July 21, 2025 • 41 mins
Bloomberg’s Caroline Hyde discusses the hack of Microsoft SharePoint software that could impact tens of thousands of organizations. Plus, investors prepare for more second-quarter tech earnings. And Elon Musk’s wild bets and his feud with President Trump are creating challenges for his business empire.
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Speaker 1 (00:04):
Bloomberg Tech is alive from coast to coast with Carolline
hide in New York and ever though in San Francisco.
Speaker 2 (00:13):
This is Bloomberg Tech coming up.
Speaker 1 (00:15):
Tens of thousands of organizations could be affected by a
hack of Microsoft is a share Point software.
Speaker 2 (00:21):
Plus all eyes on Tesla, Alphabet IBM.
Speaker 1 (00:24):
This week is big tech earnings get underway and stop benchmarks,
hit new records and how Tesla, SpaceX and Xai are
struggling to deal with the fallout from must feud with
Trump and his wild beast. But first, one key stop
we're looking at, which is managing to shrug off initial
anxiety that you saw at the Sardle trade around this
global vulnerability.
Speaker 2 (00:44):
Share Point the software where you.
Speaker 1 (00:46):
Can be It's a data management application for Microsoft, and
indeed it could be exposed two hackers. Tens of thousands
of businesses could be affected.
Speaker 2 (00:54):
Let's get to it.
Speaker 1 (00:55):
Bloomberg's Brodie Ford and it's not a share impact, but
it could be a real impact for users.
Speaker 3 (01:01):
That is absolutely right. If you have a coworker who
sends you a file, there's a good chance it's on SharePoint.
I mean, this is a very well used, pervasive program
from Microsoft. And what is interesting about this situation is
it is about one year after a very fateful day
for Microsoft, which is when that issue with CrowdStrike caused
all those flights to go down. And so Microsoft Cybersecurity
(01:25):
Division has had a lot of heat lately. Today it
just got a little hotter.
Speaker 2 (01:29):
It did over the course of the weekend.
Speaker 1 (01:31):
The US Cybersecurity and Infrastructure Security Agency CEESA put out
this warning. And it's not the first time that the
US government has called out Microsoft for these sorts of vulnerabilities.
Speaker 3 (01:42):
Absolutely, and you could say that this is a really
small sub sect of customers likely, right, this is folks
who are using SharePoint on premise. That's likely a small
subsect of the larger group. And it's those who maybe
should have updated to the cloud and this maybe wouldn't
have happened. But it doesn't matter, right, If you're a
customer and you got your SharePoint hacked and now you
have hackers going between your files to your teams and
(02:04):
pulling out emails and god knows what, you certainly might
take a second look before staying with Microsoft or certain
security products.
Speaker 1 (02:12):
Has Microsoft responded and how well they've sent out some
instructions on Hey, here's how to patch your system, here's
what to do if you think you may have been impacted.
Speaker 3 (02:21):
But this is a pretty quick moving thing.
Speaker 4 (02:23):
I mean.
Speaker 3 (02:24):
Also, Microsoft earnings are next week, and so I'm certainly
expecting to hear some questions about, hey, is this impacting
any kind of customer.
Speaker 1 (02:31):
Behavior yet Census Silas Cutler and your story saying it's
a dream for ransomware operators.
Speaker 2 (02:38):
Yeah, yes, Brody.
Speaker 1 (02:39):
Ford, thank you, thanks for reporting on it for us. Meanwhile,
let's just get a bit broader, because we were just
hearing from Brody that big tech earnings are coming up. Indeed,
Microsoft is one of them. Amazon that's happening later this
month too. This week, we've got Tesla, Alphabet, IBM, to
name but a few. Let's bring in Bloomberg's Denitza Takover Dinitza. Look,
are we expecting red you to be improving for the
(03:01):
likes of.
Speaker 2 (03:01):
Alphabet at least? I know that test a story. But
let's talk on about Alphabet.
Speaker 5 (03:05):
We actually saw an upgrade on Alphabet from Morgan's family.
They're very optimistic both on Alphabet and Meta, but they're
up grading. The press saga at Alphabet just because the
violations of META is pretty high. But what we're seeing now,
we're obviously at record high SMP traits at twenty times
(03:26):
twenty two times forward turnings, just incredible rally here, we're
also seeing a very high bar. There is a big
punishment for those who miss on learnings, the biggest in
three years. And for those who actually overperform outperform, it's
like the best in about a year, So the bar
is higher, especially if you disappoint. Artificial intelligence spending has
(03:48):
really made a big difference in the Magnificent seven. We
see meta, we see Microsoft and Video leading the games,
and obviously Apple were struggling.
Speaker 2 (03:57):
Amazon is another interesting story. They're up just about three
percent year.
Speaker 5 (04:01):
To date, which compared to the incredible spending metadid and
the reward investors have given to that companies up more
than twenty percent.
Speaker 2 (04:09):
So we're seeing a big gap opening.
Speaker 5 (04:11):
And with this year earning season happening without too many
economic reports, too much happening in the macro, it's all
about the earnings right now.
Speaker 2 (04:19):
And I love that you bring up the spending.
Speaker 1 (04:21):
The metro is done because Boomberg Intelligence manly it's saying
writing that Alphabet. We are anticipating maybe even increasing capex
coming from then. We're also anticipating all the fact that
they've boosted some of the prices of their ad targeting.
Maybe that's going to be reaping dividend. You can go
and read more about the preview that our colleagues over
at Bloomberg Intelligence have. But he said, go back to
(04:42):
maybe the other key proof point this week is Tesla.
Now what's interesting is sometimes the fundamentals don't matter for
this business. We expect revenue to full, profitability to full.
There's more about what Elon says.
Speaker 5 (04:53):
It's really fascinating because he was very active this week
and he was saying he was working twenty four to seven.
He's even sleeping there.
Speaker 2 (05:00):
She did so big reaction today.
Speaker 5 (05:02):
In pre market there was some optimism, but today the
stock is actually down. We also have news the tests,
so it's set to fight California Department of Motor Vehicles
over there claims that the company has exaggerated their capitabilities
of sale driving. And no, we're not seeing a major move. Obviously,
after that quarrel with President Trump, the stock was under
(05:25):
roll of pressure. It has recovered some of that, but
there is a whole universe of investments. Try to even
musk that has been under pressure and hasn't received that
big social social sentiment we saw after the election in
the beginning of the year. So with that boost absence,
the question is whether investors will really penalize a missing earnings.
Speaker 2 (05:48):
Particularly the retail funds.
Speaker 1 (05:49):
We're going to dig into Tesla much more in a
moment with Max Traffick can but with the numbers was
Denisa Teikova.
Speaker 2 (05:55):
We thank you very much now that.
Speaker 1 (05:56):
She's bringing a broader perspective as we think about earnings,
we think about idias in crime news. Like Microsoft's Michael
Reynolds is with US vice president Investment Strategy of at
glen Mead. You've got a call forty five billion dollars
in assets under management, and I go to you first
about the optimism already baked in the market. We're at
record highs again, How high is the bar for earnings
this week?
Speaker 6 (06:18):
Thanks for having me on. The bar is pretty high.
Speaker 7 (06:20):
As we come into Q two, it seems like a
lot of companies are really posting some or expected to
post some results that are relatively resilient, especially compared to
where people thought tariffs were going to be in early
April that the thought that that was going to hit
margins pretty materially.
Speaker 6 (06:34):
We're looking at Q two numbers.
Speaker 7 (06:36):
In the aggregate that are actually holding up pretty well.
Sm P five hundred expected to post five percent earnings
growth on a year over year basis. Tech is a
pretty big contributor to that, and they may be relative
beneficiaries from the tariffs that have been announced and have
gone into effect so far. So overall, the story of
earning season as the rubber sit in the road is
resilient so far.
Speaker 1 (06:55):
More surprisingly, stop resilience for the large cap is of
the AI trade in particular, I think of in video
in particular, I think meta. But we have started to
see this bifurcation in the MAG seven. For example, Tesla
has not overperformed this year, and indeed is a key
lagged so too is Apple. How are you seeing that
being plaid out from an investor sentiment perspective?
Speaker 7 (07:19):
An excellent point. We're not just bucketing the MAG seven.
We're looking at broader tech here, and there is this bifurcation.
Speaker 6 (07:25):
In large cap MAG seven.
Speaker 7 (07:26):
Overall, Again, some aren't contributing are a really big driver
of the.
Speaker 6 (07:30):
Results for the S and P five hundred.
Speaker 7 (07:32):
But if you look over into small caps, actually some
of the biggest contributors for pretty notable gains and earnings
for Q two are so be financials and healthcare. So
what that sort of tells you is it's really not
just a broad tech play for earnings resilience this quarter.
Speaker 6 (07:46):
It's actually a little bit more company.
Speaker 7 (07:47):
Specific, which is a bit of a departure from what
we saw last year, where in the aggregate mag seven
just blistering earnings growth and you're starting.
Speaker 6 (07:55):
To see some of that falter a little bit deceleration.
Speaker 7 (07:58):
In the aggregate in some company is just having a
little bit of a tougher go of it.
Speaker 1 (08:02):
In terms of a tougher go of it, just think
Max last week in Netflix. I mean, they managed to
post some really solid earnings, but they were punished largely
because of just how well they've run up. Is there
a risk that companies don't even underperform. They actually managed
to beat but not well enough.
Speaker 7 (08:19):
Sure, that's an inherent risk when you have companies that
are valued so to such a premium extent that they
have such high let's call it price to earnings ratios
that you bake in a growth rate to those earnings,
and if you can't meet those hurdles, there's often a
big punishment for failing to meet those results. There comes
great expectations with great valuations, and so if you're showing
(08:43):
signs that perhaps down the road we're not going to
be able to meet some of those earnings growth expectations,
there's a rerating that has to happen there, and it's
an inherent risk investing with again, growth stocks or premium
valuation equities.
Speaker 2 (08:55):
And regulatory risk overhangs a lot of these big names.
Speaker 1 (08:58):
I think of Alphabet in the line of fire when
it comes to investigations as to whether it's a monopoly
in certain areas of its business. You think about Tesla
and the ongoing need for more regulation around robotaxis in
the future. That affects way more too. How much do
you have to factor in regulation right now?
