February 18, 2025 • 43 mins
Bloomberg's Jackie Davalos and Tim Stenovec discuss Intel's soaring stock price after reports that TSMC and Broadcom are mulling potential deals. And, Elon Musk debuts a new Grok-3 model chatbot, calling it the "smartest AI on earth". Plus, a conversation on the ethics of AI as companies and governments shift attitudes.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde and.
Speaker 2 (00:20):
Ed Ludlow live from New York.
Speaker 3 (00:36):
I'm Tim Steneveek and I'm Jackie Devalas in San Francisco.
This is Bloomberg Technology coming up. Intel shares are soaring
on reports that both TSMC and Broadcom are only potential
deals that would split the US chip making Giant. In
two plus, Elon Musk's artificial intelligence startup XAI showcases it's
(00:57):
updated Grock three model, a rush challenge to open AI,
and we'll dive into concerns around AI safety as companies
and governments appear to change their attitudes on how to
make the technology safer. But first let's look at markets. Tim,
what are you looking at?
Speaker 4 (01:12):
I'm looking at the Nazaq one hundred, searching for a
little bit of direction you can see down not even well,
not even one tenth of one percent, bouncing between gains
and losses throughout the session so far, Traders watching the
latest geopolitical developments. All eyes are what's happening in Eastern Europe.
This is the US and Russia agreed to more talks
on resolving the war in Ukraine, but set no date
(01:34):
for a summit meeting between Donald Trump and Vladimir Putin
Ukraine's of Vladimir's Olenski canceling his visit.
Speaker 2 (01:41):
To Saudi Arabia. So we'll bring you updates on that
as we do get them. I am watching.
Speaker 4 (01:45):
Shares of Intel though, up about ten percent as we speak,
surging after the Wall Street Journal reported that both TSMC
and Broadcom are molling separate potential deals that would split
Intel into two. Now the journal is reporting that Broadcom
would be interested in the chip design and market business. Well,
TSMC is apparently interested in Intel's chip plants. Today's serge, though,
(02:08):
does come after Intel had its best week all the way.
Speaker 2 (02:11):
Going back to the year two thousand.
Speaker 4 (02:13):
Shares rows more than twenty percent last week on reports
that the US government is possibly getting involved with a
plan that involves both Intel and TSMC.
Speaker 3 (02:22):
Jackie, let's get right too with Bloomberg's Bryan Westelica. Ryan,
let's talk about those chip plans which Intel is operating
currently at a loss. What could a potential deal with
TSMC mean for that business.
Speaker 5 (02:35):
Hey, good afternoon, thanks for having me. So.
Speaker 6 (02:37):
Yeah, so a lot remains unclear right now, but certainly
this has been a real drag on Intel for quite
an extended period of time. Obviously, the previous CEO invested
heavily in the foundry business, you know, billions of dollars
and really see too much of a return on that.
It is well behind TSMC and Samsung. So people are
really looking to see if there is any kind of
(02:59):
you know, sort of resk you for the foundry business
that is really expected to really support Intel. If there
is some kind of deal coming to fruition.
Speaker 4 (03:08):
Ryan, what would be left of Intel if it's TSMC
and Broadcom were to succeed in this as reported by
the journal.
Speaker 5 (03:18):
Yeah, that's a great question.
Speaker 6 (03:20):
Again, so many details are still up in the air,
not yet confirmed. I mean, you know, there is such
a focus on domestic manufacturing. Intel got a lot of
money from the Chips Act. It was building out a
factory in Ohio, for example, So there is certainly a
geopolitical aspect to this. People want to see more domestic
chip manufacturing, and if TSMC is able to work with
Intel in some capacity, obviously that would probably be good
(03:42):
for PSMC to have more of a domestic presence here,
certainly good for Intel. But again, we really don't know
what any of this is going to end up looking like,
if anything does come to fruition.
Speaker 3 (03:53):
Ryan, Let's talk about some other non sexy names in tech,
like IBM and Cisco. You wrote this morning that they're
kind of seeing a run up and showing themselves to
be AI contenders. What's leading this enthusiasm.
Speaker 6 (04:06):
Yeah, so Cisco last week gave a pretty positive revenue
forecast talking about the demand it is seeing related to
all the AI infrastructure that is being built out. IBM
earlier this year had a pretty strong forecast of its own,
some strong long term sales targets. These are two companies
that you know, were sort of forgotten by a lot
of investors. They are nowhere near you know, like you said,
(04:29):
they're sexy heydays like Cisco still below its dot com
erapeak from two thousand, but you know, as it's starting
to see a little bit more of a growth narrative,
especially really to AI, people are taking another look. These
are stocks that are you know, trading at pretty considerable
discounts to the max seven names. They have pretty strong
dividend yield. So in a period of time when people
are maybe wondering, have the Max seven gone too far?
Speaker 5 (04:50):
Is this story already priced in?
Speaker 6 (04:52):
Having some new AI stocks in there, especially mature companies
with pretty solid cash flow and dividends and so forth
trading at lower multiples, you can see white people might
be taking another look at them.
Speaker 4 (05:02):
Well, let's stick with the Mag seven. Bloomberg's Ryan Vistelica
joining us from Chicago. Always good to see you, Ryan.
For more, I do want to bring in Dana Dioria.
She's group president over at invest Net Solutions, also co
chief investment officer at invest Net. Dana, we heard Ryan
just now talking about the Mag seven. It's more than
thirty percent of the makeup of the S and P
five hundred, those seven stocks. How are your clients diversifying
(05:26):
away from the MAG seven? Are they overinvested in them?
Speaker 5 (05:30):
Well?
Speaker 7 (05:30):
I mean so, beauties in the eye of the holder, right,
So there's a lot of you know, research that suggest look,
if you are invested.
Speaker 8 (05:38):
In the market, the market, the market's.
Speaker 7 (05:40):
Determination is this is what these stocks are worth, and
you know they're invested where they should be. I think
a lot of our clients though, are looking at that,
and obviously on investment, we're talking about retail clients with
advisors managing our assets, and they look to diverse.
Speaker 8 (05:56):
By in other places. They look to have an overall
globally allocate portfolio.
Speaker 7 (06:00):
That has international investments that perhaps leans a little bit
into small caps. But let's be honest, if you are
you know, more than fifty cents on the dollar that
goes into our platform goes into passive assets. So if
you're there, you've got a ton of you said it yourself,
it's it's thirty percent right of the SMP. But even
if you're in an actively managed strategy, it's very hard
(06:21):
at this point to have a ton of tracking error
to the passive index because it's performed so well in
the last several years.
Speaker 3 (06:29):
Dana, there's a couple of different ways that we can
look at tech companies. Now you have software, hardware, enterprise
and then the consumer focus. How are you thinking about
how to bucket these sorts of investments going forward and
the sorts of catalysts you're looking from each bucket?
Speaker 7 (06:46):
Well, so I think you know, for the average client
on the platform, it's more about the sector, and it's
more about, you know, where is the sector from a
market cap weighted perspective within the indexes. And then if
you're in say a Rust one thousand growth actively managed strategy,
how are the how is that manager doing that bucketing?
Speaker 8 (07:06):
How are they thinking about playing the AI trade? For example?
Is it a question of you know, do I diverse by.
Speaker 7 (07:13):
Again away from saying Nvidia right, and and this has
been a big struggle for them because you know, you
have to meet forty act rules around diversification in a
lot of cases, and it's hard to do when you
have more than fifty percent of say the Russell one
thousand growth uh, you know, invested in these mag seven
And so I think that bucketing helps where a good
active manager who's able to look at the tech sector
(07:36):
and say, okay, you.
Speaker 8 (07:37):
Know, I see opportunity sets.
Speaker 7 (07:39):
Maybe in some of these suppliers to big you know,
to the MAG seven right, and these different parts of
the market where I can still kind of take that
growthy bet on AI and tech, but.
Speaker 8 (07:51):
Not necessarily you know, be so heavily focused.
Speaker 7 (07:55):
On the MAG seven and you know, not meeting those
diversification roles. So I think that's something that you know,
these managers struggle with and every time we see sort
of a dip, you know, it's a question is it
a buying opportunity to kind of leg more into those
types of things as opposed.
Speaker 8 (08:12):
To actually diversifying.
Speaker 3 (08:14):
You know, that's kind of the question where can we
find certainty? And I know that's asking a lot given
these days, but when we think about where we can
see the tangible return, you have concerns around infrastructure capacity
and then at the same time and consumer you just
don't really know how these sorts of features are going
to be monetized. Which one do you think holds more
(08:35):
certainty for investors?
Speaker 7 (08:37):
Well, I mean, I think the energy theme has been
a huge one. It's it comes across and you know,
so we sit at the junction of hundreds of asset managers,
so we kind of get a good sense of where,
you know, the zeitgeist is sort of leaning, and I
would say to you that the secular trend and energy
has definitely been a theme.
Speaker 8 (08:53):
I also think people understand that this administration.
Speaker 7 (08:55):
Is probably going to be not like pro growth, but
you know, helpful and terms of energy centers, you know,
helping the energy sector in general. Here in the US,
and I have a view. You know that we're going
to have to meet the energy demands over the next
several years and into the next you know, decade, et cetera.
Speaker 8 (09:17):
You're going to have energy sources from everywhere. It just
is what it is.
Speaker 7 (09:20):
So sustainable, yes, you know, more traditional incumbent. Yes, We're
just not there yet to kind of transition over to sustainable.
So I think energy is a play that probably a
lot of investors have focused on for this and you know,
particularly with this administration, they see the opportunity set there.
Speaker 8 (09:38):
You know, even before AI.
Speaker 7 (09:39):
Right, our energy needs we're going to increase just looking
at demographic trends, population growth, you know, parts of the
world that are moving into a better standard of living,
which is what we obviously want to see. But all
of that is going to create energy demands even before
you get to the AI.
Speaker 4 (09:54):
Trade growth versus value. It's a debate that I've been
having with guests. I started doing this, Is this finally
the year? I mean, growth is one every year I've
been doing this, Is this finally the year that we
see value?
