October 8, 2025 • 44 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss the curious financial structure Elon Musk’s AI startup, xAI, is using to expand its ongoing fundraise. Plus, Tesla unveils cheaper versions of its top-selling EV models. And, the UK Minister for AI discusses increased investments between the UK and US on tech innovation.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde and New York
and Eva Low in sentences, go.
Speaker 2 (00:23):
This is Bloomberg Tech coming up. Elon Musk's XAI taps
big name investors, including Nvidia in a curious piece of
financing for GPUs. Bloomberg breaks the story wide open.
Speaker 3 (00:35):
Plus, Tesla unveils cheaper versions of its top selling EV models.
Speaker 4 (00:39):
Will it help with falling sales numbers? We'll discuss.
Speaker 2 (00:42):
We sit down with the UK Minister for AI to
discuss increased investment between the UK and US on tech
innovation and a whole lot more.
Speaker 3 (00:51):
First, that's check in on these markets that rally once again,
if you're looking in then aw's that one hundred ed
It is your key players, it is the in video's mds.
We're talking so much about the relentless intertwining of generative
AI players at the moment in the market. But what's
notable is we still are thinking about fundamentals. We are
still thinking about how far we've come from the lows
of April.
Speaker 4 (01:09):
But what are you looking at underneath the hood.
Speaker 2 (01:11):
Let's get to our top story overnight, Bloomberg broke details
of a financing mechanism that Xai is using for the
GPUs that are going in Colossus too. Our understanding from
sources is that an SPV or special purpose vehicles formed.
They use debt inequity to get the capitol by the GPUs.
XAI rents or leases those GPUs from the investors and
(01:36):
pays them that fee over time. In Video is involved,
it's getting involved in the equity piece. This morning, in
Video CEO Jensen one confirmed a whole chunk of our reporting. Carrow,
this is very complicated. Let's get into the specifics.
Speaker 4 (01:51):
Let's do exactly that.
Speaker 3 (01:52):
Sticking with the two key players in Video and Xai,
bloom most common.
Speaker 4 (01:56):
ROYO is with us.
Speaker 3 (01:57):
You help break the story with Ed and I just
want to get to grips of how creative this financing
actually is. How often do we see SPVs being set
up to buy GPUs and use them as underlying assets.
Speaker 5 (02:09):
Hi, thank you for having me. We've seen aspvs in
the past before used for other type of assets. It's
quite common in Wall Street to basically use assets as
collateral instead of putting corporate debt, but it's becoming much
more interesting and much more common to see tech giants
basically do this type of deals because they don't want
to put a lot of debt on the corporate balance sheet.
(02:32):
So I think we're going to see more of these
in the future.
Speaker 2 (02:36):
Common It's been a busy couple of days chasing this one, right.
So the structure is twenty billion dollars, most of it
is debt and there is some equity in there. And
this morning in Video's CEO Jensen One went on another
network and in an interview essentially confirmed in vidious participation.
(02:56):
Just give us the rest of the details that we
put in that story.
Speaker 5 (03:00):
Sure, So it will be at least twenty billion of
capital basically to buy the chips that xa I will
use for this data center in Memphis. And there's going
to be like a variety of Wall Street investors in
the dead We know Apollo is in a diameter. We
reported as well. The equity will have a number of
investors as well, including Valor, who's leading the financing. But yeah,
(03:24):
and Videos invested in the equity, which is really interesting
given that they're basically using that money to buy their
own chips.
Speaker 6 (03:31):
Where do we go from here?
Speaker 2 (03:32):
I mean It's really difficult because I feel there's a
lot more reporting to be done. The piece of the
mechanism that I'm trying to get my head around is
that there's an SPV and Xai rents and leases the chips.
We think over a five year period, what are the
investors get in return, Like are they going to get
a stake in Xai? Are they just being paid rent basically?
(03:53):
And then that covers their debt obligations.
Speaker 5 (03:55):
What do we know, Well, well, from what do we know,
they get the least payments, which is how they can
amortiz with debt overtime. So basically you get like yeah,
like monthly quarterly payments for the financing, so you kind
of like pay down the debt that way. But the
idea from what we understand is basically at the end
of it, you still have like the chips that have
some value right after the five years, so that stays
(04:18):
within that SPV.
Speaker 2 (04:20):
I would say just very quick that we haven't heard
from Elon Musk or Xai, Gensen, Wang and Nvidia haven't
responded to us formerly other than declining to comment, so
we'll keep a track of this one. Bloomberg's Carmen a Roya.