Speaker 5 (09:12):
Am I?
Speaker 7 (09:13):
Regulatory risk is so important, especially when you have such
a concentrated market as we have now. Right now, we
have one stock in the S and P five hundred
that's had an eight percent plus weight in a five
hundred company index. We've seen this two other times in
the sixties you had AT and T, and you had IBM.
What happens is when you get to such a scale,
you have a target on your back, and that can
(09:34):
be a regulatory target, and that could also be a
competitive target. So these are things that you have to
think through. When you're looking at a company that dominates
an index, they have a target on their back and
you have to sort of think through the implications of
what that can have to future earnings, growth and future
dominance of the company.
Speaker 1 (09:52):
Thus far, in video stays higher, up about a quarter
of percent. In fact, Apple getting a little bit of
wind beneath its wings for this particular week. But might
go back to what you said about small caps, so
that we're a tech focus show here, but the fact
that healthcare and the fact that financials outperform how much
that's starting to be, the fact that.
Speaker 2 (10:08):
AI will be beneficial and that will help.
Speaker 1 (10:11):
Revenue growth and maybe profitability as well.
Speaker 7 (10:14):
It's an excellent point because we've seen some of the
initial beneficiaries of AI than those that are developing the
technology and providing the hardware for that technology. But ultimately
that's going to be something like the Internet that permeates
through every company and there's got to be this thought
process across the spectrum that AI is going to be
(10:34):
a beneficiary for these companies and it's going to penetrate
through throughout C suites, throughout the economy.
Speaker 6 (10:41):
So is it a little early to perhaps.
Speaker 7 (10:43):
Being able to see some of that penetration happen in
real time for some of these companies perhaps, but some
of these early movers could start to see some benefits
onto their bottom line loop.
Speaker 1 (10:53):
We're a global network as well, and we talk so
much about the US winners, but I think about what
TSMC is doing with its valuation hitting more than a
trillion over in South Korea, when you're thinking about European bets, Mike,
how much you're seeing investors want to get global with
their tech exposure.
Speaker 7 (11:10):
We're seeing quite a bit of that, especially around the
dollar in particular, where we're looking at portfolios in some
cases that you know, if they're very US focused. We're arguing,
if you don't have a single investment in your portfolio
that's not dollar denominated, you're not properly invested. And so
when we're going to look for these opportunities abroad, it's
not just what are the company specific opportunities, but more
(11:32):
on a macro basis, if we do find ourselves in
a declining dollar environment, you're going to really wish you
have non dollar denominated assets in your portfolio.
Speaker 6 (11:41):
May some of that be AI plays, perhaps, but.
Speaker 7 (11:43):
More broadly, it's just more important that you're looking abroad
for a global opportunity set within your equity portfolio.
Speaker 1 (11:49):
Michael Reynolds, vice president of investment Strategy at glenmade great
to catch up with you.
Speaker 2 (11:53):
Thank you.
Speaker 1 (11:54):
Now coming up how Tesna SpaceX xai. They are struggling
to deal with the fallout from musks feud with try
that's next.
Speaker 2 (12:01):
It's the Business Week front cover. This is bloom Beg Tech.
You know Musk's feuds and wild bets.
Speaker 1 (12:18):
Well, they're having an impact on the billionaires businesses, including.
Speaker 2 (12:21):
Tessa SpaceX XAI.
Speaker 1 (12:23):
And that is the focus on the Bloomberg Big take,
and it's bloom Begg's Max Chafkin and our own End
Ludlow that co author and Max joins us right now.
Speaker 2 (12:30):
It's a great story.
Speaker 1 (12:31):
It's the lead of the Business Week cover as well,
and you go into the case studies of just how
what has been a very public spat has fallen out
into some key well future crises for these companies.
Speaker 8 (12:45):
Yeah.
Speaker 9 (12:45):
Absolutely, So you do have this feud with Donald Trump,
which is a big deal.
Speaker 6 (12:49):
I mean, I think you look at like, why.
Speaker 9 (12:51):
Has Tesla's stark fallen over the past six months or so.
Speaker 6 (12:55):
A big reason of that is.
Speaker 9 (12:56):
It's kind of like it hit a high just after
the election, and we've had kind of a reverse Trump train.
But once you back away from the Trump of it all,
you start to see three key companies, SpaceX, Tesla X,
all of which are attempting these huge, kind of monumental
things with huge amounts of risk. I think it's a
(13:18):
thing that Elon Musk has never tried to do before.
Speaker 6 (13:20):
Really, we've never seen.
Speaker 9 (13:22):
This in his career, as much as he's a guy
who makes big bets. We have Tesla attempting to do
a really like a hard pivot away from car manufacturing
to robotaxis, a competitive field where they're not necessarily in
the lead. We have Starship, this giant rocket which has
yet to fly yet, we've had three successive explosions during
test flights. And then we have x which looks very
(13:42):
promising XAI, but I think is clearly a little bit
behind some of its competitors, Open AI and anthropic and
is losing huge sums of money. And you take all
those three things, and then you take a poor relationship
with the guy who is in power in the United States.
And that is a dangerous recipe.
Speaker 1 (14:00):
Say, and it's a dangerous recipe that investors now stead
down the barrel of his earnings come up this week
on Wednesday, he's already declaring he's sleeping at the office
largely to fix is it Tesla?
Speaker 2 (14:11):
And at the moment is X How do we know
where he's spending his time?
Speaker 6 (14:14):
Well, that is the thing.
Speaker 9 (14:15):
And as Ed and I talk about in this story,
I think if you talk to different people at different companies,
they'll say different things. I think Tesla employees, a lot
of them feel that Tesla's is Elon Musk's main priority.
XAI employees kind of would say the same thing. I
think SpaceX is in a slightly different position because you
do have sort of a strong executive more or less
in charge. That's Gwen shot Well, the president and COO.
(14:37):
But there is that tension and we saw that come up.
You know, in the last couple of weeks, we've seen
investors suggest that maybe Tesla needs to give Elon Musk
even more equity to sort of persuade him to spend
more time at Tesla.
Speaker 6 (14:50):
Which is a strange thing when you're.
Speaker 9 (14:52):
Talking about a stock that's gone down, when you're talking
about all of the challenges this company faces in terms
of the core business, the car business, which has not
been performing well over the last year.
Speaker 1 (15:03):
Or so, And you really articulate how much just general
sentiment towards Musk as what had been the most adored
entrepreneur has completely depleted, but he still has such a
big base of retail supporters.
Speaker 2 (15:16):
Is that fading in this current moment? How much does
that have to be an anxiety?
Speaker 9 (15:19):
I mean, you look at Tesla stock and it's still
not doing that poorly considering all of these kind of
challenges that I've brought up. So the stock is still
very very expensive compared to other car companies. It hasn't
you know, done especially badly over the last month or so.
So there is this base of support, But I think
you hit the nail on the head, Caroline. The big
(15:40):
change here for Elon Musk is he went from being
a very popular, admired guy.
Speaker 2 (15:45):
To being unpopular when you.
Speaker 9 (15:47):
Look at his approval rantings, they are poor, and you
know it's possible. You don't necessarily need to be popular
to succeed in business. But it doesn't hurt, especially when
you've made your own personal brand so important to your companies,
says Yon musk Has.
Speaker 1 (16:01):
And when your biggest found from an analyst perspective, and
we know, give a short shrift to Wall Street.
Speaker 2 (16:05):
But when Dan I says, pay the guy more, and
he says, shut up.
Speaker 1 (16:09):
Dan Ulmberg's MaTx Chaffkin, it's great piece.
Speaker 2 (16:13):
I urge you to go read it in his time.
Speaker 1 (16:21):
Now for Talking tech and first up app design software
maker Figma and some of its investors are looking to
raise one million dollars in its USIPO and what could
be one.
Speaker 2 (16:29):
Of the biggest listings of the year.
Speaker 1 (16:30):
It can value the company up to thirteen point six
billion dollars based on filings. The move comes after the
plans sale to Adobe and remember fell through in twenty
twenty three.
Speaker 2 (16:38):
Plus Uber well, it's doing a group of lawyers and medical.
Speaker 1 (16:41):
Providers in LA alleging they made fraudulent insurance claims that
cost the company.
Speaker 2 (16:45):
Millions and legal fees.
Speaker 1 (16:46):
Now Uber accused the defendants of directing passengers to pre
selected medical providers who submitted inflated bills to treat negligible
or non existing injuries from minor collisions between twenty nineteen
and twenty twenty four, and the Crypto Exchange back by
Peter Teel That's Bullish, has filed for an IPO too.
Speaker 2 (17:03):
The offering is being led by JP Morgan Jefferson.
Speaker 1 (17:05):
Citigroup is the latest company in the growing crypto market
pursuing a public listing this year. Look, there's another company
set to access crypto by public markets, the Ether Machine.
The firm is a combination of dynamics and the Ether reserve,
creating an Ether treasury with over four hundred thousand Ether tokens.
Who in more is Andrew Keyes Ether Machine chairman co
(17:28):
founder Andrew There are a fair few companies doing this
digital asset treasury play.
Speaker 2 (17:34):
Why are you the one to go with?
Speaker 10 (17:36):
So?
Speaker 11 (17:36):
We are not a buy and hold treasury. We are
an institutional vehicle that is generating risk adjusted returns actively
managing ether. Okay, Ether is a productive asset onlike bitcoin,
and in doing and having Ether on our balance sheet,
(17:57):
we have to stake it and use it to participate
in the decentralized financial economy where we're able to actively
generate yield.
Speaker 1 (18:06):
Okay, you'll also know not the only one that's looking
to bring yield.
Speaker 2 (18:11):
I think what bit mine and others are doing out there.
So how do you.
Speaker 1 (18:14):
Distinguish yourselves as the experience with which to allocate the
experience with which to drive yield. I know that you're
age old in the ETH space and a co founder
of Consensus, but well, the CEO of Consensus and the
guy co founded eth is backing another one.