Speaker 2 (10:06):
I perform?
Speaker 8 (10:08):
It is so hard to be a value manager.
Speaker 7 (10:12):
You know, here's what I would say January effect is interesting.
It's not statistically significant, but you know, there's a little
signal in there. January did see out performance of value.
I think, look the notion that we are higher for
longer on interest rates. Traditionally speaking, that should benefit value,
right because more of those cash flows are coming earlier,
(10:33):
and so when you have a higher discount rate, the
growth stocks should theoretically be impacted worse by that because
they have more longer dated cash flows, more years that
you have to discount by a higher number.
Speaker 8 (10:45):
So yeah, theoretically there's some makings for that there, but.
Speaker 7 (10:48):
We all know the AI trade can just you know,
and or other secular trends can can just blow that
out of the water.
Speaker 8 (10:54):
So it's very hard I think in the short run
to say what will win what won't win.
Speaker 7 (10:58):
I will say, you know, I think at the end
of the day, valuation will always still matter.
Speaker 8 (11:03):
It matters more for medium term expect and return.
Speaker 7 (11:05):
To try to trade on it in the short run
is you know, it doesn't have a good track record
for that.
Speaker 3 (11:11):
There's hope yet for value investors. Dana Doria from Investment
thanks for joining us Elon Musk's XAI has debuted its
latest GROP three model, promising advanced reasoning and even a
new smart search feature. This comes just days after Musk
(11:34):
made an unsolicited bid to buy Sam Motman's open Ai,
which was ultimately rejected for more. Bloomberg Intelligence analyst man
Deep Singh joins us Now, Man Deep, what do you
make of this model? How does it stack up to
xai rivals?
Speaker 5 (11:47):
Yeah?
Speaker 9 (11:47):
Look, I think what they have showed is another reasoning
model that can do well on certain benchmarks, and clearly
was trained on one of the biggest clusters out there.
Speaker 2 (11:58):
And you think about you know the number of.
Speaker 9 (12:00):
GPUs they use for this model, So is there anything groundbreaking?
Speaker 5 (12:04):
I don't think so.
Speaker 9 (12:05):
But at the same time, what they're showing is all
these llms are narrowing, you know, the capability gap they
had with open ai, and I still think open ai
is the preferred model when it comes to the usage
and the distribution they have created for themselves. It would
be interesting to see how much upsale xai can have
(12:26):
on their own platform, Twitter and whether users are willing
to pay a subscription. That will be the real test.
But clearly I think it scores well on all the benchmarks.
Speaker 2 (12:35):
Mandeep.
Speaker 4 (12:36):
Is the market big enough now and in the future
for Claude, for chat, GPT, for you know, whatever comes
next that's being worked on right now. Is it smart
enough for Gemini? Is it big enough for Gemini? Do
we need all of these?
Speaker 5 (12:53):
Yeah?
Speaker 9 (12:53):
Look, I mean we just got off the earning season
in the past one month, and it's very obvious that
everyone is doubling down when it comes to their capex investments.
So the market is big enough to answer your question.
At the same time, our view is that the field
is narrowing when it comes to the foundational model players.
And that's where, you know, only the ones with deep pockets,
(13:13):
your hyperscalers or XAI for that matter, that can spend
on these you know, billion dollar training runs will be
the ones who would have the foundational models and they'll
try to roll it out for all the applications to use.
Speaker 4 (13:25):
Bloomberg Intelligence analyst Mandeep saying and joining us here in
New York, Mandy, thanks so much.
Speaker 2 (13:30):
Well sticking with AI.
Speaker 4 (13:31):
Meanwhile, open ai co founder Ilias at Skimer is looking
to raise more than one billion dollars for his startup,
Safe Superintelligence. It could value the company at over thirty
billion dollars. According to sources. San Francisco based VC firm
Green Oaks Capital Partners is leading the deal. For more
Bloomberg's Kate Clark joins US now here in New York.
(13:52):
So where does this company sit in the AI world?
Speaker 10 (13:56):
Well, this company is brand new. It was founded in
June of last year, which its valuation even more incredible.
The company is trying to create a safe superintelligence, so it's.
Speaker 3 (14:06):
All in the name.
Speaker 10 (14:07):
But otherwise we don't know very much about this company.
It is very secretive, it is very much under the radar,
and it's just getting started.
Speaker 3 (14:15):
Kate, what do we know about why investors are interested?
As you mentioned, it's super new, it's not really generating
much revenue. And you add on to the fact that
kind of the word safety is almost coming out of
vogue this year amid a new administration that doesn't really
seem to put too much importance on responsible AI. What
(14:35):
do you make of that? Like, what's kind of the
hook here for a VC that's investing in this company.
Speaker 10 (14:41):
There's one huge clear hook, and that's the founder, Iliasitzkiber, which,
as you both know, is a co founder of open ai.
Longtime chief scientists and a chief architect of those aim models.
People really truly believe that he is a singular force
and that whatever he builds will be a massive, massive success.
The company has zero revenue and we won't see a
product for years most likely, as it seeks to create
(15:05):
this safe super intelligence. So truly it is all about
the founder in this one, and that is what's justifying
this thirty billion dollar valuation, which by the way, makes
this one of the most highly valued companies in the world.
And I don't have the statistics in front of me,
but I think having zero dollars in revenue and evaluation
that high is pretty rare.
Speaker 4 (15:23):
I feel like you're, you know, you're sort of emphasizing
the fact that this company doesn't have a product at
this point and it's all on the founder and it
could be worth billions of dollars at this point.
Speaker 2 (15:31):
Can we can we say froth or VC saying froth.
Speaker 3 (15:34):
Vcs are saying froth.
Speaker 10 (15:35):
I mean vcs are also saying this is a once
in a generation moment, and they want to get on
board with people like Ilia because they do believe that
they will someone like him can create the next trillion
dollar company. So if you believe that, then sure it's
a great moment. But I think outside of you know,
maybe Ilia is a unique person who really will create
that super intelligence. But you're seeing tens of billions of
(15:56):
dollars go into one year old, two year old companies.
It'll take five to ten years before we know how
much money venture capitalists will lose, but they will lose
a lot of money.
Speaker 3 (16:06):
That's Bloomberg's Kate Clark, thanks for joining us. Coming up,
we speak to Cato Network CEO Shlomo Kramer as the
company sees a big revenue boost in twenty twenty four.
This is Bloomberg.
Speaker 4 (16:44):
Elon musk Dos team is said to be attempting to
gain access to a broad range of taxpayer data, raising
concern from Democratic lawmakers over privacy concerns. Strict US laws
prohibit the disclosure of taxpayer data, with some exceptions for
law enforcement resources.
Speaker 2 (17:00):
The team is seeking the data but has not yet
accessed it.
Speaker 3 (17:04):
Jackie cybersecurity firm Cato Networks as they surpassed two hundred
and fifty million in annual recurring revenue for twenty twenty four.
That's a jump of forty six percent compared to the
year prior. Here with us is Cato Network CEO Shlomo Kramer. Solomo,
at a time when companies are really on the hook
to show that they can deliver, can you tell us
(17:25):
where this demand is coming from.
Speaker 11 (17:28):
The demand is coming from all sizes of organization that
faces increased complexity of point solution and are looking for
a platform to deliver the network security with operational efficiency
and business agility. So it's all about digitively transforming IT
(17:52):
security to serve the digitive business.
Speaker 2 (17:56):
Soloma.
Speaker 4 (17:56):
Are you seeing a decline in demand in terms of
total spent on this sector due to investment in AI
or are you seeing investment grow here?
Speaker 11 (18:09):
We are seeing consistent increase in spending on IT security. Actually,
in the four years following COVID, spend of IT security
out of IT budget has gone forty percent, while we
are not more secure now than we were four years ago.
(18:31):
So actually this is actually the increase in spend is
the core problem that platforms such as Kato solved.
Speaker 2 (18:41):
So how do we get.
Speaker 4 (18:42):
More secure If people are and companies are spending more
money but they're not seeing the results when it comes
to security, how do we get more secure?
Speaker 11 (18:49):
We replaced the fifty point products that an average CISO has.
With three four call platforms, you know, a platform on
the endpoint, a platform on the cloud, a CATO on
the network side, all integrated together. It's much more manageable,
(19:14):
it's much more agile. You can say yes to the
business and you can fit it within the budget and
talent that you have.
Speaker 3 (19:23):
Let's talk about venture capital. Investors are pretty excited about
cybersecurity startups. They raised a bunch of money in twenty
twenty four. You US raised around in twenty twenty three,
two hundred and thirty eight million dollars. I mean, is
an IPO next for you this year?
Speaker 11 (19:37):
As a growth company, we have many different options, both
public and private, and the real goal here is to
build a long term leader in this new category called
SASS platform for network security.
Speaker 3 (19:57):
Do you see that being as a possibility this year though?
I mean, if you were to perhaps speculate on who
potential buyers could be, perhaps not just for your company,
but kind of in the space in general. As we
see M and A tick up, what are you seeing?
Speaker 2 (20:10):
Well?
Speaker 11 (20:10):
Really heads on, heads down on building CATO and I
can't I won't circulate on any financing M and a
events this year.
Speaker 4 (20:25):
What would be the next financial benchmark? Though you did
say you've surpassed two undred and fifty million in arr
for twenty twenty four, what's the next benchmark?
Speaker 11 (20:34):
So you know, Governor assess is the market is going
twenty six percent AEOV to twenty eight billion dollars in
less than four years, and we last year we go
(20:55):
much more than that, and we fully expect to go
this year also more than the market and take market
share and continue to build the company.
Speaker 4 (21:07):
What would you say is the market size?
Speaker 2 (21:10):
It's a huge market, you know.
Speaker 11 (21:13):
Essentially, a SASE our category is the third generation of
network security. It replaces the second generation, which are the appliances.
These are many tens of billions of dollars that are
going to be re architected and five to seven years
from now, eighty to ninety percent of appliances are going
(21:36):
to be replaced by a SASE cloud implementation. So there's
a huge potential and we are just in the beginning.