It's great to work with you in the newsroom. Thank you.
So that latest funding on Nvidia into ex Ai only
adds into what is now complex web of aideals that
(04:41):
have been occurring. It's the topic of today's Big Take,
looking at the circular transactions happening within the AI market.
Bloomberg's Ai editor Seth Figgerman joins us, Now there is
this big one trillion dollar headline figure and if you
draw up a mad web with red string on a
ball of where everything's going, it all kind of touches
(05:03):
in Nvidia and open Ai. Give us the top line
of the big Take.
Speaker 7 (05:08):
Well, we did try to draw that mad web of
red string and our graphic, and also thank YOUEV for
the extra newspeg overnight with the great scoop on video.
But yes, I think ultimately we have seen something resembling
circular or interconnected deals for a lot of the A boom.
But it's getting to the point where it's harder to ignore.
There are just dozens of investments and business partnerships and
(05:28):
chip agreements primarily that all lead back one or two
steps are moved to Nvidia and open Ai, and the
size and scope of these have just grown exponentially, particularly
as open ai itself has kind of gone from saying
we're going to spend billions to possibly trillions on the
infrastructure of the support this sect. Also, I think, as
in Vidia has become a four point five trillion dollar
company that's very eager to keep the good times going
(05:49):
by spreading the money around.
Speaker 3 (05:52):
Seth talk about the good times and really whether anxiety
is vindicated here.
Speaker 4 (05:57):
The worry on open aiyes front, is that at the moment.
Speaker 3 (05:59):
It's loss making, and so how does it eventually pay
this back? But you have to bet on its growth
and its ability to get revenue. Nvidia has the money,
and that's in many ways why Goldman, for example, is
saying this is not like the dot com era, even
if we are seeing these complex web of integrations and relationships.
Speaker 7 (06:17):
I think both things can be true. You know, ultimately,
a lot of what's backstopping the AI boom, as we
know are these very big tech companies with very healthy
balance sheets and massive cash stockpiles, including in Nvidia. On
the other hand, I think the graphic makes quite clear
and the story itself that increasingly a lot of these
companies are very bound up, particularly open AI affirmed that
while it's a decade old and a household name everywhere,
(06:38):
has never turned the profit and plans to spend you know,
hundreds of billions if not more, including through debt. So
you know, I think both things can be true. Is
it in Vigia about to go bust tomorrow because of this? No?
But is there a heightened exposure to all these companies
because they're tethering themselves to a handful of you know,
fast growing but still unprofitable AIS startups. Yeah, there's a
(06:59):
risk in.
Speaker 3 (07:01):
Meg Seth Fiegeman, thank you for talking us through what
is an amazing piece of data journalism as well.
Speaker 4 (07:05):
Go read it the Big Take.
Speaker 3 (07:07):
Let's get more investor analysis now, though carrosh life for
more as chief market strategistic BIMO Private Wealth has one
hundred fifteen million dollars in assets under management.
Speaker 4 (07:15):
And Carol, I'm interested in.
Speaker 3 (07:17):
There's a great line in that Big Take coming from
Stacy Ragson over at Bernstein saying basically, Sam Altman is
either going to drive this economy lower, We're going to
see the world economy tank or he's taking us to
the promised land.
Speaker 4 (07:30):
Which way are you seeing it going?
Speaker 8 (07:32):
I'm not sure it's either or First off, thanks for
having me. I'm joining you from Toronto today. Or we're
doing a Female Eurasia Group US Canada summit. So there's
a lot of discussions on AI and other things like
that going on here.
Speaker 5 (07:46):
But I'm not.
Speaker 8 (07:48):
Sure it's all good or all bad. It's someplace in between,
and there are a lot of things to watch. I
love the Big Take already. I caught it in the
middle of the night and sent it out to a
number of co workers, especially the graphic in they're showing
that circular nature that's very much like some of the
stuff we saw go on in previous bubbles. But as
(08:10):
your reporter commented on, you've got right now. It's backed
by big companies with very solid balance sheets, and they're
generating revenue off of that. The one thing that we
keep in mind for our investors, though, is that you've
also got a very concentrated stock market because of that
circular nature and the interrelated deals that they're all doing.
(08:31):
If investors start questioning one, you could get a ripple effect,
but it would be a rip effect. Perhaps you lead
to some sort of pullback, which we haven't had since April,
but we don't see it rippling through the economy and
taking known major suads of the economy. So it's a
very nuanced answer, but it's it's rarely ever all black
(08:54):
or all.
Speaker 4 (08:55):
White, Carol.