Speaker 11 (18:28):
Yeah, so we have amassed the avengers of Ethereum. Our
technology team is unparalleled in experience and the creation of
proprietary technology to generate this yield. And basically we're able
to outperform the exchange traded funds that don't have yield
(18:50):
and the ETPs that are only able to participate fifty
percent capacity in staking. And we are able to steak
which is the only thing that the ETFs would be
able to do, restake, which is using Ethereum's proof of
steak mechanism to secure other middlewars and then use ether
(19:11):
as a pristine collateral in the DeFi economy to further
generate additional yield.
Speaker 1 (19:17):
What's interesting is this is almost about a little bit
of pr for the Ethereum ecosystem. More broadly, you talk
about it catalyzing the ecosystem, and you've got some big
institutional strategic players who come on board with this particular
initial announcement. I think in Pantera thinking crack and how
long do they hold? How long do they stay with
you after this back is completed and you continue to trade.
Speaker 11 (19:40):
So all of our capital partners, we believe our long
term money. We had no fast money in this vehicle.
And these are other people that believe that Ethereum is
essentially the next generation of the Internet. With Bitcoin, you
have one asset that is moving on that ledger, the
bit coin. With Etherium, you can have and tokenize infinite
(20:04):
assets such as stable coins, real world assets like parcels
of lands, stocks, bonds, derivatives, and with those tokenized assets
you can deploy them into what are called smart contracts,
so arbitrarily complex legal agreements. And we believe that Ethereum
is in the earliest innings of the next generation.
Speaker 6 (20:27):
Of the Internet.
Speaker 1 (20:28):
It's interesting that if has so lagged Bitcoin as an
institutional play though, and we just think in the recent
years we have has seen it just not perform in
the way that bitcoin has as an institutional asset. But
now you get the Genius Act potentially going to give
more regulatory calater clarity.
Speaker 2 (20:45):
Now you get the bet on DeFi. How do you.
Speaker 1 (20:48):
Think though it can perform against Solana or other rival protocols.
Speaker 11 (20:52):
Briefly, so, Etherium is the largest beneficiary of these regulatory
tailwinds because Ethereum is where these assets reside. Ninety percent
of stable coins and high quality liquid assets reside on Ethereum,
whereas only ten percent are displayed between the other blockchains.
(21:15):
And furthermore, we believe that Ethereum is poised to have
essentially what we call a gravitational pull, where more of
these assets are going to be settled on top of Etheria.
Speaker 1 (21:29):
Andrew Keys, ether Machine, chairman of it, thanks for joining today. Meanwhile,
talk about Polymarket, crypto betting platform that was kicked off
shore by federal regulators.
Speaker 2 (21:39):
It's just stuck a deal to return to the United
States markets.
Speaker 1 (21:42):
Just weeks after prosecutors shut down a probe of the company.
How is it doing it? So to say it will
buy a little known derivatives exchange called QCX, which will
allow polymarket to legally re.
Speaker 2 (21:53):
Enter the country.
Speaker 1 (22:00):
Welcome back to Bloomberg Tech and let's get a check
on these markets. So I'm going to take you to
Verizon because shares are higher. After the company posted second
quarter of revenue the beat analyst expectations WEPC four and
a half percent. The mobile phone company also raised the
profit outlook and excited whiles price increases as well as
US taps with the price and CEO Hans Westburg spoke
with Blomberg Alia.
Speaker 2 (22:19):
Take listen.
Speaker 4 (22:20):
Now, if you look at the quarter and actually the
last four quarters, our strategy is working. We have a
lot of vectors of growth all the way from our
broadband fixed wires access, our step ups, prepaid is growing,
and then we have our adjacent services with perks and
all of that, so all of them are actually contributing.
(22:41):
And then the last i would say three four quarters
were also been very good and discipline our cost levels,
so we get the leverage. Our ABITA was twelve point
eight billion dollars of growth of four so we'll raised
the guidance both for ABTA EPs and free cash flow,
all of them sort of coming from the generation of financials,
but it's based on the customer offerings where built over
(23:03):
the last year, and there is really resonating with the
market either on broadband or wireless, and for all customers.
We're serving all customers the United States, all the way
from the governmental or federal customers to large enterprise SMBs
and consumers. So that's what you see right now, resonating
with the financials. But ultimately it's about having the right
offerings for our customers.
Speaker 2 (23:25):
All about earnings. This week, that was Verizon CEO Hans Fezberg.
Speaker 1 (23:28):
Now let's talk about how private equity firm Blackstone has
just pulled out of a group of investors seeking to
take a minority stake in TikTok's US based business.
Speaker 2 (23:37):
And this is all according to a source who.
Speaker 1 (23:38):
Says the firm has ceded its potential state to other
investors in the consortium, which includes Oracle and recent Horowitz.
Speaker 2 (23:45):
And General Atlantic are coming up.
Speaker 1 (23:48):
Excel partner Ben Fletcher joins us to talk about one
of Europe's latest uniforms.
Speaker 2 (23:53):
It says bring back tech.
Speaker 1 (24:06):
Interest in AI coding tools remains high among users and
mention capital alike ACEL has led a recent two orred
million dollar Series A route into Swedish vibe coding startup
Lovable and startup has become Europe's latest unicorn with evaluation
of one point eight billion. For more, let's bring an
Excel partner Ben Fletcher, So, Ben, what stood out for Lovable?
Why back it with such a significant sized Series A
(24:29):
for European standards?
Speaker 12 (24:31):
Yeah, I think it's a couple of things. First off,
thanks for having me on. It's really great to be
here and to chat a little bit more about Lovable.
But when we spent time with Anton and Fabia and
the two co founders, it was really really impressive to
see that they were a really, really technical crew. So
they had worked in research, they had worked in applied
AI research, but they were building a tool that was
(24:52):
applicable to the masses. So only one percent of the
world's population can code, and then the ninety nine percent
don't have that ability to code or to be able
to create things for the web. And so when they
looked at their experience of building applied AI systems, they
were to be able to take that and put it
to a platform that they built called Lovable that allows
(25:13):
them to offer to their users the ability to chat
or text based prompt to be able to create.
Speaker 13 (25:20):
Fully fledged applications.
Speaker 12 (25:22):
So that's a front end with a back end and
a fully working application.
Speaker 13 (25:26):
This is pretty incredible. If you talk with users, they say.
Speaker 12 (25:28):
It's magic, and so all those things got us really
excited to invest in Lovable.
Speaker 1 (25:33):
I mean, attraction has been phenomenal. I'm interested as to
who attraction then really ends up being with, because often
it's the non technical founder who just wants to sort
of put together initial idea of what the website where
they looks like and then they actually get a developer involved.
How long until that developer is no longer needed.
Speaker 12 (25:52):
The nice thing is is it's been non technical folks.
Speaker 13 (25:55):
It's been semi technical.
Speaker 12 (25:56):
Folks and technical folks that are using Lovable about the
technical folks that are using it on the weekends, making
it easier for them to get applications up and running.
And then you see semi technical folks, maybe the product
manager or the person that has had experience in the
past but wants to build something or they want to
be able to spin up a prototype and then pass
(26:17):
it on to their technical or their developer team.
Speaker 13 (26:20):
And then as folks that have.
Speaker 12 (26:21):
Never had any experience, or don't understand frameworks, or don't
understand different coding languages and their ability to actually get
something spun up and to be able to build a
fully functioning application.
Speaker 13 (26:32):
So all those folks are now are using it.
Speaker 12 (26:34):
We see this as a way to give the power
to the masses to be able to create. So now
if you have an idea, you can now build and
you can have full software to be able to have
a working prototype or also a working application.
Speaker 1 (26:49):
And I don't want to be sensationists, but I'm interested therefore,
push us forward ten years, twenty years. Developers still a
role one needs engineering, Still something that someone's going into
for engineering, I.
Speaker 13 (27:02):
Would say absolutely.
Speaker 12 (27:03):
I would say absolutely, Like you think about the engineers
that are building a lot, and it's always been how
do we abstract more and more things over time? And
so it started with cloud and with hosting with AWS,
and now you have it with applications. You always need maintenance,
You'll always need the ability to what are the right systems,
(27:24):
how do you make sure that everything works together?
Speaker 13 (27:26):
And it will go more into.
Speaker 12 (27:28):
The critical thinking and the critical aspects around engineering.
Speaker 1 (27:33):
Oh, go ahead, Well, no, I'm interested in talent writ
large a little bit at this moment, Ben, and you'll
see why within my question that you're saying how you've
batted them because of just the sheer, agility and expertise
that Anton and team bring. Now I'm thinking of another
coding application company like a Windsurf for example, which also
(27:53):
helps developers right code. And the fact that that very
elite part of the team basically got siphoned off to
Google this licensing deal. Qull it what you will, whether
it's an aquaha or not. Then how are you thinking
about structuring these deals going forward to protect all talent
and your own bet on lovable.
Speaker 12 (28:12):
Well, the nice thing is that where we sit and
where we partner, we're constantly partnering with entrepreneurs and our
idea is to make sure that we can align our
interest with them to build the biggest companies as possible
and companies that are really going to matter. Now you're
talking more around you know, M and A and acquihirres
and deals that are being structured from an enterprise perspective.
(28:38):
For us, it's always about one how do we make
sure that we can align our incentives with partners, so
with the companies that we're going to partner with and
then how do we make sure that we can support
them and we can support them to the best outcome
and what they ultimately want.
Speaker 13 (28:52):
If they want to go and they want to work
at these larger companies, that's that's great.
Speaker 12 (28:55):
We want to make sure that we can support them
and make sure that they have the ability to do that.
We'll also make sure that we protect URLPS and our
investors and make sure that we can return capital to them.
And so very similarly with Scale AI and with Meta,
Alex had an incredible opportunity. And the amazing thing is
that we still own as investors fifty percent of the
(29:18):
entity going forward, and so we saw it as an
awesome opportunity where a great company like Scale AI gets
to go and reshape AI in the future as well
as there's a lot of value that will continue to
being created and accrued over time to the investors and
to URLPS.
Speaker 10 (29:35):
Well.
Speaker 1 (29:35):
Certainly Cognition thought that about Windsorf, so all can win
in certain situations. Ben Fletcher, Axcel Partner, it's great to
have some time with you. Thank you very much, Indean.