Less than fifteen percent of enterprises have started implemented SASE,
and more than almost fifty percent of enterprises are saying
(21:57):
that they are going to implement US in the next
three years. So this is literally the money time of
this cut.
Speaker 4 (22:04):
And goalie Shlomo Kramer, CEO of Cato Networks, thanks so
much for joining us to appreciate it. Welcome back to
Bloomberg Technology. I'm Tim Stenoveek in New.
Speaker 3 (22:20):
York and I'm Jackie Devalis in San Francisco.
Speaker 4 (22:24):
Let's get a check on the market. So I do
want to take a look at shares a super Micro,
which are just surging. Look at that up thirteen percent.
It's exciting gain three fourth session in a row. This
after the totally beat up chip maker issued an aggressive
long term revenue outlook and pledged to meet a Nasdaq
deadline to file auditive financial results. Super Micro has rallied
almost ninety percent this month, putting it on track for
(22:46):
the best month going back to May of twenty twenty three,
and it looks like it finally could happen meta platforms
the parent company on Facebook, Instagram, WhatsApp, and more, halting
that twenty day winning streak, shares adding more than twenty
percent over that record run, though shares down about two
point three percent in today's session.
Speaker 2 (23:05):
Well.
Speaker 4 (23:05):
Creators of a new AI chat bought often claim their
model is the best the website. Chat Bot Arena puts
those claims to the test, allowing users to test and
rank these programs, and bans of the site likely knew
that Deep seeks are one model would challenge us.
Speaker 2 (23:20):
Built rivals Bloomberg.
Speaker 4 (23:22):
Seth Figgerman is here to tell us more about chat
Bought Arena.
Speaker 2 (23:25):
What happens on this site.
Speaker 12 (23:26):
Well, it seems thinking that the fate and the temperature
of a billion dollar industry is being largely shaped by
a bunch of students that you see Berkeley.
Speaker 5 (23:34):
It's basically a blind test.
Speaker 12 (23:35):
You know, people can try out, I think something two
hundred different models on the site and put two of
them against each other. They don't know what they are,
and they'll ask a question and see which one does better,
and then they'll vote it up or down. And based
on that crowdsource ranking, we'll see which rankings which models
are at the top of the leaguerboard. So Deep Seek
grows up pretty high for months leading up to the
launch that captivated everyone, and today as we speak, Grock
(23:58):
three is rigging high there too, So it's become a
real bragging right for some of the industry.
Speaker 3 (24:02):
But Seth talk to us about some of the risks
of some of these crowdsourced platforms that allow us to
benchmark how well one model is versus another. What can
go wrong?
Speaker 12 (24:13):
Yeah, it's a great question. I mean, first off, it's
not definitive. It seems definative, But these are systems that
could be rigged, and they're starting not being tests for
every different use case. I think the real point here
is that one, there are not that many, you know,
really agreed upon benchmarks right now for AI systems, and
as these systems get better, there's even fewer. I think
you're seeing hyperbolic name things like Humanity's last Exam for example,
(24:33):
as a mogul with test that with And I think also,
you know, at the end of the day, a lot
of this as vibes. You know, these systems are all
kind of similarly competitive right now, so what might feel
good for one person may feel different for another.
Speaker 3 (24:45):
Always the vibes Bloomberg set viagram and thanks for joining us.
Concerns around AI safety appear to be shifting, and companies
and governments are starting to change the language they use
to talk about the topic. Doctor Margaret Mitchell is the
chief Ethics Scientists for hugging Face, an open source platform
for building and training AI. Margaret talked to us about
(25:06):
the shift and tone that we're seeing not just from
lawmakers but also from companies as they're starting to really
reckon with the fact that weren't a completely different eras
or relates to AI safety.
Speaker 13 (25:20):
Yeah, so in the US, we've seen a shift with
US companies so like Meta and Google removing some of
the language that they had in their various terms of
use and sort of responsible practices. So it's less focused
on things like accountability, less focused on not participating in
surveillance that sort of thing, and less of a focus
(25:43):
on this general concept of safety. And there was recently
this AI Action summit where jd Vance came and spoke
and said that he thinks that the focus should now
be on opportunity and it seems like the larger tech
companies are our following suit on.
Speaker 4 (25:57):
That, Margaret, If the large tech companies aren't necessarily the
ones who put the framework into place when it comes
to rules regulations, does the government need to step in?
Speaker 2 (26:10):
What's your view there?
Speaker 13 (26:12):
Yeah, So my view of the role of government, and
people have different views here, is that the government should
be set up to protect the people, not to protect companies,
you know, creating a marketplace of ideas that companies can
sort of thrive in, but ultimately stepping in where companies
can't step in, in order to make sure that there's
(26:32):
a level playing field that everyone can do the responsible
thing within the context of market dynamics where you might
accidentally destroy your company if you're trying to do all
the things that are the best for the people. Right Like,
companies exist to make money, and so there needs to
be a counterbalance that sort of thinks about, well, what
if we're not making money, what if we care about people,
(26:55):
and what can we put in place for all companies
to abide, buy and then change the market place dynamics
in light of that leveled playing field.
Speaker 4 (27:02):
Well, David Sachs's Crypto and AIS are you confident that
the Trump administration will put into place policies that will
protect people.
Speaker 14 (27:13):
I think the jury is still out on that.
Speaker 13 (27:17):
There definitely is interest in growing the economy, so they've
spoken a lot about creating healthy competition that sort of thing.
Speaker 14 (27:27):
I haven't seen.
Speaker 13 (27:27):
As much of their thoughts on protecting people and what
that is. I think right now there's sort of a
reactionary force. So there's always pendulum swings and ethics. People
care a lot about ethics and safety and things like that,
and then people absolutely do not. I think we're having
a little bit of a pendulum swing right now, back
(27:48):
to not being.
Speaker 14 (27:50):
As concerned about foreseeable risks.
Speaker 13 (27:53):
But you know, hopefully the government will listen to the
will of the people and step in where no one
else will help them.
Speaker 3 (28:00):
Margaret, Just a couple of years ago, we had companies
and just a wide swath of the AI community coming
out and highlighting the existential risks. Some of these AI
safety groups of dubbed as dooomer types if you will.
Elon Musk has a growing influence in Washington, and he's
been one of those at the forefront of kind of
(28:21):
highlighting these existential risks as he's building his own AI technology.
What do you make of his influence, but also the
existential risks that have been raised before.
Speaker 14 (28:34):
Yeah, so there's a lot to unpack there. This is
a really big discussion in ethics circles.
Speaker 13 (28:39):
There's a little bit of an issue where people who
focus on existential risks tend to drown out the concerns
about current discrimination, so that causes a little bit of
tension in ethical discussions. Elon Musk in particular, I'm pretty
concerned about the role he has throughout the government right now,
but within that's a AI in particular, he doesn't seem
(29:02):
to be someone who would really stand up for making
sure technology is not discriminatory or doesn't disproportionately harm some subpopulations.
Speaker 14 (29:13):
So there's a pretty big risk there.
Speaker 13 (29:16):
Existential risk is now less of an issue within the
past few months, we've seen some stepping down from that
as part of these pendulum swings, and so one would
hope that that would mean that the immediate and current
harms of AI would have more of a center stage.
But as it seems to be right now, neither current
harms nor foreseeable harms are really much of the focus.
Speaker 3 (29:41):
Even coming out of the Paris AI Action Summit, so
much of the language shifted from safety to security, the
UK Safety Institute being rebranded as the UK Security Institute.
Where should we look to as a leader for you know,
how to build not just innovative technology but also responsible
(30:02):
AI technology.
Speaker 13 (30:04):
Yeah, so there's a bunch of different ways to kind
of approach This one is via governments, and one is
via different companies. So like one the company I work for,
Hugging Face, takes an approach of being transparent and open
because that's a way of making yourself accountable to people.
So even in the in marketplace dynamics where you're sort
(30:25):
of going for profit, you also have to show your
work and that you're doing responsible things. So this is
an area where openness can really be helpful in helping
drive forward responsible practices. And then you know, there's also
been a lot of really nice work in the EU
on legislation. The EU and the US are not currently
fully aligned on what to prioritize, but I've definitely appreciated
(30:47):
a lot of their work on legislation that looks at
foreseeable harms and risks as well as benefits.
Speaker 2 (30:52):
Margaret, what are the stakes here? Like?
Speaker 4 (30:54):
What could go wrong if we don't get this right
as a society.
Speaker 13 (31:00):
Yeah, So we're in a situation right now where there's
a large centralization of power for the AI companies and
the larger ones, and they're accruing a lot of wealth
while a lot of other people are losing their jobs,
and so there's more and more of a divide between
the have nots and the have yachts, as Trudeau said recently,
(31:23):
So you're really seeing that the wealthy people are getting
wealthier and people who are just struggling by are losing
their jobs or having their data used in these AI
systems that then the larger tech companies are benefiting from
while they can't even get you a basic basic income.
Speaker 14 (31:41):
So this massive divide is happening right now.
Speaker 13 (31:44):
There has been like some discussion about UBI like universal
basic income, but I haven't seen that really moving forward
in the AI world, despite the great idea there. And
so that's happening now. And then that also means that
people who are dis powered are going to be more
subject to things like surveillance, more subject to non consensual
(32:04):
usage of their content kind of way that it can
be used to further harm them, you know, not give
them the medical benefits they need, this sort of thing
because of something they had said on social media. You
can get into really nasty territory in terms of the
rights to the general public, the rights that people have.
Speaker 4 (32:25):
Hugging faces Chief Ethics Scientists Margaret Margaret Mitchell, thanks so
much for joining us, Margaret, do appreciate it well. Now
Carson Block, founder and CEO of short Sellar Muddy Waters
sat down with Bloomberg's Huslinda Men to discuss Elon Musk's
Empire and Testless Future in particular.
Speaker 2 (32:41):
Check it out.
Speaker 15 (32:42):
It's one thing to ask whether you bet on Elon Musk,
but I would not bet against him, So I don't
count the capital structure arbitrage trade is betting against him
because it was pretty edged.