Speaker 3 (08:56):
What we are trying to see though, is actually who
takes the most the profits available from all these deals
in video clearly massively revenue generating and profit generating. But
then you think of Oracle and some of the questioning
about how much of a margin they make on a
three hundred billion dollar contract for open AI. How much
do you have to do the due diligence on individual
names right now?
Speaker 4 (09:17):
Well, I think you really do it.
Speaker 8 (09:18):
The market's not much because I mean one of the
phrases we've been using all week is the market seems
to be acting like no news on economic data or anything.
No news is good news, and off we go to
new highs. But you have to be very discerning. But
we've always been a combination of top down and bottom
up in what we're looking at things. And you also
(09:39):
have to, especially in a diversified portfolio, realize you might
be over concentrated even if you're doing individual securities. If
you own a passive index fund. If you own an
AI specific or a technology specific ETF, you've concentrated it
even more. And so it's doing some of that and
it's stepping back and doing some good portfolio hygiene looking
(10:00):
back perhaps at where we started the year, taking some
of those games off the table and shifting them around
to other sectors that are potential beneficiaries. Because we have energy,
we have nuclear, we have a lot of things that
have to happen for those for the switches to go
on in those data centers.
Speaker 2 (10:16):
Carol, you've had a decorated career of markets as a
chief investment officer. I just want to run the mechanism
that I reported overnight passed you again a special purpose
vehicle where you have both debt inequity pulled together by
a group of investors who buy GPUs and then in
this case XAI rents those GPUs or leases them from
(10:40):
the special purpose vehicle. I haven't heard of this structure before,
but just as a structural consideration in financial markets and
the debt load and where it's placed, how do you
react to that?
Speaker 8 (10:55):
I think it'll be a really interesting earning season because
I'm sure a lot of analysts will be asking those
detailed questions because we're starting from a place with a
lot of those companies other than perhaps Oracle, as I
understand it, we're starting from a place of pretty pristine
balance sheets. You also have tax benefits that accrue to
some where. I'm not sure exactly how their accounting works
(11:19):
in terms of who's expensing everything, who's capitalizing some but
you have to capitalize less stuff now, so if you've
got the earnings to support writing it off, it's less
damaging to the balance sheet. But it is indicative of
the fact that Wall Street staffed up at the end
of less year with an awful lot of deal making
people that I've had a lot of time to think
(11:41):
really creatively about how to put this stuff together. So
as an investor, it makes a job that much more
difficult because to your point, you really have to figure
out what's on the balance sheet, what's not on the
balance sheet.
Speaker 2 (11:52):
Carol, there's a lot we don't know as well, like
the tax consideration.
Speaker 6 (11:56):
I'm trying to get after it.
Speaker 2 (11:58):
Oracle one hundred billion dollar is a debt swinging to
negative free cash flow for the first time since nineteen
ninety two. I've been tracking the data do you.
Speaker 8 (12:09):
Yeah, we track some of it, and we've got a
lot of analysts in our global asset management and capital
markets units that get really specific about that. I don't
as much anymore on a macro basis, but I listened
really hard, and I asked the questions, and I started
a couple of months ago asking the some of the
research teams, how are they financing these deals? How are
(12:30):
they dealing with you know, when does it shift to debt,
because at the time it was all coming out of
cash flow, and I wanted to understand too, what goes
right through the income statement so it's never showing up
on the balance sheet Because an Nvidia chip isn't going
to last twenty years, and anything less than twenty years
you can technically write off against earnings in the period
you do.
Speaker 6 (12:50):
It twenty years.
Speaker 2 (12:52):
So most investors I speak to you say try five years.
Carol Stone. Right, you've been brilliant. You've been brilliant. We're
really grateful for your time here, BG Tech, be MO,
Private Wealth Corosh Live.
Speaker 6 (13:02):
Thank you.
Speaker 2 (13:03):
Now, coming up on the program, we're going to take
another look at Tesla's cheaper, cheaper version of its top
selling EV models and if it can help with falling
sales numbers.
Speaker 6 (13:12):
That's next. This is Bloomberg Tech.
Speaker 3 (13:21):
Kees Left just unveiled new cheaper versions of its top
selling models, priced it under forty thousand dollars to make
them well more affordable in an effort to counteract the
loss of US incentives for electric cars.
Speaker 4 (13:33):
One of the most croterd L who covers Auto's joins
US Now for more.
Speaker 3 (13:36):
How much cheaper? Let's get specific on some of the
price data and what you're losing for that.