Now let's talk about larger trends in venture investing two
and Pitchbook to release its funding data for the first
half of twenty twenty five. Senior Venture Capital Research Anasov
at Pitchbook, Emily Sung joins us.
Speaker 2 (29:55):
Now and Emily Look.
Speaker 1 (29:58):
One of the focuses has been an exit how much
of these aquahys bringing numbers in terms for you on
what is happening in Pitchmook data.
Speaker 10 (30:09):
Emina activity has been really interesting because a lot of
startups are really leading this trend. Because of the FTC
leadership hasn't really changed much in the EMMA landscape. This
has really led a lot of large startups to be
the forefront of acquires. But I think what's really interesting
and what the biggest topic in Q two was was IPOs.
(30:34):
IPOs did come back modestly, but I would say it's
more of a reset rather than a rebound.
Speaker 1 (30:41):
Okay, so we're now thinking, well, Figma is the one
to watch. They're already on their road show Eminy, So
is that going to be yet another one that helps
push open the door or really we're going to have
a tricular effect when it comes to IPOs.
Speaker 10 (30:55):
Currently, there hasn't been a really rush towards new filings,
mainly because of the August one and tariff deadline that
hasn't addressed a lot of key policy questions that still
need to be answered. For a FIGMA specifically, what's interesting
is that it's an order company, it's about thirteen years old,
and it also has a really.
Speaker 13 (31:14):
Large crypto balance.
Speaker 10 (31:15):
And a trend we've been seeing recently with the new
Trump administration is sectors that are focused on key policy
parties like crypto, AI, national security, defense and fintech has
really propelled recent exit activity.
Speaker 1 (31:31):
We're just hearing about Bullish looking to IPO as well.
So another one that adds to that crypto vibe eminy.
Speaker 2 (31:37):
What about just more.
Speaker 1 (31:39):
Generally liquidity needs so it takes people to the market
is because often it's your employees, your the VCS that are.
Speaker 6 (31:46):
Back to you.
Speaker 2 (31:46):
They want this moment.
Speaker 1 (31:48):
Are you seeing liquidity needs though, be satiated in the
secondary market a lot more?
Speaker 10 (31:54):
The secondary market is really interesting. It has been growing rapidly.
I publish a quarterly report on I pitchbook and the
market currently is about sixty billion dollars and that's significant,
and that's the annual value as of Q one, But
sixty billion, for context, is about two percent of primary
Unicorn valuations and about a quarter's worth of primary VC
(32:17):
exit value, So it's notable, but it's also not big
enough to be the new IPO for example. And with
the secondary market, it's important to realize that the concentration
is super high in the top twenty to fifty unicorns,
So unless you're an investor in one of these top startups,
(32:39):
you're not necessarily benefiting much from the secondary's market right now.
But there is a lot of growth in the space.
The number of funds that have invested in VC secondaries,
the total fund value has doubled since twenty twenty two,
which really shows investor interest in the secondary space. And
(32:59):
I do for you continuing to grow.
Speaker 1 (33:01):
I mean, you talk about that concentration when it's looking
at those that are able to tap the secondary market,
what about concentration and those that can ultimately come for
an IPO as well. I mean, there's no surprise that
Figma is probably going to be leaning in on its
AI advantages. Is it still all about gen ai and
that trend.
Speaker 10 (33:19):
Ai is really dominating VC right now. It's captured about
two thirds of the deal value in twenty twenty five,
but only about a third of the deal count, which
really shows the concentration in AI, and I think AI
will continue to be a really big theme. Of course,
foundational models have captured a lot of VC dollars in interest,
(33:39):
but what's also really interesting is that AI is fundamentally
changing how businesses are operating and their fundamental models throughout
a variety of sectors. So it is really transformative and
that's why I Venture is funneling a lot of dollars
into the space.
Speaker 2 (33:57):
And lastly, were talking very much.
Speaker 1 (34:00):
I know you focus on the US in terms of
the data, but what does.
Speaker 2 (34:03):
It look like globally.
Speaker 1 (34:04):
It's still the US the nexus when it comes to
at least coming and tapping the IPO market and more
companies coming internationally to tap that market.
Speaker 10 (34:12):
The US is currently still dominating the IPO market and
in general, across the world, deal making exit activity has
remained muted. Venture really doesn't like volatility, and there has
been a lot of volatility recently, and until some key
questions are answered like the third for instance, the tariffs,
(34:33):
trade wars, geopolitical tensions, there probably won't be muted deal
making exit activity until those questions are answered.
Speaker 2 (34:41):
Emmani Sung, we thank you so much.
Speaker 1 (34:43):
Inventure capital research anaist over at pitchbook great to get
the breakdown. Chicago, it is host to the Global Quantum Forum,
happening this week, is where top industry leaders are set
to discuss the future of the sometimes hoped technology. Let's
join Jeremy O'Brien over in Chicago. It's High Quantum co
(35:06):
founder and CEO Sside Quantum. It's currently building out the
Quantum Computer campus in Chicago. And Jeremy, before I ask
exactly what you're going to be doing in the force
of quantum, but first, why was Chicago the place to
be spending I think at least a billion is what
you're committing in capital.
Speaker 8 (35:22):
Yeah, so Chicago, we figured it was the best place
in the world to do what we're doing here, which
is building the country's first utility scale quantum computer. And
that's really about an understanding that that folk here have
of just how big and hard it is to build
a system of that scale.
Speaker 1 (35:43):
Let's talk about, therefore, the application, because I maybe loosely
say that quantum is often hyped. The hype is around
when it can be purposeful. When it is going to
be really truly useful, we have breakthrough after breakthrough, Jeremy,
how are you going to be offering something really useful
for commercial purpose?
Speaker 8 (36:00):
Yeah, you're right there. There has been a ah, a
lot of hype and a lot of talk of breakthroughs,
and fundamentally, I I my my view is that breakthroughs
UH precipitate a decade or more of of hard work,
you know, r real hard technological development. It's not breakthrough
(36:20):
and then suddenly you have a new technology. And that's
certainly true UH with quantum computing. And so our breakthrough
UH was a decade ago UH when we were university
professors and we figured out a path whereby we could
leverage the uh, the semiconductor industry and the trillions of
(36:40):
dollars that have gone into that and adjacent industries to
build uh the real thing, UH, which is a million
cubic scale UH fault tolerant, utility scale quantum computer. And
so that's what we're d that's what we're doing right
here in Chicago.
Speaker 1 (36:55):
Your professor over at Stamford at Bristol Universities as well, Jeremy,
and I'm thinking about how tonics has become the area
of real focus for you.
Speaker 2 (37:02):
How does that differentiate you from what others are doing.
Speaker 8 (37:06):
Yeah, so you're absolutely right. It's the silicon photonics platform,
uh that we spent uh twenty years figuring out what's
the platform that enables us to leverage that semiconductor industry
because it's been my conviction since I don't know, the
mid mid to late nineties that unless we figure that out,
(37:27):
it's not gonna happen in my lifetime. And uh, when
we figured that out, uh, we established uh Psychonum, and
we spent you know, many years and uh much blood,
sweat and tears grinding away at the really hard uh
semiconductor engineering problems to to make that work. And now
(37:49):
we're at this point where we're we're poised to you know,
to break ground and build that facility here.
Speaker 1 (37:55):
Can you hate to say put yourself against the competition,
but when you've got IBU.
Speaker 2 (38:00):
Am out there saying here in Upstate.
Speaker 1 (38:01):
You're not New York, we're going to be getting there
by twenty twenty nine, a real use case quantum computer. Jeremy,
you've got the race on with well companies we've helped
advise before. When I'm thinking about Microsoft up to AWS
and Google, where are you in comparison to that race,
as we like to put it.
Speaker 8 (38:18):
Yeah, firstly, I'm not sure that it's a race when
it comes to hard technologies. It's in some sense it's
a filter, right. But you know, I can't speak for
all the other different folks that are out there are
pursuing this, but I can say that, you know, our
approach has been very different from the beginning, which is
(38:40):
to really focus on the scale that's required for really
valuable commercial applications. And it's been the case for twenty
five plus years that that's a million cubic scale system,
and so we have uh had nothing to do with
(39:01):
doing small UH demonstrations proofs of principle of quantum computing.
And that's been a a very deliberate approach because it's
a bit my You know, if you if you're trying
to get to the top of the Sears Tower here
in UH in Chicago, UH, then you know, ladders are
a good way to to try and get to the
(39:23):
to the top. But if you wanna get to the moon, UH,
ladders are not really the way to get you there.
And so we've taken a pretty antithetical approach, I would say,
from from the beginning, which is to really focus on scale.
And so when you're talking about a million qubet scale system,
as I said, it's been you know clear to me
(39:46):
uh for a very long time, right. The only way
to be able to do that is to leverage the
you know trillion dollars uh and you know better part
of a century that went into the semiconductor industry and leveraged.
Speaker 1 (39:59):
So that's what and a billion that you're going to
be investing in that project. And you take us to
the Sears Tower, I go back to Chicago.
Speaker 2 (40:06):
What has the workings been like with the governor?
Speaker 1 (40:08):
Why have you managed to think that that is going
to be where the talent pool is basically for you
going forward?
Speaker 8 (40:14):
Yeah, I think from the governor to the aldermen and
the entire ecosystem, we've really enjoyed great partnerships here and
it's been driven by, as I said earlier, the understanding
of just how big, complex and hard this project is.
To build a utility scale on a computer that's a
(40:36):
that's a very big, hard project. And I'll give you
just one example of that. Early in our interactions with
the city and the state, a big delegation came to
us in Silicon Valley led by the Deputy Governor and
the head of Commed. The power utility came to that
(40:56):
very first meeting, and I think that's a big different
intiator for us as an organization and for the ecosystem
here is to understand that, yeah, we need to get
you know, we need to get power to the side,
et cetera, et cetera. So that's that's a really big
part of our decision.
Speaker 1 (41:13):
Well, Jeremy, have a great time at the Chicago Quantum event.
You are, of course Jeremy O'Brien of Side Quantum. Now
that does it for this edition of bluemg Tech, quick
check in on the NASLAK which is at a record
high once again, Nasak one hundred and two.
Speaker 2 (41:28):
We have got earnings thick and fast.