Speaker 2 (32:53):
Maybe that's me being.
Speaker 15 (32:54):
Intellectually disingenuous, but I wouldn't bet against him.
Speaker 5 (32:58):
Now.
Speaker 15 (32:59):
In terms of the robotaxis literally, I think he's been
saying that Tesla's robotaxi capability is imminent. I think he's
been saying that since twenty sixteen, So you know, take
take that with a grain of salt, and you do
see in the US in Weimo is offering robotaxi services
(33:19):
where I live in Austin, it won't drive on the freeways.
Speaker 7 (33:24):
You know.
Speaker 15 (33:24):
My understanding is that Tesla's technology, because they won't use lidar,
is not up to par with with Weimo.
Speaker 2 (33:33):
Or even with Cruise. So yeah, I'd be skeptical of that.
Speaker 15 (33:37):
I mean, do they find appliable local or state government
somewhere in the US that says, okay, you can run
the service here.
Speaker 8 (33:45):
Yeah.
Speaker 15 (33:45):
Maybe, but I don't think it's you know, I mean
even WEIMO is not ready for prime time if you're
not driving on the freeway.
Speaker 14 (33:51):
So, Carson, would you be a buyer of Tesla.
Speaker 3 (33:53):
Then or not?
Speaker 15 (33:55):
Well, I'll check with the quantitative screen that we have
and let you know.
Speaker 16 (34:00):
But as it stands now, as it stands now, I mean,
given where he is with Trump, given his relationship with Trump,
given the chances of him being able.
Speaker 3 (34:10):
To influence regulation for instance displayed.
Speaker 2 (34:13):
Ge you calculation, Well, that's really a double edged sword.
Speaker 15 (34:16):
And one of the things that I was just you know,
marveling over on the sixteen and a half hour flight
here was when you look at how Elon Musk has
really changed his positioning politically over the years. It needs
to be darling of the left right, you know, pounding
the table that oh, we need to electrify the economy,
(34:37):
we need electric cars or else we're going to die
as a civilization. We're killing ourselves with CO two emissions,
et cetera.
Speaker 2 (34:45):
I mean, politically, we know that.
Speaker 15 (34:46):
He's totally switched Poles, but I mean he's allied himself
very closely with the no, let's be realistic here about
energy transition. If we're going to transition, we need natural gas,
nuclear and you know, electrification is a pipe dream. We
don't have the battery technology. I mean, that's what the
smarter people on the right, and I happen to agree
(35:09):
with those views. That's what they're saying. So Elon Musk
is now aligned with them. So my question is with
all the focus that he's putting, all the energy is
putting into Doge, which, by the way, I'm ahead of
the election, I had no idea whether this was really
just him trying to be a provocateur or whether.
Speaker 2 (35:28):
He was serious.
Speaker 15 (35:28):
He's serious, he's really focusing on on this Doge, and
I think he's actually doing some very interesting things there.
But my question then is in his head, has he
basically has he admitted.
Speaker 2 (35:43):
To himself that Tesla is.
Speaker 15 (35:46):
It's never going to be. It's that electric vehicles are
a long long way away from supplanting ices, and that
it's really a niche product, and that it's you know,
and has he convinced himself that no, we shouldn't be pushing,
you know, running head you know, headfirst into trying to
(36:07):
electrify the grid or trying to electrify our economy. I
wonder if he's I suspect he has switched views on
a macro level, but especially with how he thinks about Tesla,
that would be a little bit embarrassing for him to
say publicly. So yeah, maybe just banging the table about
oh ai AI and robotaxis is how he tries to
(36:28):
cover up that sentiment shift internally.
Speaker 3 (36:32):
That was Muddy Waters founder and CEO Carson Block, along
with Bloomberg's has Linda. I'm in coming up big text,
big pullback from DEI. The CEO of inclusion benchmarking platform
Paradigm joins us. Next, this is Bloomberg.
Speaker 4 (36:51):
Well, following the lead of the Trump administration, some tech companies,
including Google, Meta, and Amazon are scrapping or rolling back
DEI diversity, equity.
Speaker 2 (36:59):
And inclusion programs.
Speaker 4 (37:01):
For more on what this change of direction could mean,
we're joined by Joel Emerson. She's the co founder and
CEO of Paradigm. It's a platform that helps companies improve
and benchmark inclusion efforts. Joelle, good to see you. You know,
I'm curious, I would imagine you kind of have a
problem with the premise of the question here, because you
argue that these companies are not in fact rolling back
(37:22):
their DEI programs. But I got to tell you, it's
what it looks like to me.
Speaker 17 (37:27):
You know, I think it's a moment of evolution. Definitely,
the legal, political.
Speaker 14 (37:31):
Social landscapes are changing.
Speaker 17 (37:34):
But what I see, especially from the companies that we
work with, is this desire to refocus efforts on programs
that create fair and inclusive cultures for everyone.
Speaker 14 (37:44):
And the good news is that that's a goal that's.
Speaker 17 (37:46):
Pretty universally popular, and I think, you know, that's going
to require us some evolution. It's going to look like
a shift away from maybe some of the more performative
or high visibility but less impactful to employees types of
programs that companies might have been focused on, the last
several years. And I don't think that's necessarily a bad thing, Joell.
Speaker 3 (38:07):
For some of the people that this might affect, the
underrepresented groups, people of color, women, it's somewhat emboldening when
you see companies really taking a stand and making their
stands known publicly. What are some of the drawbacks though,
of perhaps pulling some of this language back, Even while
some of these programs are still going on behind the scenes.
Speaker 17 (38:30):
I think the risk is that companies are going to
signal in some of their messaging that they no longer
care about casting a wide net for talent. They no
longer care about building cultures where people from all backgrounds
and all identities can come together and do their best
work and thrive, which, you know, communicating that you care
about those things is actually pretty essential to building a
future ready company. It's the type of thing that attracts
(38:53):
the best employees. It's the type of thing that unlocks
engagement and performance. When you feel like you belong, you
believe your company cares about these things. So I think
what companies should do if they truly do still care
about those goals but just don't want to be associated
with this now highly charged acronym DEI is communicate more
precisely about what it is they're actually going to be doing.
Speaker 14 (39:14):
So maybe they are no longer.
Speaker 17 (39:16):
Going to be tying you know, executive compensation to hitting targets, which,
by the way, is the type of thing we haven't
seen be all that impactful. It's focused on sort of
one of the most lagging indicators of whether you're building
an equitable, inclusive culture and instead talking about how are
we going to build a culture for everyone? How are
we going to take a look at what's happening in
(39:37):
our hiring process and make sure that people from all
backgrounds have a fair shot at getting hired here, How
are we going to make sure that we're looking at
things like who gets promoted or who stays and who leaves,
and if we're consistently looking at those things and we're
addressing any problems that we identify, I think that'll help
employees understand that, you know, the acronym wasn't.
Speaker 14 (39:57):
Really what mattered.
Speaker 17 (39:58):
What mattered is are we actually doing the things that
make our culture more diverse, more fair, more inclusive. And
those are actually the types of things that buy and
large I see companies continuing to.
Speaker 4 (40:08):
Focus on I imagine that you have data that shows
that there's a business case for doing this. If that
is indeed the case, then why doesn't the free market
solve this? Or do you think that the free market
could solve this?
Speaker 17 (40:20):
I actually think the free market does solve this to
some extent, which is why I'm not that concerned that
companies are going to stop doing the things that help
them compete for the best talent that help them build
cultures that unlock performance.
Speaker 14 (40:32):
But I think the business case is complicated.
Speaker 17 (40:34):
It's not true that you just make your team, you know,
somewhat marginally more diverse, and magic happens in your share
price goes up. I think you know what actually tends
to unlock performance, what actually tends to drive better business outcomes,
is some of the hard work of building a healthy
and inclusive culture. Culture is where people are going to
speak up if they have an idea that might diverge
(40:54):
from the norm. Cultures where people who are different from
each other, which is increasingly true as workplaces just become
more diverse because the population is becoming more diverse. Creating
a culture where people who are different from one another
can come together and collaborate effectively and communicate effectively. These
things really do matter to company performance, and I don't
always think it's so obvious whether you're doing that, or
(41:15):
whether or not or you know, companies are pretty complex.
It's not always obvious which things are contributing to which outcomes.
So I think it's important to continue to remind companies
that you know, a lot of the things that formerly
might have been categorized under the bucket of DEI are
actually pretty universally popular and uncontroversial. Things like making sure
that you're opening up access to your company to people
(41:36):
from different backgrounds, like veterans who might not have known
about the technology industry. Things like robust parental leaf policies
so that caregivers can return to work and continue their
careers after taking time off to have a child.
Speaker 14 (41:50):
Things like promotion practices that.
Speaker 17 (41:52):
Make sure that we're applying the same standards to everyone
so it's the actual best person and not just the
person who's closest friends with the manager who has an
opportunity to grow. The vast majority of things that we
categorize previously under this bucket of DEI, they help companies
perform better, they make organizations more fair, and the vast
majority of people think they're a good idea.
Speaker 14 (42:12):
And those are the types of things that I just
don't see companies shifting.
Speaker 3 (42:15):
Away from that. Show Elamerson, CEO of Paradigm, thanks for
joining us. Coming up, we'll discuss what to expect from
Apple's event tomorrow. This is Bloomberg Apple CEO Tim Cook
teasing last week the arrival of quote the newest member
(42:36):
of our family, Bloomberg Intelligence analyst Anna A. Grano, joins
us now with more anrog what can we expect next week?
Speaker 18 (42:43):
It's really looking forward to their the cheapest phone that
they have, the iPhone. I see coming up with a
big bang. Mark Gorman's already told us about it in
terms of the foster processor and the larger screen. I
think this is a good thing for Apple because they're
really struggling to really break the market share both in
China and India and Brazil in terms of getting a
(43:06):
bigger piece of that pie, and a cheaper phone can
really help them do that.