Speaker 9 (13:42):
Yeah, you know, it's somewhere in the range of eleven
or thirteen percent cheaper relative to what the base model
three and Model Y we're costing prior to this. However,
when you take into account the seventy five hundred dollars
text credit that's gone away and what it would have
cost you to buy those base models, you know, even
just you know, a week ago or so, these models
(14:05):
are are you know, two thousand dollars more expensive and
for less content? So you lose a second row screen,
you lose ambient lighting, you have less battery range, slower accelerations,
So you know, will this be helpful for the incremental
consumer who was maybe on the sort of line of
being able to afford versus not being able to afford
(14:27):
a Tesla. I think it does help Tesla's you know,
business in that regard. But it's also a case of,
you know, not necessarily a slam dunk if you're a consumer,
because you're giving up a lot for you know, for
for a lower price, and you know, there is a
real sort of value equation here here to do.
Speaker 2 (14:49):
We reported about twenty four hours ahead of time that
there would be a standard model Y. We did not
report that there would also be a three, and there was.
But I think if you could recap some of the
reporting we did on where they engineered out cost, because
the reaction on social media at least has been like,
hold on, so if you engineered out seventy percent of whatever,
(15:10):
why is it only thirteen percent cheaper.
Speaker 9 (15:13):
Yeah, it's a really good question. And I think, you know,
I go back even to April of last year and
when you were reporting on the sort of idea that
a twenty five thousand dollars Tesla was sort of falling
by the wayside. You know, Tesla sort of came right
out and sort of responded to those reports by saying
that they were going to introduce more affordable models, and
(15:35):
they sort of alluded to this idea of taking some
elements of this next generation you know, vehicle that they
were going to sort of incorporate into their existing lineup.
I don't get a whole I don't really get much
of a sense that they've actually done that.
Speaker 5 (15:51):
Here.
Speaker 9 (15:52):
It feels more like they've just decontented these vehicles. And so,
you know, to the extent that I have questions for
Musk and the management team, it's how much are you
actually sort of innovating your vehicles versus just taking things
out and then you know, charging consumers less because you've
taken cost off of your own cost of goods sould
(16:13):
And you know, that's pretty unclear at this juncture whether
they've actually, you know, done things with the batteries, with
the motors.
Speaker 6 (16:21):
Or have they just taken away content.
Speaker 2 (16:23):
Yeah, yeah, I mean the engineering side, that's what we
had heard. Blue Bells creator ow our Global Autos editor,
thank you so much. Let's continue the conversation with Steve Wesley,
founder and managing partner of the Wesley Group, a venture
firm with seven one hundred million dollars of assets, on
the massive management but we go to Steve because at
one time Steve sat on Tesla's board and shaired their
audit committee. He's also been involved at state level finance
(16:47):
at a high level for a long time.
Speaker 6 (16:50):
You heard all of the reporting.
Speaker 2 (16:51):
I'm sure you've been on Tesla's website and looked at
the vehicles. The story here is the impact that is
seventy five hundred dollar federal tax credit was having on
the EV market in America?
Speaker 6 (17:04):
Is it not?
Speaker 10 (17:06):
Well, it's going to have a big impact. Look, the
big question here is this is a step in the
right direction. Tesla's bringing prices down, But at thirty seven
K for the Model three, is that low enough to
attract the new class of buyers? And step back a bit.
Thirty seven k it's less than the average US internal
combustion and engine vehicle, which day stands at forty eight k.
(17:27):
But can Tesla's new model compete with the EV from
Volkswagen at hyunda A and the US at twenty seven thousand?
And how are they going to compete with those twenty
thousand dollars Chinese evs that bid is bringing into Europe.
So I think there's a chance the new slim down
Model Y. It's going to bring in some new buyers
(17:48):
for sure, but how much is it going to cut
into the premium market and are they going to end
up ahead at the end of the day. Looking forward,
battery prices are going to continue to drop. This may
be a stopgap measure, but Tesla, I believe, still needs
that twenty five thousand dollars model to get into new
(18:08):
developing markets and attract for first time entering buyers in
the US.
Speaker 2 (18:13):
You know, Tesla considers itself a technology company and the
leader in global engineering. Right when you were at Tesla,
it was about Model S principally and like that was
value for money because it was so performant and had
all of these bells and whistles with it. I guess
the root of my question is why would they release
(18:33):
this vehicle? You know, to many people, it doesn't live
up to that engineering or technology value that Tesla's given historically.