Speaker 1 (41:30):
This week we embrace ourselves for Wednesday, the Tesla Alphabet
and IBM.
Speaker 2 (41:34):
Don't forget to check out our podcast as well. This
is bluemeg Tech
Bloomberg Tech is alive from coast to coast with Carolline
hide in New York and ever though in San Francisco.
Speaker 2 (00:13):
This is Bloomberg Tech coming up.
Speaker 1 (00:15):
Tens of thousands of organizations could be affected by a
hack of Microsoft is a share Point software.
Speaker 2 (00:21):
Plus all eyes on Tesla, Alphabet IBM.
Speaker 1 (00:24):
This week is big tech earnings get underway and stop benchmarks,
hit new records and how Tesla, SpaceX and Xai are
struggling to deal with the fallout from must feud with
Trump and his wild beast. But first, one key stop
we're looking at, which is managing to shrug off initial
anxiety that you saw at the Sardle trade around this
global vulnerability.
Speaker 2 (00:44):
Share Point the software where you.
Speaker 1 (00:46):
Can be It's a data management application for Microsoft, and
indeed it could be exposed two hackers. Tens of thousands
of businesses could be affected.
Speaker 2 (00:54):
Let's get to it.
Speaker 1 (00:55):
Bloomberg's Brodie Ford and it's not a share impact, but
it could be a real impact for users.
Speaker 3 (01:01):
That is absolutely right. If you have a coworker who
sends you a file, there's a good chance it's on SharePoint.
I mean, this is a very well used, pervasive program
from Microsoft. And what is interesting about this situation is
it is about one year after a very fateful day
for Microsoft, which is when that issue with CrowdStrike caused
all those flights to go down. And so Microsoft Cybersecurity
(01:25):
Division has had a lot of heat lately. Today it
just got a little hotter.
Speaker 2 (01:29):
It did over the course of the weekend.
Speaker 1 (01:31):
The US Cybersecurity and Infrastructure Security Agency CEESA put out
this warning. And it's not the first time that the
US government has called out Microsoft for these sorts of vulnerabilities.
Speaker 3 (01:42):
Absolutely, and you could say that this is a really
small sub sect of customers likely, right, this is folks
who are using SharePoint on premise. That's likely a small
subsect of the larger group. And it's those who maybe
should have updated to the cloud and this maybe wouldn't
have happened. But it doesn't matter, right, If you're a
customer and you got your SharePoint hacked and now you
have hackers going between your files to your teams and
(02:04):
pulling out emails and god knows what, you certainly might
take a second look before staying with Microsoft or certain
security products.
Speaker 1 (02:12):
Has Microsoft responded and how well they've sent out some
instructions on Hey, here's how to patch your system, here's
what to do if you think you may have been impacted.
Speaker 3 (02:21):
But this is a pretty quick moving thing.
Speaker 4 (02:23):
I mean.
Speaker 3 (02:24):
Also, Microsoft earnings are next week, and so I'm certainly
expecting to hear some questions about, hey, is this impacting
any kind of customer.
Speaker 1 (02:31):
Behavior yet Census Silas Cutler and your story saying it's
a dream for ransomware operators.
Speaker 2 (02:38):
Yeah, yes, Brody.
Speaker 1 (02:39):
Ford, thank you, thanks for reporting on it for us. Meanwhile,
let's just get a bit broader, because we were just
hearing from Brody that big tech earnings are coming up. Indeed,
Microsoft is one of them. Amazon that's happening later this
month too. This week, we've got Tesla, Alphabet, IBM, to
name but a few. Let's bring in Bloomberg's Denitza Takover Dinitza. Look,
are we expecting red you to be improving for the
(03:01):
likes of.
Speaker 2 (03:01):
Alphabet at least? I know that test a story. But
let's talk on about Alphabet.
Speaker 5 (03:05):
We actually saw an upgrade on Alphabet from Morgan's family.
They're very optimistic both on Alphabet and Meta, but they're
up grading. The press saga at Alphabet just because the
violations of META is pretty high. But what we're seeing now,
we're obviously at record high SMP traits at twenty times
(03:26):
twenty two times forward turnings, just incredible rally here, we're
also seeing a very high bar. There is a big
punishment for those who miss on learnings, the biggest in
three years. And for those who actually overperform outperform, it's
like the best in about a year, So the bar
is higher, especially if you disappoint. Artificial intelligence spending has
(03:48):
really made a big difference in the Magnificent seven. We
see meta, we see Microsoft and Video leading the games,
and obviously Apple were struggling.
Speaker 2 (03:57):
Amazon is another interesting story. They're up just about three
percent year.
Speaker 5 (04:01):
To date, which compared to the incredible spending metadid and
the reward investors have given to that companies up more
than twenty percent.
Speaker 2 (04:09):
So we're seeing a big gap opening.
Speaker 5 (04:11):
And with this year earning season happening without too many
economic reports, too much happening in the macro, it's all
about the earnings right now.
Speaker 2 (04:19):
And I love that you bring up the spending.
Speaker 1 (04:21):
The metro is done because Boomberg Intelligence manly it's saying
writing that Alphabet. We are anticipating maybe even increasing capex
coming from then. We're also anticipating all the fact that
they've boosted some of the prices of their ad targeting.
Maybe that's going to be reaping dividend. You can go
and read more about the preview that our colleagues over
at Bloomberg Intelligence have. But he said, go back to
(04:42):
maybe the other key proof point this week is Tesla.
Now what's interesting is sometimes the fundamentals don't matter for
this business. We expect revenue to full, profitability to full.
There's more about what Elon says.
Speaker 5 (04:53):
It's really fascinating because he was very active this week
and he was saying he was working twenty four to seven.
He's even sleeping there.
Speaker 2 (05:00):
She did so big reaction today.
Speaker 5 (05:02):
In pre market there was some optimism, but today the
stock is actually down. We also have news the tests,
so it's set to fight California Department of Motor Vehicles
over there claims that the company has exaggerated their capitabilities
of sale driving. And no, we're not seeing a major move. Obviously,
after that quarrel with President Trump, the stock was under
(05:25):
roll of pressure. It has recovered some of that, but
there is a whole universe of investments. Try to even
musk that has been under pressure and hasn't received that
big social social sentiment we saw after the election in
the beginning of the year. So with that boost absence,
the question is whether investors will really penalize a missing earnings.
Speaker 2 (05:48):
Particularly the retail funds.
Speaker 1 (05:49):
We're going to dig into Tesla much more in a
moment with Max Traffick can but with the numbers was
Denisa Teikova.
Speaker 2 (05:55):
We thank you very much now that.
Speaker 1 (05:56):
She's bringing a broader perspective as we think about earnings,
we think about idias in crime news. Like Microsoft's Michael
Reynolds is with US vice president Investment Strategy of at
glen Mead. You've got a call forty five billion dollars
in assets under management, and I go to you first
about the optimism already baked in the market. We're at
record highs again, How high is the bar for earnings
this week?
Speaker 6 (06:18):
Thanks for having me on. The bar is pretty high.
Speaker 7 (06:20):
As we come into Q two, it seems like a
lot of companies are really posting some or expected to
post some results that are relatively resilient, especially compared to
where people thought tariffs were going to be in early
April that the thought that that was going to hit
margins pretty materially.
Speaker 6 (06:34):
We're looking at Q two numbers.
Speaker 7 (06:36):
In the aggregate that are actually holding up pretty well.
Sm P five hundred expected to post five percent earnings
growth on a year over year basis. Tech is a
pretty big contributor to that, and they may be relative
beneficiaries from the tariffs that have been announced and have
gone into effect so far. So overall, the story of
earning season as the rubber sit in the road is
resilient so far.
Speaker 1 (06:55):
More surprisingly, stop resilience for the large cap is of
the AI trade in particular, I think of in video
in particular, I think meta. But we have started to
see this bifurcation in the MAG seven. For example, Tesla
has not overperformed this year, and indeed is a key
lagged so too is Apple. How are you seeing that
being plaid out from an investor sentiment perspective?
Speaker 7 (07:19):
An excellent point. We're not just bucketing the MAG seven.
We're looking at broader tech here, and there is this bifurcation.
Speaker 6 (07:25):
In large cap MAG seven.
Speaker 7 (07:26):
Overall, Again, some aren't contributing are a really big driver
of the.
Speaker 6 (07:30):
Results for the S and P five hundred.
Speaker 7 (07:32):
But if you look over into small caps, actually some
of the biggest contributors for pretty notable gains and earnings
for Q two are so be financials and healthcare. So
what that sort of tells you is it's really not
just a broad tech play for earnings resilience this quarter.
Speaker 6 (07:46):
It's actually a little bit more company.
Speaker 7 (07:47):
Specific, which is a bit of a departure from what
we saw last year, where in the aggregate mag seven
just blistering earnings growth and you're starting.
Speaker 6 (07:55):
To see some of that falter a little bit deceleration.
Speaker 7 (07:58):
In the aggregate in some company is just having a
little bit of a tougher go of it.
Speaker 1 (08:02):
In terms of a tougher go of it, just think
Max last week in Netflix. I mean, they managed to
post some really solid earnings, but they were punished largely
because of just how well they've run up. Is there
a risk that companies don't even underperform. They actually managed
to beat but not well enough.
Speaker 7 (08:19):
Sure, that's an inherent risk when you have companies that
are valued so to such a premium extent that they
have such high let's call it price to earnings ratios
that you bake in a growth rate to those earnings,
and if you can't meet those hurdles, there's often a
big punishment for failing to meet those results. There comes
great expectations with great valuations, and so if you're showing
(08:43):
signs that perhaps down the road we're not going to
be able to meet some of those earnings growth expectations,
there's a rerating that has to happen there, and it's
an inherent risk investing with again, growth stocks or premium
valuation equities.
Speaker 2 (08:55):
And regulatory risk overhangs a lot of these big names.
Speaker 1 (08:58):
I think of Alphabet in the line of fire when
it comes to investigations as to whether it's a monopoly
in certain areas of its business. You think about Tesla
and the ongoing need for more regulation around robotaxis in
the future. That affects way more too. How much do
you have to factor in regulation right now?
Speaker 5 (09:12):
Am I?