Speaker 3 (43:10):
That's Bloomberg Intelligences, Anna Igrana, thanks for joining us, and
that does it for this edition of Bloomberg Technology. Don't
forget to check out our podcast. You can find it
on the terminal as well as online apples, Spotify and
iHeart This is Bloomberg
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde and.
Speaker 2 (00:20):
Ed Ludlow live from New York.
Speaker 3 (00:36):
I'm Tim Steneveek and I'm Jackie Devalas in San Francisco.
This is Bloomberg Technology coming up. Intel shares are soaring
on reports that both TSMC and Broadcom are only potential
deals that would split the US chip making Giant. In
two plus, Elon Musk's artificial intelligence startup XAI showcases it's
(00:57):
updated Grock three model, a rush challenge to open AI,
and we'll dive into concerns around AI safety as companies
and governments appear to change their attitudes on how to
make the technology safer. But first let's look at markets. Tim,
what are you looking at?
Speaker 4 (01:12):
I'm looking at the Nazaq one hundred, searching for a
little bit of direction you can see down not even well,
not even one tenth of one percent, bouncing between gains
and losses throughout the session so far, Traders watching the
latest geopolitical developments. All eyes are what's happening in Eastern Europe.
This is the US and Russia agreed to more talks
on resolving the war in Ukraine, but set no date
(01:34):
for a summit meeting between Donald Trump and Vladimir Putin
Ukraine's of Vladimir's Olenski canceling his visit.
Speaker 2 (01:41):
To Saudi Arabia. So we'll bring you updates on that
as we do get them. I am watching.
Speaker 4 (01:45):
Shares of Intel though, up about ten percent as we speak,
surging after the Wall Street Journal reported that both TSMC
and Broadcom are molling separate potential deals that would split
Intel into two. Now the journal is reporting that Broadcom
would be interested in the chip design and market business. Well,
TSMC is apparently interested in Intel's chip plants. Today's serge, though,
(02:08):
does come after Intel had its best week all the way.
Speaker 2 (02:11):
Going back to the year two thousand.
Speaker 4 (02:13):
Shares rows more than twenty percent last week on reports
that the US government is possibly getting involved with a
plan that involves both Intel and TSMC.
Speaker 3 (02:22):
Jackie, let's get right too with Bloomberg's Bryan Westelica. Ryan,
let's talk about those chip plans which Intel is operating
currently at a loss. What could a potential deal with
TSMC mean for that business.
Speaker 5 (02:35):
Hey, good afternoon, thanks for having me. So.
Speaker 6 (02:37):
Yeah, so a lot remains unclear right now, but certainly
this has been a real drag on Intel for quite
an extended period of time. Obviously, the previous CEO invested
heavily in the foundry business, you know, billions of dollars
and really see too much of a return on that.
It is well behind TSMC and Samsung. So people are
really looking to see if there is any kind of
(02:59):
you know, sort of resk you for the foundry business
that is really expected to really support Intel. If there
is some kind of deal coming to fruition.
Speaker 4 (03:08):
Ryan, what would be left of Intel if it's TSMC
and Broadcom were to succeed in this as reported by
the journal.
Speaker 5 (03:18):
Yeah, that's a great question.
Speaker 6 (03:20):
Again, so many details are still up in the air,
not yet confirmed. I mean, you know, there is such
a focus on domestic manufacturing. Intel got a lot of
money from the Chips Act. It was building out a
factory in Ohio, for example, So there is certainly a
geopolitical aspect to this. People want to see more domestic
chip manufacturing, and if TSMC is able to work with
Intel in some capacity, obviously that would probably be good
(03:42):
for PSMC to have more of a domestic presence here,
certainly good for Intel. But again, we really don't know
what any of this is going to end up looking like,
if anything does come to fruition.
Speaker 3 (03:53):
Ryan, Let's talk about some other non sexy names in tech,
like IBM and Cisco. You wrote this morning that they're
kind of seeing a run up and showing themselves to
be AI contenders. What's leading this enthusiasm.
Speaker 6 (04:06):
Yeah, so Cisco last week gave a pretty positive revenue
forecast talking about the demand it is seeing related to
all the AI infrastructure that is being built out. IBM
earlier this year had a pretty strong forecast of its own,
some strong long term sales targets. These are two companies
that you know, were sort of forgotten by a lot
of investors. They are nowhere near you know, like you said,
(04:29):
they're sexy heydays like Cisco still below its dot com
erapeak from two thousand, but you know, as it's starting
to see a little bit more of a growth narrative,
especially really to AI, people are taking another look. These
are stocks that are you know, trading at pretty considerable
discounts to the max seven names. They have pretty strong
dividend yield. So in a period of time when people
are maybe wondering, have the Max seven gone too far?
Speaker 5 (04:50):
Is this story already priced in?
Speaker 6 (04:52):
Having some new AI stocks in there, especially mature companies
with pretty solid cash flow and dividends and so forth
trading at lower multiples, you can see white people might
be taking another look at them.
Speaker 4 (05:02):
Well, let's stick with the Mag seven. Bloomberg's Ryan Vistelica
joining us from Chicago. Always good to see you, Ryan.
For more, I do want to bring in Dana Dioria.
She's group president over at invest Net Solutions, also co
chief investment officer at invest Net. Dana, we heard Ryan
just now talking about the Mag seven. It's more than
thirty percent of the makeup of the S and P
five hundred, those seven stocks. How are your clients diversifying
(05:26):
away from the MAG seven? Are they overinvested in them?
Speaker 5 (05:30):
Well?
Speaker 7 (05:30):
I mean so, beauties in the eye of the holder, right,
So there's a lot of you know, research that suggest look,
if you are invested.
Speaker 8 (05:38):
In the market, the market, the market's.
Speaker 7 (05:40):
Determination is this is what these stocks are worth, and
you know they're invested where they should be. I think
a lot of our clients though, are looking at that,
and obviously on investment, we're talking about retail clients with
advisors managing our assets, and they look to diverse.
Speaker 8 (05:56):
By in other places. They look to have an overall
globally allocate portfolio.
Speaker 7 (06:00):
That has international investments that perhaps leans a little bit
into small caps. But let's be honest, if you are
you know, more than fifty cents on the dollar that
goes into our platform goes into passive assets. So if
you're there, you've got a ton of you said it yourself,
it's it's thirty percent right of the SMP. But even
if you're in an actively managed strategy, it's very hard
(06:21):
at this point to have a ton of tracking error
to the passive index because it's performed so well in
the last several years.
Speaker 3 (06:29):
Dana, there's a couple of different ways that we can
look at tech companies. Now you have software, hardware, enterprise
and then the consumer focus. How are you thinking about
how to bucket these sorts of investments going forward and
the sorts of catalysts you're looking from each bucket?
Speaker 7 (06:46):
Well, so I think you know, for the average client
on the platform, it's more about the sector, and it's
more about, you know, where is the sector from a
market cap weighted perspective within the indexes. And then if
you're in say a Rust one thousand growth actively managed strategy,
how are the how is that manager doing that bucketing?
Speaker 8 (07:06):
How are they thinking about playing the AI trade? For example?
Is it a question of you know, do I diverse by.
Speaker 7 (07:13):
Again away from saying Nvidia right, and and this has
been a big struggle for them because you know, you
have to meet forty act rules around diversification in a
lot of cases, and it's hard to do when you
have more than fifty percent of say the Russell one
thousand growth uh, you know, invested in these mag seven
And so I think that bucketing helps where a good
active manager who's able to look at the tech sector
(07:36):
and say, okay, you.
Speaker 8 (07:37):
Know, I see opportunity sets.
Speaker 7 (07:39):
Maybe in some of these suppliers to big you know,
to the MAG seven right, and these different parts of
the market where I can still kind of take that
growthy bet on AI and tech, but.
Speaker 8 (07:51):
Not necessarily you know, be so heavily focused.
Speaker 7 (07:55):
On the MAG seven and you know, not meeting those
diversification roles. So I think that's something that you know,
these managers struggle with and every time we see sort
of a dip, you know, it's a question is it
a buying opportunity to kind of leg more into those
types of things as opposed.
Speaker 8 (08:12):
To actually diversifying.
Speaker 3 (08:14):
You know, that's kind of the question where can we
find certainty? And I know that's asking a lot given
these days, but when we think about where we can
see the tangible return, you have concerns around infrastructure capacity
and then at the same time and consumer you just
don't really know how these sorts of features are going
to be monetized. Which one do you think holds more
(08:35):
certainty for investors?
Speaker 7 (08:37):
Well, I mean, I think the energy theme has been
a huge one. It's it comes across and you know,
so we sit at the junction of hundreds of asset managers,
so we kind of get a good sense of where,
you know, the zeitgeist is sort of leaning, and I
would say to you that the secular trend and energy
has definitely been a theme.
Speaker 8 (08:53):
I also think people understand that this administration.
Speaker 7 (08:55):
Is probably going to be not like pro growth, but
you know, helpful and terms of energy centers, you know,
helping the energy sector in general. Here in the US,
and I have a view. You know that we're going
to have to meet the energy demands over the next
several years and into the next you know, decade, et cetera.
Speaker 8 (09:17):
You're going to have energy sources from everywhere. It just
is what it is.
Speaker 7 (09:20):
So sustainable, yes, you know, more traditional incumbent. Yes, We're
just not there yet to kind of transition over to sustainable.
So I think energy is a play that probably a
lot of investors have focused on for this and you know,
particularly with this administration, they see the opportunity set there.
Speaker 8 (09:38):
You know, even before AI.
Speaker 7 (09:39):
Right, our energy needs we're going to increase just looking
at demographic trends, population growth, you know, parts of the
world that are moving into a better standard of living,
which is what we obviously want to see. But all
of that is going to create energy demands even before
you get to the AI.
Speaker 4 (09:54):
Trade growth versus value. It's a debate that I've been
having with guests. I started doing this, Is this finally
the year? I mean, growth is one every year I've
been doing this, Is this finally the year that we
see value?
Speaker 2 (10:06):
I perform?
Speaker 8 (10:08):
It is so hard to be a value manager.
Speaker 7 (10:12):
You know, here's what I would say January effect is interesting.