Speaker 10 (18:42):
I think you put your finger on the problem. Tesla's
a premium vehicle. They charge a premium and people expect
to have the latest and greatest, and I don't think
they're really seeing that. You see these other brands like
VIEID with twelve models and Swagen and the eight I
Think and General Motors with ten ge Whiz. Tesla has
(19:05):
only had five models in its history, and the cyber
truck barely accounts because that was a flop. People want
to see new technology, new products coming into market. I
really think they need that twenty five thousand dollars car.
But they've got to do both. They not only need
to bring new models and lower cost cars to market.
At the same time, they have to deliver on this
(19:26):
promise of getting full self driving out there, staying competitive
with Weemo. They've got some things to prove.
Speaker 3 (19:32):
Stee that is the technology that they're now betting on.
The innovation cycle moves towards robotics and wards to automation.
How integral is the cash cow of car sales to you.
Speaker 10 (19:44):
Well, again, they've got to do both. When you have
a company that's trading at a two hundred and fifty
price to earnings ratio, that's nosebleedy high. I mean, gosh,
in VideA is only at fifty to one. So they've
got to show that they can not only bring new
products to market, stay in the ballpark price wise. I'm
(20:05):
not sure a four k reduction really gets them there
and get licensing in new cities so they could show
that their full self driving is going national and hopefully international,
and that they're going to be a deliver on this
humanoid robots. They've got a tough road ahead to show
that they can stand up to the evaluation they currently have.
(20:27):
Now aren't argue with one point trillion dollar market cap,
but I'm not sure investors will buy that for.
Speaker 3 (20:33):
A long I mean, briefly, you just mention the valuation
difference between Nvidia and Tesla, but we know that Jensen
Wang saying I wish I put more money into Xai,
for example in the SPV because he wants to back
anything Elon does. Steve, what would it take for you
to be interested in buying back into Tesla as a shareholder, Well.
Speaker 10 (20:51):
You'd want to see real progress full self driving. You know,
just as the world's going all electric, it's going autonomous
faster than people realize. You're going to see that in
the next year with way moost growth. The question is
is Tesla going to be right in there as a
major competitor or not. At the same time, you're absolutely right,
we're heading into this new world of autonomy in everything
(21:13):
from the factory floor to vehicles, and people are going
to want to see this new humanoid robot can tessly
be cutting edge at new areas. Now, who wants to
bet against Elon Musk for all he's developed at SpaceX
Starlink and frankly you've got to give him credit for
reinventing the auto industry. But the last three years have
(21:33):
been lean and you look at three years of flat revenues.
People need to hear that new story and I think
they need to hear it soon.
Speaker 3 (21:41):
Steve Westley of the Wesley Group always great catching up
with the thank you now coming up. SoftBank gets in
on robotics, talking of it in a new deal, furthering
Masochi Soun's growing bets on the emerging tech and AI.
Speaker 4 (21:52):
Do's something that tech time now for talking.
Speaker 3 (22:02):
Tech and first up SoftBank as we used to buy
ABB's robotics unit, which supplies industrial arms and robots to
manufacturers in a factuck four million dollar deal.
Speaker 4 (22:10):
And this is says Softbag CEO.
Speaker 3 (22:11):
Masayoshi's son aims to build data centers across the US
in partnership with Open Ai and Oracle Plus.
Speaker 4 (22:17):
Ali Baba has set up an.
Speaker 3 (22:19):
In house robotics team part of its effort to develop
physical AI. The team sits within the unit responsible for
the company's main AI foundation models units. Leader Justin Lynd
says the focus will be motormodel models, which he predicted
would become foundational agents.
Speaker 2 (22:34):
Okay, coming up, we're going to speak with Kristin Smith, Solana.
Speaker 6 (22:37):
Policy Institute President.
Speaker 2 (22:39):
As signs of some Bitcoin support begin to fade a little,
a big crypto segment coming up next from San Francisco
and Los Angeles.
Speaker 6 (22:48):
This is Bloomberg Tech.
Speaker 2 (23:01):
Welcome back to Bloomberg Tech if you're just joining us,
So I thought'd give you a little bit of a
flavor of what tech's doing in financial markets. And now's
that one hundred up about a percentage point. There's buyers
for stocks in tech right now. It's mostly the chip name,
so they're pushing us higher, but some megacaps as well.