Speaker 7 (09:13):
Regulatory risk is so important, especially when you have such
a concentrated market as we have now. Right now, we
have one stock in the S and P five hundred
that's had an eight percent plus weight in a five
hundred company index. We've seen this two other times in
the sixties you had AT and T, and you had IBM.
What happens is when you get to such a scale,
you have a target on your back, and that can
(09:34):
be a regulatory target, and that could also be a
competitive target. So these are things that you have to
think through. When you're looking at a company that dominates
an index, they have a target on their back and
you have to sort of think through the implications of
what that can have to future earnings, growth and future
dominance of the company.
Speaker 1 (09:52):
Thus far, in video stays higher, up about a quarter
of percent. In fact, Apple getting a little bit of
wind beneath its wings for this particular week. But might
go back to what you said about small caps, so
that we're a tech focus show here, but the fact
that healthcare and the fact that financials outperform how much
that's starting to be, the fact that.
Speaker 2 (10:08):
AI will be beneficial and that will help.
Speaker 1 (10:11):
Revenue growth and maybe profitability as well.
Speaker 7 (10:14):
It's an excellent point because we've seen some of the
initial beneficiaries of AI than those that are developing the
technology and providing the hardware for that technology. But ultimately
that's going to be something like the Internet that permeates
through every company and there's got to be this thought
process across the spectrum that AI is going to be
(10:34):
a beneficiary for these companies and it's going to penetrate
through throughout C suites, throughout the economy.
Speaker 6 (10:41):
So is it a little early to perhaps.
Speaker 7 (10:43):
Being able to see some of that penetration happen in
real time for some of these companies perhaps, but some
of these early movers could start to see some benefits
onto their bottom line loop.
Speaker 1 (10:53):
We're a global network as well, and we talk so
much about the US winners, but I think about what
TSMC is doing with its valuation hitting more than a
trillion over in South Korea, when you're thinking about European bets, Mike,
how much you're seeing investors want to get global with
their tech exposure.
Speaker 7 (11:10):
We're seeing quite a bit of that, especially around the
dollar in particular, where we're looking at portfolios in some
cases that you know, if they're very US focused. We're arguing,
if you don't have a single investment in your portfolio
that's not dollar denominated, you're not properly invested. And so
when we're going to look for these opportunities abroad, it's
not just what are the company specific opportunities, but more
(11:32):
on a macro basis, if we do find ourselves in
a declining dollar environment, you're going to really wish you
have non dollar denominated assets in your portfolio.
Speaker 6 (11:41):
May some of that be AI plays, perhaps, but.
Speaker 7 (11:43):
More broadly, it's just more important that you're looking abroad
for a global opportunity set within your equity portfolio.
Speaker 1 (11:49):
Michael Reynolds, vice president of investment Strategy at glenmade great
to catch up with you.
Speaker 2 (11:53):
Thank you.
Speaker 1 (11:54):
Now coming up how Tesna SpaceX xai. They are struggling
to deal with the fallout from musks feud with try
that's next.
Speaker 2 (12:01):
It's the Business Week front cover. This is bloom Beg Tech.
You know Musk's feuds and wild bets.
Speaker 1 (12:18):
Well, they're having an impact on the billionaires businesses, including.
Speaker 2 (12:21):
Tessa SpaceX XAI.
Speaker 1 (12:23):
And that is the focus on the Bloomberg Big take,
and it's bloom Begg's Max Chafkin and our own End
Ludlow that co author and Max joins us right now.
Speaker 2 (12:30):
It's a great story.
Speaker 1 (12:31):
It's the lead of the Business Week cover as well,
and you go into the case studies of just how
what has been a very public spat has fallen out
into some key well future crises for these companies.
Speaker 8 (12:45):
Yeah.
Speaker 9 (12:45):
Absolutely, So you do have this feud with Donald Trump,
which is a big deal.
Speaker 6 (12:49):
I mean, I think you look at like, why.
Speaker 9 (12:51):
Has Tesla's stark fallen over the past six months or so.
Speaker 6 (12:55):
A big reason of that is.
Speaker 9 (12:56):
It's kind of like it hit a high just after
the election, and we've had kind of a reverse Trump train.
But once you back away from the Trump of it all,
you start to see three key companies, SpaceX, Tesla X,
all of which are attempting these huge, kind of monumental
things with huge amounts of risk. I think it's a
(13:18):
thing that Elon Musk has never tried to do before.
Speaker 6 (13:20):
Really, we've never seen.
Speaker 9 (13:22):
This in his career, as much as he's a guy
who makes big bets. We have Tesla attempting to do
a really like a hard pivot away from car manufacturing
to robotaxis, a competitive field where they're not necessarily in
the lead. We have Starship, this giant rocket which has
yet to fly yet, we've had three successive explosions during
test flights. And then we have x which looks very
(13:42):
promising XAI, but I think is clearly a little bit
behind some of its competitors, Open AI and anthropic and
is losing huge sums of money. And you take all
those three things, and then you take a poor relationship
with the guy who is in power in the United States.
And that is a dangerous recipe.
Speaker 1 (14:00):
Say, and it's a dangerous recipe that investors now stead
down the barrel of his earnings come up this week
on Wednesday, he's already declaring he's sleeping at the office
largely to fix is it Tesla?
Speaker 2 (14:11):
And at the moment is X How do we know
where he's spending his time?
Speaker 6 (14:14):
Well, that is the thing.
Speaker 9 (14:15):
And as Ed and I talk about in this story,
I think if you talk to different people at different companies,
they'll say different things. I think Tesla employees, a lot
of them feel that Tesla's is Elon Musk's main priority.
XAI employees kind of would say the same thing. I
think SpaceX is in a slightly different position because you
do have sort of a strong executive more or less
in charge. That's Gwen shot Well, the president and COO.
(14:37):
But there is that tension and we saw that come up.
You know, in the last couple of weeks, we've seen
investors suggest that maybe Tesla needs to give Elon Musk
even more equity to sort of persuade him to spend
more time at Tesla.
Speaker 6 (14:50):
Which is a strange thing when you're.
Speaker 9 (14:52):
Talking about a stock that's gone down, when you're talking
about all of the challenges this company faces in terms
of the core business, the car business, which has not
been performing well over the last year.
Speaker 1 (15:03):
Or so, And you really articulate how much just general
sentiment towards Musk as what had been the most adored
entrepreneur has completely depleted, but he still has such a
big base of retail supporters.
Speaker 2 (15:16):
Is that fading in this current moment? How much does
that have to be an anxiety?
Speaker 9 (15:19):
I mean, you look at Tesla stock and it's still
not doing that poorly considering all of these kind of
challenges that I've brought up. So the stock is still
very very expensive compared to other car companies. It hasn't
you know, done especially badly over the last month or so.
So there is this base of support, But I think
you hit the nail on the head, Caroline. The big
(15:40):
change here for Elon Musk is he went from being
a very popular, admired guy.
Speaker 2 (15:45):
To being unpopular when you.
Speaker 9 (15:47):
Look at his approval rantings, they are poor, and you
know it's possible. You don't necessarily need to be popular
to succeed in business. But it doesn't hurt, especially when
you've made your own personal brand so important to your companies,
says Yon musk Has.
Speaker 1 (16:01):
And when your biggest found from an analyst perspective, and
we know, give a short shrift to Wall Street.
Speaker 2 (16:05):
But when Dan I says, pay the guy more, and
he says, shut up.
Speaker 1 (16:09):
Dan Ulmberg's MaTx Chaffkin, it's great piece.
Speaker 2 (16:13):
I urge you to go read it in his time.
Speaker 1 (16:21):
Now for Talking tech and first up app design software
maker Figma and some of its investors are looking to
raise one million dollars in its USIPO and what could
be one.
Speaker 2 (16:29):
Of the biggest listings of the year.
Speaker 1 (16:30):
It can value the company up to thirteen point six
billion dollars based on filings. The move comes after the
plans sale to Adobe and remember fell through in twenty
twenty three.
Speaker 2 (16:38):
Plus Uber well, it's doing a group of lawyers and medical.
Speaker 1 (16:41):
Providers in LA alleging they made fraudulent insurance claims that
cost the company.
Speaker 2 (16:45):
Millions and legal fees.
Speaker 1 (16:46):
Now Uber accused the defendants of directing passengers to pre
selected medical providers who submitted inflated bills to treat negligible
or non existing injuries from minor collisions between twenty nineteen
and twenty twenty four, and the Crypto Exchange back by
Peter Teel That's Bullish, has filed for an IPO too.
Speaker 2 (17:03):
The offering is being led by JP Morgan Jefferson.
Speaker 1 (17:05):
Citigroup is the latest company in the growing crypto market
pursuing a public listing this year. Look, there's another company
set to access crypto by public markets, the Ether Machine.
The firm is a combination of dynamics and the Ether reserve,
creating an Ether treasury with over four hundred thousand Ether tokens.
Who in more is Andrew Keyes Ether Machine chairman co
(17:28):
founder Andrew There are a fair few companies doing this
digital asset treasury play.
Speaker 2 (17:34):
Why are you the one to go with?
Speaker 10 (17:36):
So?
Speaker 11 (17:36):
We are not a buy and hold treasury. We are
an institutional vehicle that is generating risk adjusted returns actively
managing ether. Okay, Ether is a productive asset onlike bitcoin,
and in doing and having Ether on our balance sheet,
(17:57):
we have to stake it and use it to participate
in the decentralized financial economy where we're able to actively
generate yield.
Speaker 1 (18:06):
Okay, you'll also know not the only one that's looking
to bring yield.
Speaker 2 (18:11):
I think what bit mine and others are doing out there.
So how do you.
Speaker 1 (18:14):
Distinguish yourselves as the experience with which to allocate the
experience with which to drive yield. I know that you're
age old in the ETH space and a co founder
of Consensus, but well, the CEO of Consensus and the
guy co founded eth is backing another one.
Speaker 11 (18:28):
Yeah, so we have amassed the avengers of Ethereum. Our
technology team is unparalleled in experience and the creation of
proprietary technology to generate this yield. And basically we're able
to outperform the exchange traded funds that don't have yield
(18:50):
and the ETPs that are only able to participate fifty
percent capacity in staking. And we are able to steak
which is the only thing that the ETFs would be
able to do, restake, which is using Ethereum's proof of
steak mechanism to secure other middlewars and then use ether
(19:11):
as a pristine collateral in the DeFi economy to further
generate additional yield.