It's not statistically significant, but you know, there's a little
signal in there. January did see out performance of value.
I think, look the notion that we are higher for
longer on interest rates. Traditionally speaking, that should benefit value,
right because more of those cash flows are coming earlier,
(10:33):
and so when you have a higher discount rate, the
growth stocks should theoretically be impacted worse by that because
they have more longer dated cash flows, more years that
you have to discount by a higher number.
Speaker 8 (10:45):
So yeah, theoretically there's some makings for that there, but.
Speaker 7 (10:48):
We all know the AI trade can just you know,
and or other secular trends can can just blow that
out of the water.
Speaker 8 (10:54):
So it's very hard I think in the short run
to say what will win what won't win.
Speaker 7 (10:58):
I will say, you know, I think at the end
of the day, valuation will always still matter.
Speaker 8 (11:03):
It matters more for medium term expect and return.
Speaker 7 (11:05):
To try to trade on it in the short run
is you know, it doesn't have a good track record
for that.
Speaker 3 (11:11):
There's hope yet for value investors. Dana Doria from Investment
thanks for joining us Elon Musk's XAI has debuted its
latest GROP three model, promising advanced reasoning and even a
new smart search feature. This comes just days after Musk
(11:34):
made an unsolicited bid to buy Sam Motman's open Ai,
which was ultimately rejected for more. Bloomberg Intelligence analyst man
Deep Singh joins us Now, Man Deep, what do you
make of this model? How does it stack up to
xai rivals?
Speaker 5 (11:47):
Yeah?
Speaker 9 (11:47):
Look, I think what they have showed is another reasoning
model that can do well on certain benchmarks, and clearly
was trained on one of the biggest clusters out there.
Speaker 2 (11:58):
And you think about you know the number of.
Speaker 9 (12:00):
GPUs they use for this model, So is there anything groundbreaking?
Speaker 5 (12:04):
I don't think so.
Speaker 9 (12:05):
But at the same time, what they're showing is all
these llms are narrowing, you know, the capability gap they
had with open ai, and I still think open ai
is the preferred model when it comes to the usage
and the distribution they have created for themselves. It would
be interesting to see how much upsale xai can have
(12:26):
on their own platform, Twitter and whether users are willing
to pay a subscription. That will be the real test.
But clearly I think it scores well on all the benchmarks.
Speaker 2 (12:35):
Mandeep.
Speaker 4 (12:36):
Is the market big enough now and in the future
for Claude, for chat, GPT, for you know, whatever comes
next that's being worked on right now. Is it smart
enough for Gemini? Is it big enough for Gemini? Do
we need all of these?
Speaker 5 (12:53):
Yeah?
Speaker 9 (12:53):
Look, I mean we just got off the earning season
in the past one month, and it's very obvious that
everyone is doubling down when it comes to their capex investments.
So the market is big enough to answer your question.
At the same time, our view is that the field
is narrowing when it comes to the foundational model players.
And that's where, you know, only the ones with deep pockets,
(13:13):
your hyperscalers or XAI for that matter, that can spend
on these you know, billion dollar training runs will be
the ones who would have the foundational models and they'll
try to roll it out for all the applications to use.
Speaker 4 (13:25):
Bloomberg Intelligence analyst Mandeep saying and joining us here in
New York, Mandy, thanks so much.
Speaker 2 (13:30):
Well sticking with AI.
Speaker 4 (13:31):
Meanwhile, open ai co founder Ilias at Skimer is looking
to raise more than one billion dollars for his startup,
Safe Superintelligence. It could value the company at over thirty
billion dollars. According to sources. San Francisco based VC firm
Green Oaks Capital Partners is leading the deal. For more
Bloomberg's Kate Clark joins US now here in New York.
(13:52):
So where does this company sit in the AI world?
Speaker 10 (13:56):
Well, this company is brand new. It was founded in
June of last year, which its valuation even more incredible.
The company is trying to create a safe superintelligence, so it's.
Speaker 3 (14:06):
All in the name.
Speaker 10 (14:07):
But otherwise we don't know very much about this company.
It is very secretive, it is very much under the radar,
and it's just getting started.
Speaker 3 (14:15):
Kate, what do we know about why investors are interested?
As you mentioned, it's super new, it's not really generating
much revenue. And you add on to the fact that
kind of the word safety is almost coming out of
vogue this year amid a new administration that doesn't really
seem to put too much importance on responsible AI. What
(14:35):
do you make of that? Like, what's kind of the
hook here for a VC that's investing in this company.
Speaker 10 (14:41):
There's one huge clear hook, and that's the founder, Iliasitzkiber, which,
as you both know, is a co founder of open ai.
Longtime chief scientists and a chief architect of those aim models.
People really truly believe that he is a singular force
and that whatever he builds will be a massive, massive success.
The company has zero revenue and we won't see a
product for years most likely, as it seeks to create
(15:05):
this safe super intelligence. So truly it is all about
the founder in this one, and that is what's justifying
this thirty billion dollar valuation, which by the way, makes
this one of the most highly valued companies in the world.
And I don't have the statistics in front of me,
but I think having zero dollars in revenue and evaluation
that high is pretty rare.
Speaker 4 (15:23):
I feel like you're, you know, you're sort of emphasizing
the fact that this company doesn't have a product at
this point and it's all on the founder and it
could be worth billions of dollars at this point.
Speaker 2 (15:31):
Can we can we say froth or VC saying froth.
Speaker 3 (15:34):
Vcs are saying froth.
Speaker 10 (15:35):
I mean vcs are also saying this is a once
in a generation moment, and they want to get on
board with people like Ilia because they do believe that
they will someone like him can create the next trillion
dollar company. So if you believe that, then sure it's
a great moment. But I think outside of you know,
maybe Ilia is a unique person who really will create
that super intelligence. But you're seeing tens of billions of
(15:56):
dollars go into one year old, two year old companies.
It'll take five to ten years before we know how
much money venture capitalists will lose, but they will lose
a lot of money.
Speaker 3 (16:06):
That's Bloomberg's Kate Clark, thanks for joining us. Coming up,
we speak to Cato Network CEO Shlomo Kramer as the
company sees a big revenue boost in twenty twenty four.
This is Bloomberg.
Speaker 4 (16:44):
Elon musk Dos team is said to be attempting to
gain access to a broad range of taxpayer data, raising
concern from Democratic lawmakers over privacy concerns. Strict US laws
prohibit the disclosure of taxpayer data, with some exceptions for
law enforcement resources.
Speaker 2 (17:00):
The team is seeking the data but has not yet
accessed it.
Speaker 3 (17:04):
Jackie cybersecurity firm Cato Networks as they surpassed two hundred
and fifty million in annual recurring revenue for twenty twenty four.
That's a jump of forty six percent compared to the
year prior. Here with us is Cato Network CEO Shlomo Kramer. Solomo,
at a time when companies are really on the hook
to show that they can deliver, can you tell us
(17:25):
where this demand is coming from.
Speaker 11 (17:28):
The demand is coming from all sizes of organization that
faces increased complexity of point solution and are looking for
a platform to deliver the network security with operational efficiency
and business agility. So it's all about digitively transforming IT
(17:52):
security to serve the digitive business.
Speaker 2 (17:56):
Soloma.
Speaker 4 (17:56):
Are you seeing a decline in demand in terms of
total spent on this sector due to investment in AI
or are you seeing investment grow here?
Speaker 11 (18:09):
We are seeing consistent increase in spending on IT security. Actually,
in the four years following COVID, spend of IT security
out of IT budget has gone forty percent, while we
are not more secure now than we were four years ago.
(18:31):
So actually this is actually the increase in spend is
the core problem that platforms such as Kato solved.
Speaker 2 (18:41):
So how do we get.
Speaker 4 (18:42):
More secure If people are and companies are spending more
money but they're not seeing the results when it comes
to security, how do we get more secure?
Speaker 11 (18:49):
We replaced the fifty point products that an average CISO has.
With three four call platforms, you know, a platform on
the endpoint, a platform on the cloud, a CATO on
the network side, all integrated together. It's much more manageable,
(19:14):
it's much more agile. You can say yes to the
business and you can fit it within the budget and
talent that you have.
Speaker 3 (19:23):
Let's talk about venture capital. Investors are pretty excited about
cybersecurity startups. They raised a bunch of money in twenty
twenty four. You US raised around in twenty twenty three,
two hundred and thirty eight million dollars. I mean, is
an IPO next for you this year?
Speaker 11 (19:37):
As a growth company, we have many different options, both
public and private, and the real goal here is to
build a long term leader in this new category called
SASS platform for network security.
Speaker 3 (19:57):
Do you see that being as a possibility this year though?
I mean, if you were to perhaps speculate on who
potential buyers could be, perhaps not just for your company,
but kind of in the space in general. As we
see M and A tick up, what are you seeing?
Speaker 2 (20:10):
Well?
Speaker 11 (20:10):
Really heads on, heads down on building CATO and I
can't I won't circulate on any financing M and a
events this year.
Speaker 4 (20:25):
What would be the next financial benchmark? Though you did
say you've surpassed two undred and fifty million in arr
for twenty twenty four, what's the next benchmark?
Speaker 11 (20:34):
So you know, Governor assess is the market is going
twenty six percent AEOV to twenty eight billion dollars in
less than four years, and we last year we go
(20:55):
much more than that, and we fully expect to go
this year also more than the market and take market
share and continue to build the company.
Speaker 4 (21:07):
What would you say is the market size?
Speaker 2 (21:10):
It's a huge market, you know.
Speaker 11 (21:13):
Essentially, a SASE our category is the third generation of
network security. It replaces the second generation, which are the appliances.
These are many tens of billions of dollars that are
going to be re architected and five to seven years
from now, eighty to ninety percent of appliances are going
(21:36):
to be replaced by a SASE cloud implementation. So there's
a huge potential and we are just in the beginning.
Less than fifteen percent of enterprises have started implemented SASE,
and more than almost fifty percent of enterprises are saying
(21:57):
that they are going to implement US in the next
three years. So this is literally the money time of
this cut.