And of course we've been talking all morning about what's
happening with Xai and Nvidio and some other folks. And
I'm sure we'll do a bit more. And there are
(23:23):
one million bitcoin headlines on the Bloomberg terminal. That's not
an exaggeration. If I had time, I'd read them all
to you. But are about one hundred and twenty two thousand,
five hundred dollars per token on bitcoin. Bitcoin's five this
year right, rising thirty percent year to date, with the
help of easier monetary policy. By the way, a lot
of FED speakers over the next couple of days and
also a week of dollars played its part, But the
(23:45):
cryptocurrency's rally is poised to fizzle a support fades. A
part of that is some of that headline that I
was talking about on the Bloomberg terminal.
Speaker 6 (23:52):
Joining us now as.
Speaker 2 (23:53):
Kristen Smith, Solana Policy Institute President. Oftentimes when you come
on the program, something has happened. It might be a
piece of legislation or someone has said something. There are
many news stories tangentially linked to bitcoin right now, but
I don't see like one single catalyst that's holding up
an entire crypto industry.
Speaker 11 (24:13):
Well, I do think there is one common thread right
now among the crypto industry, and that's that this year
we have seen tremendous progress on the public policy front.
We've had a very strong leadership by the White House
with the executive orders, We've had the stable coin legislation,
the Genius Act sign into a lot this summer, and
then we have the SEC's Project Crypto, which is issuing
(24:37):
guidance for how securities laws apply to this space. And
so I do think as we look across crypto generally,
but specifically to Bitcoin and also Solana, which I care
deeply about, we have this common thread of it's okay
if you're an asset allocator or if you're in exchange
or a bank to be looking at this sector because
(24:58):
it's going to be a part of our financial future
going forward.
Speaker 6 (25:02):
Kristen, we have a government shut down.
Speaker 11 (25:05):
We do, we do well. Crypto markets never sleep, but
the government what the agencies do? Yes, I listen. I'm
not going to allow to you. It is a short
term setback to have the federal agencies shut down right now,
particularly with the SEC and the CFTC. We have over
ninety percent of the staff furloughed at those agencies right now,
(25:27):
and so that means routine things like approval of new
S ones or S three's have a real impact, particularly
when it comes to things like Solona exchange traded products
which are on the cusp of going live. We just
need to get the corporate finance staff at the SEC back.
Or Similarly, new IPOs in the cryptospace like bitco are
impacted by the shutdown. But Congress is working, the Senate
(25:51):
is in and the legislative discussions are continuing there, and
so I think this is a short term set back
and as soon as the government opens up, we'll be
back on track.
Speaker 3 (26:00):
What's interesting is some of the froth or the constant headlines,
a million of them as ed references, but they were
all about digital asset treasuries at one point.
Speaker 4 (26:09):
And that seems to have cooled a lot.
Speaker 3 (26:11):
I'm even looking at Strategy, the office formerly known as
MicroStrategy now off by about seven percent in the last
few days alone. Is the wind coming out of that
particular trade sales?
Speaker 11 (26:21):
Well, I think there was a lot of interest over
the summer, and I think there is continued interest and
there will be some consolidation. But if you step back,
if you look at digital asset treasuries, what's going on
here is that for a long time, there were no
way for traditional investors to access exposure to crypto assets,
and digital asset treasuries have kind of filled that void.
(26:43):
In the more favorable regulatory environment, and I think what
we're seeing these digital asset treasuries do is, yes, they
are accumulating the token, but they're also participating in the network.
So in the case of Solana, they are staking it.
These stats are operating validators, and they're trying to be
good stewards of the treasuries in ways that are a
little bit more expansive than an ETF will be able
(27:06):
to do once those are approved. So I do think
dats are going to continue to play a role. I
think will likely probably see some consolidation among the dats
going forward. But I think if you think about it,
for a long time, these treasuries were held largely with
foundations that were limited in what they could do, and
you know with the treasuries of tokens they were sitting on.
(27:27):
So I think the dats are new and innovative model,
but it's also a way for investors to have a
different option for getting exposure to these assets. And with
something like Solana, we think this is going to be
the future rails for finance, and so it's a great
way to get exposure to the asset class.
Speaker 3 (27:46):
I'm looking at Silana up one hundred percent in the
last six months alone, Kristin. But this isn't just an
American story. This isn't just about regulatory clarity in America.
They see global assets. What are the countries are doing
it right right now?
Speaker 11 (27:58):
Yeah, Well, I think Dubai is one hub that is
particularly strong. I think Switzerland has also had a lot
of interest, and there's incredible excitement coming out of different
parts of Asia, and so yes, I think the fact
that this is a global technology is what makes it
so compelling. It means that you can have anyone who
has access to a phone on the same set of
(28:20):
rails and provide the same access to investors or access
to investment opportunities, and so I think it's a really
exciting potential. And I think as the US continues to
move along and get these good policies in place, we're
going to see more competition and maybe even a bit
of freeing up of some of the more restrictive policies
(28:40):
around the globe. But we are seeing competition, particularly out
of the Middle East and Asia.