Speaker 1 (19:17):
What's interesting is this is almost about a little bit
of pr for the Ethereum ecosystem. More broadly, you talk
about it catalyzing the ecosystem, and you've got some big
institutional strategic players who come on board with this particular
initial announcement. I think in Pantera thinking crack and how
long do they hold? How long do they stay with
you after this back is completed and you continue to trade.
Speaker 11 (19:40):
So all of our capital partners, we believe our long
term money. We had no fast money in this vehicle.
And these are other people that believe that Ethereum is
essentially the next generation of the Internet. With Bitcoin, you
have one asset that is moving on that ledger, the
bit coin. With Etherium, you can have and tokenize infinite
(20:04):
assets such as stable coins, real world assets like parcels
of lands, stocks, bonds, derivatives, and with those tokenized assets
you can deploy them into what are called smart contracts,
so arbitrarily complex legal agreements. And we believe that Ethereum
is in the earliest innings of the next generation.
Speaker 6 (20:27):
Of the Internet.
Speaker 1 (20:28):
It's interesting that if has so lagged Bitcoin as an
institutional play though, and we just think in the recent
years we have has seen it just not perform in
the way that bitcoin has as an institutional asset. But
now you get the Genius Act potentially going to give
more regulatory calater clarity.
Speaker 2 (20:45):
Now you get the bet on DeFi. How do you.
Speaker 1 (20:48):
Think though it can perform against Solana or other rival protocols.
Speaker 11 (20:52):
Briefly, so, Etherium is the largest beneficiary of these regulatory
tailwinds because Ethereum is where these assets reside. Ninety percent
of stable coins and high quality liquid assets reside on Ethereum,
whereas only ten percent are displayed between the other blockchains.
(21:15):
And furthermore, we believe that Ethereum is poised to have
essentially what we call a gravitational pull, where more of
these assets are going to be settled on top of Etheria.
Speaker 1 (21:29):
Andrew Keys, ether Machine, chairman of it, thanks for joining today. Meanwhile,
talk about Polymarket, crypto betting platform that was kicked off
shore by federal regulators.
Speaker 2 (21:39):
It's just stuck a deal to return to the United
States markets.
Speaker 1 (21:42):
Just weeks after prosecutors shut down a probe of the company.
How is it doing it? So to say it will
buy a little known derivatives exchange called QCX, which will
allow polymarket to legally re.
Speaker 2 (21:53):
Enter the country.
Speaker 1 (22:00):
Welcome back to Bloomberg Tech and let's get a check
on these markets. So I'm going to take you to
Verizon because shares are higher. After the company posted second
quarter of revenue the beat analyst expectations WEPC four and
a half percent. The mobile phone company also raised the
profit outlook and excited whiles price increases as well as
US taps with the price and CEO Hans Westburg spoke
with Blomberg Alia.
Speaker 2 (22:19):
Take listen.
Speaker 4 (22:20):
Now, if you look at the quarter and actually the
last four quarters, our strategy is working. We have a
lot of vectors of growth all the way from our
broadband fixed wires access, our step ups, prepaid is growing,
and then we have our adjacent services with perks and
all of that, so all of them are actually contributing.
(22:41):
And then the last i would say three four quarters
were also been very good and discipline our cost levels,
so we get the leverage. Our ABITA was twelve point
eight billion dollars of growth of four so we'll raised
the guidance both for ABTA EPs and free cash flow,
all of them sort of coming from the generation of financials,
but it's based on the customer offerings where built over
(23:03):
the last year, and there is really resonating with the
market either on broadband or wireless, and for all customers.
We're serving all customers the United States, all the way
from the governmental or federal customers to large enterprise SMBs
and consumers. So that's what you see right now, resonating
with the financials. But ultimately it's about having the right
offerings for our customers.
Speaker 2 (23:25):
All about earnings. This week, that was Verizon CEO Hans Fezberg.
Speaker 1 (23:28):
Now let's talk about how private equity firm Blackstone has
just pulled out of a group of investors seeking to
take a minority stake in TikTok's US based business.
Speaker 2 (23:37):
And this is all according to a source who.
Speaker 1 (23:38):
Says the firm has ceded its potential state to other
investors in the consortium, which includes Oracle and recent Horowitz.
Speaker 2 (23:45):
And General Atlantic are coming up.
Speaker 1 (23:48):
Excel partner Ben Fletcher joins us to talk about one
of Europe's latest uniforms.
Speaker 2 (23:53):
It says bring back tech.
Speaker 1 (24:06):
Interest in AI coding tools remains high among users and
mention capital alike ACEL has led a recent two orred
million dollar Series A route into Swedish vibe coding startup
Lovable and startup has become Europe's latest unicorn with evaluation
of one point eight billion. For more, let's bring an
Excel partner Ben Fletcher, So, Ben, what stood out for Lovable?
Why back it with such a significant sized Series A
(24:29):
for European standards?
Speaker 12 (24:31):
Yeah, I think it's a couple of things. First off,
thanks for having me on. It's really great to be
here and to chat a little bit more about Lovable.
But when we spent time with Anton and Fabia and
the two co founders, it was really really impressive to
see that they were a really, really technical crew. So
they had worked in research, they had worked in applied
AI research, but they were building a tool that was
(24:52):
applicable to the masses. So only one percent of the
world's population can code, and then the ninety nine percent
don't have that ability to code or to be able
to create things for the web. And so when they
looked at their experience of building applied AI systems, they
were to be able to take that and put it
to a platform that they built called Lovable that allows
(25:13):
them to offer to their users the ability to chat
or text based prompt to be able to create.
Speaker 13 (25:20):
Fully fledged applications.
Speaker 12 (25:22):
So that's a front end with a back end and
a fully working application.
Speaker 13 (25:26):
This is pretty incredible. If you talk with users, they say.
Speaker 12 (25:28):
It's magic, and so all those things got us really
excited to invest in Lovable.
Speaker 1 (25:33):
I mean, attraction has been phenomenal. I'm interested as to
who attraction then really ends up being with, because often
it's the non technical founder who just wants to sort
of put together initial idea of what the website where
they looks like and then they actually get a developer involved.
How long until that developer is no longer needed.
Speaker 12 (25:52):
The nice thing is is it's been non technical folks.
Speaker 13 (25:55):
It's been semi technical.
Speaker 12 (25:56):
Folks and technical folks that are using Lovable about the
technical folks that are using it on the weekends, making
it easier for them to get applications up and running.
And then you see semi technical folks, maybe the product
manager or the person that has had experience in the
past but wants to build something or they want to
be able to spin up a prototype and then pass
(26:17):
it on to their technical or their developer team.
Speaker 13 (26:20):
And then as folks that have.
Speaker 12 (26:21):
Never had any experience, or don't understand frameworks, or don't
understand different coding languages and their ability to actually get
something spun up and to be able to build a
fully functioning application.
Speaker 13 (26:32):
So all those folks are now are using it.
Speaker 12 (26:34):
We see this as a way to give the power
to the masses to be able to create. So now
if you have an idea, you can now build and
you can have full software to be able to have
a working prototype or also a working application.
Speaker 1 (26:49):
And I don't want to be sensationists, but I'm interested therefore,
push us forward ten years, twenty years. Developers still a
role one needs engineering, Still something that someone's going into
for engineering, I.
Speaker 13 (27:02):
Would say absolutely.
Speaker 12 (27:03):
I would say absolutely, Like you think about the engineers
that are building a lot, and it's always been how
do we abstract more and more things over time? And
so it started with cloud and with hosting with AWS,
and now you have it with applications. You always need maintenance,
You'll always need the ability to what are the right systems,
(27:24):
how do you make sure that everything works together?
Speaker 13 (27:26):
And it will go more into.
Speaker 12 (27:28):
The critical thinking and the critical aspects around engineering.
Speaker 1 (27:33):
Oh, go ahead, Well, no, I'm interested in talent writ
large a little bit at this moment, Ben, and you'll
see why within my question that you're saying how you've
batted them because of just the sheer, agility and expertise
that Anton and team bring. Now I'm thinking of another
coding application company like a Windsurf for example, which also
(27:53):
helps developers right code. And the fact that that very
elite part of the team basically got siphoned off to
Google this licensing deal. Qull it what you will, whether
it's an aquaha or not. Then how are you thinking
about structuring these deals going forward to protect all talent
and your own bet on lovable.
Speaker 12 (28:12):
Well, the nice thing is that where we sit and
where we partner, we're constantly partnering with entrepreneurs and our
idea is to make sure that we can align our
interest with them to build the biggest companies as possible
and companies that are really going to matter. Now you're
talking more around you know, M and A and acquihirres
and deals that are being structured from an enterprise perspective.
(28:38):
For us, it's always about one how do we make
sure that we can align our incentives with partners, so
with the companies that we're going to partner with and
then how do we make sure that we can support
them and we can support them to the best outcome
and what they ultimately want.
Speaker 13 (28:52):
If they want to go and they want to work
at these larger companies, that's that's great.
Speaker 12 (28:55):
We want to make sure that we can support them
and make sure that they have the ability to do that.
We'll also make sure that we protect URLPS and our
investors and make sure that we can return capital to them.
And so very similarly with Scale AI and with Meta,
Alex had an incredible opportunity. And the amazing thing is
that we still own as investors fifty percent of the
(29:18):
entity going forward, and so we saw it as an
awesome opportunity where a great company like Scale AI gets
to go and reshape AI in the future as well
as there's a lot of value that will continue to
being created and accrued over time to the investors and
to URLPS.
Speaker 10 (29:35):
Well.
Speaker 1 (29:35):
Certainly Cognition thought that about Windsorf, so all can win
in certain situations. Ben Fletcher, Axcel Partner, it's great to
have some time with you. Thank you very much, Indean.
Now let's talk about larger trends in venture investing two
and Pitchbook to release its funding data for the first
half of twenty twenty five. Senior Venture Capital Research Anasov
at Pitchbook, Emily Sung joins us.
Speaker 2 (29:55):
Now and Emily Look.