Speaker 4 (22:04):
And goalie Shlomo Kramer, CEO of Cato Networks, thanks so
much for joining us to appreciate it. Welcome back to
Bloomberg Technology. I'm Tim Stenoveek in New.
Speaker 3 (22:20):
York and I'm Jackie Devalis in San Francisco.
Speaker 4 (22:24):
Let's get a check on the market. So I do
want to take a look at shares a super Micro,
which are just surging. Look at that up thirteen percent.
It's exciting gain three fourth session in a row. This
after the totally beat up chip maker issued an aggressive
long term revenue outlook and pledged to meet a Nasdaq
deadline to file auditive financial results. Super Micro has rallied
almost ninety percent this month, putting it on track for
(22:46):
the best month going back to May of twenty twenty three,
and it looks like it finally could happen meta platforms
the parent company on Facebook, Instagram, WhatsApp, and more, halting
that twenty day winning streak, shares adding more than twenty
percent over that record run, though shares down about two
point three percent in today's session.
Speaker 2 (23:05):
Well.
Speaker 4 (23:05):
Creators of a new AI chat bought often claim their
model is the best the website. Chat Bot Arena puts
those claims to the test, allowing users to test and
rank these programs, and bans of the site likely knew
that Deep seeks are one model would challenge us.
Speaker 2 (23:20):
Built rivals Bloomberg.
Speaker 4 (23:22):
Seth Figgerman is here to tell us more about chat
Bought Arena.
Speaker 2 (23:25):
What happens on this site.
Speaker 12 (23:26):
Well, it seems thinking that the fate and the temperature
of a billion dollar industry is being largely shaped by
a bunch of students that you see Berkeley.
Speaker 5 (23:34):
It's basically a blind test.
Speaker 12 (23:35):
You know, people can try out, I think something two
hundred different models on the site and put two of
them against each other. They don't know what they are,
and they'll ask a question and see which one does better,
and then they'll vote it up or down. And based
on that crowdsource ranking, we'll see which rankings which models
are at the top of the leaguerboard. So Deep Seek
grows up pretty high for months leading up to the
launch that captivated everyone, and today as we speak, Grock
(23:58):
three is rigging high there too, So it's become a
real bragging right for some of the industry.
Speaker 3 (24:02):
But Seth talk to us about some of the risks
of some of these crowdsourced platforms that allow us to
benchmark how well one model is versus another. What can
go wrong?
Speaker 12 (24:13):
Yeah, it's a great question. I mean, first off, it's
not definitive. It seems definative, But these are systems that
could be rigged, and they're starting not being tests for
every different use case. I think the real point here
is that one, there are not that many, you know,
really agreed upon benchmarks right now for AI systems, and
as these systems get better, there's even fewer. I think
you're seeing hyperbolic name things like Humanity's last Exam for example,
(24:33):
as a mogul with test that with And I think also,
you know, at the end of the day, a lot
of this as vibes. You know, these systems are all
kind of similarly competitive right now, so what might feel
good for one person may feel different for another.
Speaker 3 (24:45):
Always the vibes Bloomberg set viagram and thanks for joining us.
Concerns around AI safety appear to be shifting, and companies
and governments are starting to change the language they use
to talk about the topic. Doctor Margaret Mitchell is the
chief Ethics Scientists for hugging Face, an open source platform
for building and training AI. Margaret talked to us about
(25:06):
the shift and tone that we're seeing not just from
lawmakers but also from companies as they're starting to really
reckon with the fact that weren't a completely different eras
or relates to AI safety.
Speaker 13 (25:20):
Yeah, so in the US, we've seen a shift with
US companies so like Meta and Google removing some of
the language that they had in their various terms of
use and sort of responsible practices. So it's less focused
on things like accountability, less focused on not participating in
surveillance that sort of thing, and less of a focus
(25:43):
on this general concept of safety. And there was recently
this AI Action summit where jd Vance came and spoke
and said that he thinks that the focus should now
be on opportunity and it seems like the larger tech
companies are our following suit on.
Speaker 4 (25:57):
That, Margaret, If the large tech companies aren't necessarily the
ones who put the framework into place when it comes
to rules regulations, does the government need to step in?
Speaker 2 (26:10):
What's your view there?
Speaker 13 (26:12):
Yeah, So my view of the role of government, and
people have different views here, is that the government should
be set up to protect the people, not to protect companies,
you know, creating a marketplace of ideas that companies can
sort of thrive in, but ultimately stepping in where companies
can't step in, in order to make sure that there's
(26:32):
a level playing field that everyone can do the responsible
thing within the context of market dynamics where you might
accidentally destroy your company if you're trying to do all
the things that are the best for the people. Right Like,
companies exist to make money, and so there needs to
be a counterbalance that sort of thinks about, well, what
if we're not making money, what if we care about people,
(26:55):
and what can we put in place for all companies
to abide, buy and then change the market place dynamics
in light of that leveled playing field.
Speaker 4 (27:02):
Well, David Sachs's Crypto and AIS are you confident that
the Trump administration will put into place policies that will
protect people.
Speaker 14 (27:13):
I think the jury is still out on that.
Speaker 13 (27:17):
There definitely is interest in growing the economy, so they've
spoken a lot about creating healthy competition that sort of thing.
Speaker 14 (27:27):
I haven't seen.
Speaker 13 (27:27):
As much of their thoughts on protecting people and what
that is. I think right now there's sort of a
reactionary force. So there's always pendulum swings and ethics. People
care a lot about ethics and safety and things like that,
and then people absolutely do not. I think we're having
a little bit of a pendulum swing right now, back
(27:48):
to not being.
Speaker 14 (27:50):
As concerned about foreseeable risks.
Speaker 13 (27:53):
But you know, hopefully the government will listen to the
will of the people and step in where no one
else will help them.
Speaker 3 (28:00):
Margaret, Just a couple of years ago, we had companies
and just a wide swath of the AI community coming
out and highlighting the existential risks. Some of these AI
safety groups of dubbed as dooomer types if you will.
Elon Musk has a growing influence in Washington, and he's
been one of those at the forefront of kind of
(28:21):
highlighting these existential risks as he's building his own AI technology.
What do you make of his influence, but also the
existential risks that have been raised before.
Speaker 14 (28:34):
Yeah, so there's a lot to unpack there. This is
a really big discussion in ethics circles.
Speaker 13 (28:39):
There's a little bit of an issue where people who
focus on existential risks tend to drown out the concerns
about current discrimination, so that causes a little bit of
tension in ethical discussions. Elon Musk in particular, I'm pretty
concerned about the role he has throughout the government right now,
but within that's a AI in particular, he doesn't seem
(29:02):
to be someone who would really stand up for making
sure technology is not discriminatory or doesn't disproportionately harm some subpopulations.
Speaker 14 (29:13):
So there's a pretty big risk there.
Speaker 13 (29:16):
Existential risk is now less of an issue within the
past few months, we've seen some stepping down from that
as part of these pendulum swings, and so one would
hope that that would mean that the immediate and current
harms of AI would have more of a center stage.
But as it seems to be right now, neither current
harms nor foreseeable harms are really much of the focus.
Speaker 3 (29:41):
Even coming out of the Paris AI Action Summit, so
much of the language shifted from safety to security, the
UK Safety Institute being rebranded as the UK Security Institute.
Where should we look to as a leader for you know,
how to build not just innovative technology but also responsible
(30:02):
AI technology.
Speaker 13 (30:04):
Yeah, so there's a bunch of different ways to kind
of approach This one is via governments, and one is
via different companies. So like one the company I work for,
Hugging Face, takes an approach of being transparent and open
because that's a way of making yourself accountable to people.
So even in the in marketplace dynamics where you're sort
(30:25):
of going for profit, you also have to show your
work and that you're doing responsible things. So this is
an area where openness can really be helpful in helping
drive forward responsible practices. And then you know, there's also
been a lot of really nice work in the EU
on legislation. The EU and the US are not currently
fully aligned on what to prioritize, but I've definitely appreciated
(30:47):
a lot of their work on legislation that looks at
foreseeable harms and risks as well as benefits.
Speaker 2 (30:52):
Margaret, what are the stakes here? Like?
Speaker 4 (30:54):
What could go wrong if we don't get this right
as a society.
Speaker 13 (31:00):
Yeah, So we're in a situation right now where there's
a large centralization of power for the AI companies and
the larger ones, and they're accruing a lot of wealth
while a lot of other people are losing their jobs,
and so there's more and more of a divide between
the have nots and the have yachts, as Trudeau said recently,
(31:23):
So you're really seeing that the wealthy people are getting
wealthier and people who are just struggling by are losing
their jobs or having their data used in these AI
systems that then the larger tech companies are benefiting from
while they can't even get you a basic basic income.
Speaker 14 (31:41):
So this massive divide is happening right now.
Speaker 13 (31:44):
There has been like some discussion about UBI like universal
basic income, but I haven't seen that really moving forward
in the AI world, despite the great idea there. And
so that's happening now. And then that also means that
people who are dis powered are going to be more
subject to things like surveillance, more subject to non consensual
(32:04):
usage of their content kind of way that it can
be used to further harm them, you know, not give
them the medical benefits they need, this sort of thing
because of something they had said on social media. You
can get into really nasty territory in terms of the
rights to the general public, the rights that people have.
Speaker 4 (32:25):
Hugging faces Chief Ethics Scientists Margaret Margaret Mitchell, thanks so
much for joining us, Margaret, do appreciate it well. Now
Carson Block, founder and CEO of short Sellar Muddy Waters
sat down with Bloomberg's Huslinda Men to discuss Elon Musk's
Empire and Testless Future in particular.
Speaker 2 (32:41):
Check it out.
Speaker 15 (32:42):
It's one thing to ask whether you bet on Elon Musk,
but I would not bet against him, So I don't
count the capital structure arbitrage trade is betting against him
because it was pretty edged.
Speaker 2 (32:53):
Maybe that's me being.
Speaker 15 (32:54):
Intellectually disingenuous, but I wouldn't bet against him.
