
Are you all about West Coast where you currently sit?
Speaker 2 (31:29):
Are you thinking about outside of that particular area of
Silicon Valley.
Speaker 17 (31:33):
Yeah, we're a location agnostic. We have venture partners all
over the world. We have a venture partner, Pascal Levy Garbua,
who's in France. We have Justin Mayers who's in Austin, Texas.
We're always looking to expand the team. We punch above
our weight for our fund size. You know, magical founders
exist everywhere, and you know what we're looking for people
(31:54):
who are just you know, thinking about how they're going
to fundamentally transform the future for humanity, and they're thinking
about very big ideas and so we like to think
six to seven years ahead. You know, going back to Crusoe,
we identified the energy was going to be needed for
a crypto as well as AI before AI.
Speaker 9 (32:11):
Was even a space.
Speaker 17 (32:12):
And so that's what we're doing right now, is we're
thinking about what comes next. And so while everybody's investing
sort of in the Cambrian explosion of the application layer,
we're thinking about what does this enable six to seven
years from now. And so we're already looking at like,
you know, things like biotechnology, nanotechnology, et cetera. And you know,
you can always count on long journey to be thinking
(32:33):
about the future, because it's a long journey before they
ever end up on NAZAC. You know, we have to
be able to see this idea when it's just a
napkin and a bunch of people in a house potentially,
and give them their first check and believe in them.
Speaker 2 (32:47):
How scarage room, You've got roughly one hundred and thirty
companies yan that you've backed thus far.
Speaker 3 (32:54):
That's a lot.
Speaker 2 (32:55):
And I'm thinking about how you're attracting the LPs into
fund after fund. What do you think is the ability
to weather well has been a tough time in the
VC market.
Speaker 17 (33:05):
Well, we're very differentiated. I think that our LP base
sees that when they look across you know, all of
their fund managers, they're seeing that there's not a lot
of duplication. Because we're looking into the future, we're finding
people that look absurd, and so everybody's passing on them.
And so you know, when you have a crazy idea
about the future. When you think about Uber, when they
went out to pitch Uber, everyone said to me when
(33:28):
I tried to pass that deal on to my co investor,
you know, my colleagues, no one's gonna get in a
stranger's car. If you look at Airbnb, they said, no
one's gonna stay on a stranger's couch. If you look
at Niantic, they said, no one's gonna catch invisible Pokemon.
If you look at SpaceX, they said, no individual in
the private sector deserves to launch rockets in the space
The list goes on and on. So I'm looking for,
you know, one of my ex colleagues, Jeff Lewis, like
(33:50):
to call it a narrative violation, and that's how he
coined it. But that's what I'm looking for. Are you know,
things where I have a firm belief and I can
see future and no one else can. You know, you're
going to get a pricing advantage, And we continuously bat
above average and we're doing incredibly well on our LPC
that and so I know it's a competitive and a
(34:12):
tough landscape to raise right now, but I think our
LPs are very excited and continue to be in what
we're doing.
Speaker 18 (34:19):
Who doesn't love a little bit of absurd sign Minister
Lee Jacobs to the co founders a long journey, Thanks
so much for joining us today.
Speaker 2 (34:34):
Let's return to call Weave's IPO. I'm very pleased to
say we're welcoming David snyderm a managing partner of Magneta.
It is the biggest institutional investor of care Weave long
term backer. I've got to ask today, I mean the timing,
how do you feel about it?
Speaker 19 (34:49):
Well, first, thank you so much for having me, and
this is an exciting day for Magnetar, for our investors,
and especially for our partners sa Core Weave. You know,
for us, this is one step in all long process
and a beginning step in that process of sentiment and timing.
You know, it's really about execution of the company.
Speaker 2 (35:07):
Today and will you therefore remain a long term committed
holder even as it goes public. I know we've exited
a little bit on this particular liquidity moment.
Speaker 19 (35:15):
We actually have not exited at all. We've bought in
every round prior to this, and we remain committed to
the company. You know, this company is they're the gold
standard now for AI infrastructure. So as this transformation happens,
they're the people, they're the picks and shovels of this industry.
You know, when we invested in them, I think that
had twelve million dollars of revenue at the time.
Speaker 3 (35:37):
What year was this?
Speaker 19 (35:38):
This was only four years ago. This year, this past
year was almost two billion of revenue and climbing quickly.
So it's pretty incredible what they've done. It's a great
management team.
Speaker 2 (35:48):
In many ways, the timing hurts because of the narrative
that we get bombarded with Joe Sai.
Speaker 3 (35:54):
Saying there's a bubble in AI capacity.
Speaker 2 (35:56):
We've got TD Cowen trying to point to Microsoft and
moving away from day to send to leases.
Speaker 3 (36:01):
How do you feel about AI capacity right now?
Speaker 19 (36:03):
You know, I'm sorry, we read and hear the same stories,
but it's not what we see in the actual business.
The business itself has insatiable demand. They can't keep up
with the demand of the business, which is why it's
so exciting for us. And you know, I'll walk you
back to how we think about it at Magnetar. You know,
we watch we watch Earninge's reports of all the major
companies and we add up capex. Well, where does the
(36:24):
capex actually go. It goes into these innovative companies like
open ai and then open Ai. You see the revenue traction.
You know, they announced I think a couple of days
ago on Bloomberg that they were four billion last year,
and I think it's twelve billion this year and twenty
seven billion next year. I think that's one company in
one sector. You start to add up all of that revenue.