Speaker 1 (29:58):
One of the focuses has been an exit how much
of these aquahys bringing numbers in terms for you on
what is happening in Pitchmook data.
Speaker 10 (30:09):
Emina activity has been really interesting because a lot of
startups are really leading this trend. Because of the FTC
leadership hasn't really changed much in the EMMA landscape. This
has really led a lot of large startups to be
the forefront of acquires. But I think what's really interesting
and what the biggest topic in Q two was was IPOs.
(30:34):
IPOs did come back modestly, but I would say it's
more of a reset rather than a rebound.
Speaker 1 (30:41):
Okay, so we're now thinking, well, Figma is the one
to watch. They're already on their road show Eminy, So
is that going to be yet another one that helps
push open the door or really we're going to have
a tricular effect when it comes to IPOs.
Speaker 10 (30:55):
Currently, there hasn't been a really rush towards new filings,
mainly because of the August one and tariff deadline that
hasn't addressed a lot of key policy questions that still
need to be answered. For a FIGMA specifically, what's interesting
is that it's an order company, it's about thirteen years old,
and it also has a really.
Speaker 13 (31:14):
Large crypto balance.
Speaker 10 (31:15):
And a trend we've been seeing recently with the new
Trump administration is sectors that are focused on key policy
parties like crypto, AI, national security, defense and fintech has
really propelled recent exit activity.
Speaker 1 (31:31):
We're just hearing about Bullish looking to IPO as well.
So another one that adds to that crypto vibe eminy.
Speaker 2 (31:37):
What about just more.
Speaker 1 (31:39):
Generally liquidity needs so it takes people to the market
is because often it's your employees, your the VCS that are.
Speaker 6 (31:46):
Back to you.
Speaker 2 (31:46):
They want this moment.
Speaker 1 (31:48):
Are you seeing liquidity needs though, be satiated in the
secondary market a lot more?
Speaker 10 (31:54):
The secondary market is really interesting. It has been growing rapidly.
I publish a quarterly report on I pitchbook and the
market currently is about sixty billion dollars and that's significant,
and that's the annual value as of Q one, But
sixty billion, for context, is about two percent of primary
Unicorn valuations and about a quarter's worth of primary VC
(32:17):
exit value, So it's notable, but it's also not big
enough to be the new IPO for example. And with
the secondary market, it's important to realize that the concentration
is super high in the top twenty to fifty unicorns,
So unless you're an investor in one of these top startups,
(32:39):
you're not necessarily benefiting much from the secondary's market right now.
But there is a lot of growth in the space.
The number of funds that have invested in VC secondaries,
the total fund value has doubled since twenty twenty two,
which really shows investor interest in the secondary space. And
(32:59):
I do for you continuing to grow.
Speaker 1 (33:01):
I mean, you talk about that concentration when it's looking
at those that are able to tap the secondary market,
what about concentration and those that can ultimately come for
an IPO as well. I mean, there's no surprise that
Figma is probably going to be leaning in on its
AI advantages. Is it still all about gen ai and
that trend.
Speaker 10 (33:19):
Ai is really dominating VC right now. It's captured about
two thirds of the deal value in twenty twenty five,
but only about a third of the deal count, which
really shows the concentration in AI, and I think AI
will continue to be a really big theme. Of course,
foundational models have captured a lot of VC dollars in interest,
(33:39):
but what's also really interesting is that AI is fundamentally
changing how businesses are operating and their fundamental models throughout
a variety of sectors. So it is really transformative and
that's why I Venture is funneling a lot of dollars
into the space.
Speaker 2 (33:57):
And lastly, were talking very much.
Speaker 1 (34:00):
I know you focus on the US in terms of
the data, but what does.
Speaker 2 (34:03):
It look like globally.
Speaker 1 (34:04):
It's still the US the nexus when it comes to
at least coming and tapping the IPO market and more
companies coming internationally to tap that market.
Speaker 10 (34:12):
The US is currently still dominating the IPO market and
in general, across the world, deal making exit activity has
remained muted. Venture really doesn't like volatility, and there has
been a lot of volatility recently, and until some key
questions are answered like the third for instance, the tariffs,
(34:33):
trade wars, geopolitical tensions, there probably won't be muted deal
making exit activity until those questions are answered.
Speaker 2 (34:41):
Emmani Sung, we thank you so much.
Speaker 1 (34:43):
Inventure capital research anaist over at pitchbook great to get
the breakdown. Chicago, it is host to the Global Quantum Forum,
happening this week, is where top industry leaders are set
to discuss the future of the sometimes hoped technology. Let's
join Jeremy O'Brien over in Chicago. It's High Quantum co
(35:06):
founder and CEO Sside Quantum. It's currently building out the
Quantum Computer campus in Chicago. And Jeremy, before I ask
exactly what you're going to be doing in the force
of quantum, but first, why was Chicago the place to
be spending I think at least a billion is what
you're committing in capital.
Speaker 8 (35:22):
Yeah, so Chicago, we figured it was the best place
in the world to do what we're doing here, which
is building the country's first utility scale quantum computer. And
that's really about an understanding that that folk here have
of just how big and hard it is to build
a system of that scale.
Speaker 1 (35:43):
Let's talk about, therefore, the application, because I maybe loosely
say that quantum is often hyped. The hype is around
when it can be purposeful. When it is going to
be really truly useful, we have breakthrough after breakthrough, Jeremy,
how are you going to be offering something really useful
for commercial purpose?
Speaker 8 (36:00):
Yeah, you're right there. There has been a ah, a
lot of hype and a lot of talk of breakthroughs,
and fundamentally, I I my my view is that breakthroughs
UH precipitate a decade or more of of hard work,
you know, r real hard technological development. It's not breakthrough
(36:20):
and then suddenly you have a new technology. And that's
certainly true UH with quantum computing. And so our breakthrough
UH was a decade ago UH when we were university
professors and we figured out a path whereby we could
leverage the uh, the semiconductor industry and the trillions of
(36:40):
dollars that have gone into that and adjacent industries to
build uh the real thing, UH, which is a million
cubic scale UH fault tolerant, utility scale quantum computer. And
so that's what we're d that's what we're doing right
here in Chicago.
Speaker 1 (36:55):
Your professor over at Stamford at Bristol Universities as well, Jeremy,
and I'm thinking about how tonics has become the area
of real focus for you.
Speaker 2 (37:02):
How does that differentiate you from what others are doing.
Speaker 8 (37:06):
Yeah, so you're absolutely right. It's the silicon photonics platform,
uh that we spent uh twenty years figuring out what's
the platform that enables us to leverage that semiconductor industry
because it's been my conviction since I don't know, the
mid mid to late nineties that unless we figure that out,
(37:27):
it's not gonna happen in my lifetime. And uh, when
we figured that out, uh, we established uh Psychonum, and
we spent you know, many years and uh much blood,
sweat and tears grinding away at the really hard uh
semiconductor engineering problems to to make that work. And now
(37:49):
we're at this point where we're we're poised to you know,
to break ground and build that facility here.
Speaker 1 (37:55):
Can you hate to say put yourself against the competition,
but when you've got IBU.
Speaker 2 (38:00):
Am out there saying here in Upstate.
Speaker 1 (38:01):
You're not New York, we're going to be getting there
by twenty twenty nine, a real use case quantum computer. Jeremy,
you've got the race on with well companies we've helped
advise before. When I'm thinking about Microsoft up to AWS
and Google, where are you in comparison to that race,
as we like to put it.
Speaker 8 (38:18):
Yeah, firstly, I'm not sure that it's a race when
it comes to hard technologies. It's in some sense it's
a filter, right. But you know, I can't speak for
all the other different folks that are out there are
pursuing this, but I can say that, you know, our
approach has been very different from the beginning, which is
(38:40):
to really focus on the scale that's required for really
valuable commercial applications. And it's been the case for twenty
five plus years that that's a million cubic scale system,
and so we have uh had nothing to do with
(39:01):
doing small UH demonstrations proofs of principle of quantum computing.
And that's been a a very deliberate approach because it's
a bit my You know, if you if you're trying
to get to the top of the Sears Tower here
in UH in Chicago, UH, then you know, ladders are
a good way to to try and get to the
(39:23):
to the top. But if you wanna get to the moon, UH,
ladders are not really the way to get you there.
And so we've taken a pretty antithetical approach, I would say,
from from the beginning, which is to really focus on scale.
And so when you're talking about a million qubet scale system,
as I said, it's been you know clear to me
(39:46):
uh for a very long time, right. The only way
to be able to do that is to leverage the
you know trillion dollars uh and you know better part
of a century that went into the semiconductor industry and leveraged.
Speaker 1 (39:59):
So that's what and a billion that you're going to
be investing in that project. And you take us to
the Sears Tower, I go back to Chicago.
Speaker 2 (40:06):
What has the workings been like with the governor?
Speaker 1 (40:08):
Why have you managed to think that that is going
to be where the talent pool is basically for you
going forward?
Speaker 8 (40:14):
Yeah, I think from the governor to the aldermen and
the entire ecosystem, we've really enjoyed great partnerships here and
it's been driven by, as I said earlier, the understanding
of just how big, complex and hard this project is.
To build a utility scale on a computer that's a
(40:36):
that's a very big, hard project. And I'll give you
just one example of that. Early in our interactions with
the city and the state, a big delegation came to
us in Silicon Valley led by the Deputy Governor and
the head of Commed. The power utility came to that
(40:56):
very first meeting, and I think that's a big different
intiator for us as an organization and for the ecosystem
here is to understand that, yeah, we need to get
you know, we need to get power to the side,
et cetera, et cetera. So that's that's a really big
part of our decision.
Speaker 1 (41:13):
Well, Jeremy, have a great time at the Chicago Quantum event.
You are, of course Jeremy O'Brien of Side Quantum. Now
that does it for this edition of bluemg Tech, quick
check in on the NASLAK which is at a record
high once again, Nasak one hundred and two.
Speaker 2 (41:28):
We have got earnings thick and fast.
Speaker 1 (41:30):
This week we embrace ourselves for Wednesday, the Tesla Alphabet
and IBM.
Speaker 2 (41:34):
Don't forget to check out our podcast as well. This
is bluemeg Tech
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