Speaker 5 (32:58):
Now.
Speaker 15 (32:59):
In terms of the robotaxis literally, I think he's been
saying that Tesla's robotaxi capability is imminent. I think he's
been saying that since twenty sixteen, So you know, take
take that with a grain of salt, and you do
see in the US in Weimo is offering robotaxi services
(33:19):
where I live in Austin, it won't drive on the freeways.
Speaker 7 (33:24):
You know.
Speaker 15 (33:24):
My understanding is that Tesla's technology, because they won't use lidar,
is not up to par with with Weimo.
Speaker 2 (33:33):
Or even with Cruise. So yeah, I'd be skeptical of that.
Speaker 15 (33:37):
I mean, do they find appliable local or state government
somewhere in the US that says, okay, you can run
the service here.
Speaker 8 (33:45):
Yeah.
Speaker 15 (33:45):
Maybe, but I don't think it's you know, I mean
even WEIMO is not ready for prime time if you're
not driving on the freeway.
Speaker 14 (33:51):
So, Carson, would you be a buyer of Tesla.
Speaker 3 (33:53):
Then or not?
Speaker 15 (33:55):
Well, I'll check with the quantitative screen that we have
and let you know.
Speaker 16 (34:00):
But as it stands now, as it stands now, I mean,
given where he is with Trump, given his relationship with Trump,
given the chances of him being able.
Speaker 3 (34:10):
To influence regulation for instance displayed.
Speaker 2 (34:13):
Ge you calculation, Well, that's really a double edged sword.
Speaker 15 (34:16):
And one of the things that I was just you know,
marveling over on the sixteen and a half hour flight
here was when you look at how Elon Musk has
really changed his positioning politically over the years. It needs
to be darling of the left right, you know, pounding
the table that oh, we need to electrify the economy,
(34:37):
we need electric cars or else we're going to die
as a civilization. We're killing ourselves with CO two emissions,
et cetera.
Speaker 2 (34:45):
I mean, politically, we know that.
Speaker 15 (34:46):
He's totally switched Poles, but I mean he's allied himself
very closely with the no, let's be realistic here about
energy transition. If we're going to transition, we need natural gas,
nuclear and you know, electrification is a pipe dream. We
don't have the battery technology. I mean, that's what the
smarter people on the right, and I happen to agree
(35:09):
with those views. That's what they're saying. So Elon Musk
is now aligned with them. So my question is with
all the focus that he's putting, all the energy is
putting into Doge, which, by the way, I'm ahead of
the election, I had no idea whether this was really
just him trying to be a provocateur or whether.
Speaker 2 (35:28):
He was serious.
Speaker 15 (35:28):
He's serious, he's really focusing on on this Doge, and
I think he's actually doing some very interesting things there.
But my question then is in his head, has he
basically has he admitted.
Speaker 2 (35:43):
To himself that Tesla is.
Speaker 15 (35:46):
It's never going to be. It's that electric vehicles are
a long long way away from supplanting ices, and that
it's really a niche product, and that it's you know,
and has he convinced himself that no, we shouldn't be pushing,
you know, running head you know, headfirst into trying to
(36:07):
electrify the grid or trying to electrify our economy. I
wonder if he's I suspect he has switched views on
a macro level, but especially with how he thinks about Tesla,
that would be a little bit embarrassing for him to
say publicly. So yeah, maybe just banging the table about
oh ai AI and robotaxis is how he tries to
(36:28):
cover up that sentiment shift internally.
Speaker 3 (36:32):
That was Muddy Waters founder and CEO Carson Block, along
with Bloomberg's has Linda. I'm in coming up big text,
big pullback from DEI. The CEO of inclusion benchmarking platform
Paradigm joins us. Next, this is Bloomberg.
Speaker 4 (36:51):
Well, following the lead of the Trump administration, some tech companies,
including Google, Meta, and Amazon are scrapping or rolling back
DEI diversity, equity.
Speaker 2 (36:59):
And inclusion programs.
Speaker 4 (37:01):
For more on what this change of direction could mean,
we're joined by Joel Emerson. She's the co founder and
CEO of Paradigm. It's a platform that helps companies improve
and benchmark inclusion efforts. Joelle, good to see you. You know,
I'm curious, I would imagine you kind of have a
problem with the premise of the question here, because you
argue that these companies are not in fact rolling back
(37:22):
their DEI programs. But I got to tell you, it's
what it looks like to me.
Speaker 17 (37:27):
You know, I think it's a moment of evolution. Definitely,
the legal, political.
Speaker 14 (37:31):
Social landscapes are changing.
Speaker 17 (37:34):
But what I see, especially from the companies that we
work with, is this desire to refocus efforts on programs
that create fair and inclusive cultures for everyone.
Speaker 14 (37:44):
And the good news is that that's a goal that's.
Speaker 17 (37:46):
Pretty universally popular, and I think, you know, that's going
to require us some evolution. It's going to look like
a shift away from maybe some of the more performative
or high visibility but less impactful to employees types of
programs that companies might have been focused on, the last
several years. And I don't think that's necessarily a bad thing, Joell.
Speaker 3 (38:07):
For some of the people that this might affect, the
underrepresented groups, people of color, women, it's somewhat emboldening when
you see companies really taking a stand and making their
stands known publicly. What are some of the drawbacks though,
of perhaps pulling some of this language back, Even while
some of these programs are still going on behind the scenes.
Speaker 17 (38:30):
I think the risk is that companies are going to
signal in some of their messaging that they no longer
care about casting a wide net for talent. They no
longer care about building cultures where people from all backgrounds
and all identities can come together and do their best
work and thrive, which, you know, communicating that you care
about those things is actually pretty essential to building a
future ready company. It's the type of thing that attracts
(38:53):
the best employees. It's the type of thing that unlocks
engagement and performance. When you feel like you belong, you
believe your company cares about these things. So I think
what companies should do if they truly do still care
about those goals but just don't want to be associated
with this now highly charged acronym DEI is communicate more
precisely about what it is they're actually going to be doing.
Speaker 14 (39:14):
So maybe they are no longer.
Speaker 17 (39:16):
Going to be tying you know, executive compensation to hitting targets, which,
by the way, is the type of thing we haven't
seen be all that impactful. It's focused on sort of
one of the most lagging indicators of whether you're building
an equitable, inclusive culture and instead talking about how are
we going to build a culture for everyone? How are
we going to take a look at what's happening in
(39:37):
our hiring process and make sure that people from all
backgrounds have a fair shot at getting hired here, How
are we going to make sure that we're looking at
things like who gets promoted or who stays and who leaves,
and if we're consistently looking at those things and we're
addressing any problems that we identify, I think that'll help
employees understand that, you know, the acronym wasn't.
Speaker 14 (39:57):
Really what mattered.
Speaker 17 (39:58):
What mattered is are we actually doing the things that
make our culture more diverse, more fair, more inclusive. And
those are actually the types of things that buy and
large I see companies continuing to.
Speaker 4 (40:08):
Focus on I imagine that you have data that shows
that there's a business case for doing this. If that
is indeed the case, then why doesn't the free market
solve this? Or do you think that the free market
could solve this?
Speaker 17 (40:20):
I actually think the free market does solve this to
some extent, which is why I'm not that concerned that
companies are going to stop doing the things that help
them compete for the best talent that help them build
cultures that unlock performance.
Speaker 14 (40:32):
But I think the business case is complicated.
Speaker 17 (40:34):
It's not true that you just make your team, you know,
somewhat marginally more diverse, and magic happens in your share
price goes up. I think you know what actually tends
to unlock performance, what actually tends to drive better business outcomes,
is some of the hard work of building a healthy
and inclusive culture. Culture is where people are going to
speak up if they have an idea that might diverge
(40:54):
from the norm. Cultures where people who are different from
each other, which is increasingly true as workplaces just become
more diverse because the population is becoming more diverse. Creating
a culture where people who are different from one another
can come together and collaborate effectively and communicate effectively. These
things really do matter to company performance, and I don't
always think it's so obvious whether you're doing that, or
(41:15):
whether or not or you know, companies are pretty complex.
It's not always obvious which things are contributing to which outcomes.
So I think it's important to continue to remind companies
that you know, a lot of the things that formerly
might have been categorized under the bucket of DEI are
actually pretty universally popular and uncontroversial. Things like making sure
that you're opening up access to your company to people
(41:36):
from different backgrounds, like veterans who might not have known
about the technology industry. Things like robust parental leaf policies
so that caregivers can return to work and continue their
careers after taking time off to have a child.
Speaker 14 (41:50):
Things like promotion practices that.
Speaker 17 (41:52):
Make sure that we're applying the same standards to everyone
so it's the actual best person and not just the
person who's closest friends with the manager who has an
opportunity to grow. The vast majority of things that we
categorize previously under this bucket of DEI, they help companies
perform better, they make organizations more fair, and the vast
majority of people think they're a good idea.
Speaker 14 (42:12):
And those are the types of things that I just
don't see companies shifting.
Speaker 3 (42:15):
Away from that. Show Elamerson, CEO of Paradigm, thanks for
joining us. Coming up, we'll discuss what to expect from
Apple's event tomorrow. This is Bloomberg Apple CEO Tim Cook
teasing last week the arrival of quote the newest member
(42:36):
of our family, Bloomberg Intelligence analyst Anna A. Grano, joins
us now with more anrog what can we expect next week?
Speaker 18 (42:43):
It's really looking forward to their the cheapest phone that
they have, the iPhone. I see coming up with a
big bang. Mark Gorman's already told us about it in
terms of the foster processor and the larger screen. I
think this is a good thing for Apple because they're
really struggling to really break the market share both in
China and India and Brazil in terms of getting a
(43:06):
bigger piece of that pie, and a cheaper phone can
really help them do that.
Speaker 3 (43:10):
That's Bloomberg Intelligences, Anna Igrana, thanks for joining us, and
that does it for this edition of Bloomberg Technology. Don't
forget to check out our podcast. You can find it
on the terminal as well as online apples, Spotify and
iHeart This is Bloomberg
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