(36:45):
And what people don't understand about compute is it's the
single biggest driver of the expense structure of these companies.
Thirty to seventy percent of revenue goes directly to pay
for compute. Right now, core, we've the old standard for
that market.
Speaker 2 (37:02):
Before I've got to ask you about open AI a
little bit more. But what's so interesting is the way
you've done it is your lending and your background's fixed income,
so you know all about lending your equity provider. Why
go so across the capital structure of a company like
this that ultimately only has a limited amount of ultimate customers.
Speaker 19 (37:20):
The hyperscals sure we well, first, their customer base is
growing quite quickly, so we'll hit on that in a second.
But for Magnetar, what we're really good at is lowering
the cost of capital for capital intensive companies, and so
we haven't been in technology near as much in the past,
but now we're seeing them cross Now technology is capital
(37:41):
intensive technology. For AI to be effective, you need GPUs,
you need energy, and you need real estate.
Speaker 2 (37:49):
Three of the.
Speaker 19 (37:50):
Most capital intensive industries on the planet. And people like
Magnetar can come in and really help companies and partner
with them and lower their cost of capital for us,
where we want to participate across the capital structure of
these companies.
Speaker 2 (38:05):
You mentioned customers. A big lease was signed with open
Ai by Core Weave. Interestingly, open Ai now has exposure
to core Weave shares on the back of that as well.
But I want to bring you the latest post out
of Sam Altman because he's saying, look the frenzy to
get hold of the latest image generation chatupt is quote
GPUs are melting. Tell us about open Ai and your
(38:28):
bet there you are coming in when their valuation is
three hundred billion dollars with a sizeable investment, is it
about one billion you're coming in?
Speaker 19 (38:36):
So that was reported that we're looking at the investment
and we are looking. We love the company, we love management.
They're doing a great job. That's in our investment committee
right now. But we're also looking at many other companies
across the sector, so that investment has not been made
to date.
Speaker 2 (38:53):
Tell us, therefore, where you are looking and where the
value a cruise. You say you're about capital expenditure, so
it must be on the AI infrastructure there and the
large language model air, but everyone's getting excited about the applications.
Speaker 3 (39:03):
Would you go there?
Speaker 1 (39:04):
Yeah?
Speaker 19 (39:05):
For us, we're really focused on capital intensity businesses that
need to drive down their cost of capital. That's where
we can be a value added partner, and we can
be a valuated partner not just to companies, but to
venture firms who aren't used to looking at this type
of capital intensity.
Speaker 2 (39:21):
You've obviously been in CAREW for example, for a long time.
Speaker 3 (39:24):
We have four years and.
Speaker 2 (39:26):
You're going to stay with it through the public markets. Yes,
how do you think they now need and mic and
Trader now needs to talk to the market about insatiable demand.
At the moment, we're worrying a little bit about the
amount of leverage. We're worrying a little bit about ultimately
how they have financial controls. This moment of being public,
what does it mean in terms of how the business
(39:46):
is run.
Speaker 19 (39:47):
Yeah, I think there's been some misconceptions in the marketplace
about the debt load. You know, if we go back
to real capital intensive businesses, people take quarters and bring
it to the bank, and the bank lends them money
to fulfill the orders, and they pay back when the
orders come That's exactly what Mike and his team have
done on their financing journey. And so in order to
(40:07):
get the most efficient cost of capital, if you get
long term contracts which they have with companies like Microsoft
and open Ai, those are readily financiable in the marketplace.
Speaker 3 (40:17):
And Microsoft's not pulling away Micro.
Speaker 19 (40:20):
Not only is Microsoft not pulling away. These are take
or pay contracts. So Microsoft has contracts for many years
and they'll continue to pay every month. You know, It's
in my mind, it's sort of like we go and
release a car, right and of course it appreciates the
day you leave, you leave the lot, but you still
owe for four years on your car lease. And that's
(40:41):
the same thing here. And I think again, these companies
need a ton of compute right now. The best provider
of compute for all of these companies is core Weave.
Speaker 3 (40:53):
I'm so interested in Magneta.
Speaker 2 (40:54):
You're in everything at the moment that's interesting to our audience.
So where do you know focus you just telld us about.
It's about the cappal expenditure element. Are there regions that
you look to what is the next company? What is
the next open ai for you?
Speaker 19 (41:07):
Sure, we have a lot in our pipeline, and we've
made hundreds and hundreds of investments. This is our twenty
year anniversary. But it's really about a consistent, methodical process
to invest. We want to understand assets, we want to
understand cash flows, we want to understand downside scenarios. So
we look a lot different than a normal equity investor.
We're very focused on analyzing assets, the cash flows they produce,
(41:31):
and making sure companies have the right runway.
Speaker 2 (41:35):
Will you promise when it's out of your investment committee
you'll come.
Speaker 3 (41:39):
Back with open AI.
Speaker 9 (41:40):
I'd love to. I'd love to.
Speaker 3 (41:41):
It's great to have you. David Sneiderman, MAGNETI managing partner.
We hope to have him back. Now.
Speaker 2 (41:46):
That does it for this edition of bloombag Technology. You
don't want to forget to check out our podcast. You
can find it on the terminal as well as online
on Apple, Spotify and iHeart from New York from San Francisco,
wishing you a very happy weekend.
Speaker 3 (41:58):
This is bluembg Technology als what he doing haply when
he don't happy, when he don't happen
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