Speaker 3 (28:45):
Christian Smith said on a policy it's always great to
have you back on the show.
Speaker 4 (28:49):
Thank you.
Speaker 3 (28:49):
Coming up, we continue the story of what's happening elsewhere
outside of the US because it's the UK Minister of
Aisha and Narayan is joining us.
Speaker 4 (28:58):
We're talking about the leeds.
Speaker 3 (28:59):
And the founders actually gathering in San Francisco for the
Tech Week upon US right now is a grupo tech.
Speaker 2 (29:19):
San Francisco is host to Tech Week, bringing companies and
leaders from around the globe. The discussion dominated by AI.
Speaker 6 (29:26):
Shocking.
Speaker 2 (29:27):
Joining us now is Kanishka Narayan, UK Minister for AI
and also Parliamentary Undersecretary for the State in the Department
of Science, Innovation and Technology and Minister welcome to the program.
We heard you know it's timely your visit s F.
Tech Week is a tech week, but you come here
with a large delegation of both on the policy side
(29:52):
but the companies themselves. Why what is it that you
hope to get out of being here?
Speaker 12 (29:57):
Well, I think AI is a central focus for us
in UK. It as a fundamental part of our growth mission.
And one of the things I'm most focused on here
is to talk up the UK US Tech Prosperity Deal.
It is a historic deal in its scale. We have
a record set of investments, the biggest ever investment by
Microsoft and cumulatively tens of billions getting into the UK
(30:18):
and deepening our collaboration. But fundamentally on scope, the UK
and US have a deep history of a special relationship.
Speaker 13 (30:23):
We are renewing and rewiring.
Speaker 2 (30:25):
That for the AI economy, mister Narron, the United Kingdom,
as Europe is, is very dependent on very large American
technology companies making investments and innovating. Is that a fair
statement to your mind? And how conscious is your government
of a dependence on both the software and hardware side.
(30:49):
What American companies are doing well?
Speaker 12 (30:51):
Again, I think in any marriage you talk about mutual
dependence and a mutual sense of recognition and acknowledgemental strengths.
In Britain we have an amazing AI economy. In particular,
we have deep Mind, the home of a bunch of
transformer models. We have a great chip design company in
arm located in the UK, and we have a budding
sense set of entrepreneurs for the future of AI as well.
(31:12):
And so we have a lot to offer to the analysis.
But of course we want to do it when recognizing
the deep transfer of the US has That's why I'm
here opening the doors for UK and US businesses to
work more closely together.
Speaker 4 (31:25):
Kenichika.
Speaker 3 (31:25):
You mentioned great names, but Deep Minds Open, owned by
Alphabet and Masioshi Son in Japan generally controls ARM a
little bit of it trades, and it trades on US indices.
Speaker 4 (31:36):
And I'm interested from.
Speaker 3 (31:37):
Your perspective therefore, how much you're likely to see AI
rewire that how much does the UK want them to
be dependent on the UK or you ultimately all still
about trade independence on other nations too well.
Speaker 12 (31:49):
I think Caroline as a great question, but the fundamental
thing I'd say is that we want to be open
to the world in terms of business. So if people
want to come and invest in fantastic talent and fantastic
businesses in the UK, we are open for business. At
the same time, of course, we want to make sure
that people coming through our universities, people wanting to build businesses,
have capital, have compute, and fundamentally have a deep community of.
Speaker 13 (32:10):
Support in the UK as well.
Speaker 12 (32:12):
A lot of what I'm here to do is to
try and be the drum for that and to make
sure that we're attracting the best folks to come and
build in the UK as well as built in the
UK for countries abroad and.
Speaker 4 (32:22):
Can get across the UK. I think that's what's really interesting.
Speaker 3 (32:25):
There's been this focus on it, not like the services
sector all being dominated in London, but spread out. I'm
really interested in the AI growth zones. Have you thought
about any more of the cities or the towns that
are going to benefit from these data centers and really
how much it does benefit those living there, because data
centers don't add that many jobs, they're a big.
Speaker 4 (32:42):
Stuck on power and water.
Speaker 12 (32:45):
Well, this is a really really critical question, Caroen, because
in the last wave of software and as a former
assass investor, I saw a huge amount of the gains
and the jobs concentrated in a very small number of
places for a small number of people. The whole point
of what we're doing on the AI revolution with our
growth zones program is to spread opportunity right across the
length and breast of Britain. And I represent a constituency
(33:05):
in Wales which has a beating heart of the compound
semiconductor industry. As exactly as you say, we are creating
five thousand jobs in the northeast near Newcastle for Premier
League followers. They'll know it very well and we are
keen on making sure that whilst it's the case that
there are some jobs with data centers, that that's the
start or the end of the journey. We want to
create a ton of jobs in adapting and using computed
(33:27):
from data centers, not just building them.
Speaker 2 (33:29):
In South Wales formerly known as Newport Way for Fab
now known as Vishay, I think that's right. I've got
a newspaper clipping on a board in my kitchen about that, Minister.
The financing of the infrastructure projects in the United States
are getting interesting, to say the least. We are reporting
on mechanisms where investors make a special vehicle raised capital
(33:53):
XAI in that example, leases the capacity the US government
has taking a stake in Intel for example. Caroline and
I have been talking a lot about n scale recently.
What options does the UK government see in accelerating the
build out, but also any direct mechanism that you might
be considering financially or otherwise to support those initiatives.
Speaker 12 (34:16):
Well, the broad thing I'd say is what is happening
I think across the market in terms of financing is
a recognition that there is very significant value creation and
value uplift from building out AI infrastructure, and so that
is the starting point for what is going on in
the market, and whether we invest in companies or whether
we invest more indirectly is an open question. The fundamental
(34:38):
thing that we're focused on is making sure we create
a fantastic scale of AI infrastructure. We have the right
level of compute and we have talents that can make
the most of it. N Scale is a great example,
the largest ever Series B in Europe for a British
company building outside of the United States, outside of the
United States building building out in the UK. You know,
I don't think there was a direct financing requirement there
(34:59):
at all, and so we're not going to be playing
with taxpayer money where.
Speaker 6 (35:03):
It's not required.
Speaker 12 (35:03):
What we are focused on is doing everything we can,
and I speak to the founders of NSCARE regularly as well,
everything we can on permitting, on planning, on wider support
to make sure that the value uplift of AI is
captured in the UK.
Speaker 2 (35:15):
This UK government has net zero obligations and so with AI,
could you explain to our global audience many people, by
the way, watch this program in the United Kingdom, how
you're going to have an energy policy that supports AI
and its energy demands well.
Speaker 13 (35:30):
Look, I think we have two things that we want
to make sure we do.
Speaker 12 (35:33):
We have a clean power mission by twenty thirty, which
is critical to what we ran the election on. We
have a deep democratic mandate for and we have an
AI revolution that we want to make the most of
as well. The trick here is to make sure that
the two of those reaffirm each other. We are building
AI infrastructure in places with renewable energy, and in turn,
we are using AI to make our renewable energy build
(35:53):
out way more efficient as well.
Speaker 3 (35:55):
Minister, it's a tough time for governments around the world
when it comes to spending versus the size of their
deficits or they're borrowing. And it's interesting that Andrew Bailey,
of course, the leader of the Bank of England, just
this week, talking to Bloomberg and the Economy written large
saying the UK must invest more in the AI if
they're going to ride this wave. What do you, as
someone who understands investment, tell the capital markets of the UK,
(36:19):
and indeed pension funds and those that are base there
in terms of actually driving capital investment not just coming
from the big US players into the United Kingdom.
Speaker 13 (36:28):
Well, Caroline, I think this is a central question.
Speaker 12 (36:30):
And the thing I say to everyone in the capital
markets in the UK and abroad.
Speaker 13 (36:33):
Is two things. One, it's time to put risk on.
Speaker 12 (36:36):
We want to try and make sure that we are
investing in the future of our people in the UK,
the future of our kids growing up and wanting to
build fantastic AI companies, and I want the capital markets
to be deep partners in that mission.
Speaker 13 (36:48):
But the second thing is there's not a one.
Speaker 12 (36:50):
Way ask, it's a two way exchange and the offer
from government is a very clear one. We are laser
sharp focused on making sure that when you invest with
a clear sense of taking on more risk in AI
infrastructure or we will be there hand in hand clearing
the way for you in terms of making sure it's
an efficient and easy.
Speaker 13 (37:07):
Build risk one.
Speaker 3 (37:10):
Kanishka and Iran, it's been great speaking with you. Enjoy
your time in San Francisco. The UK Minister for AI
now talking with AI Andthropic. It will open its first
office in India, becoming the latest American AI company to
expand in the rapidly growing market, known for, of course,
its engineering talent, and Robert plans to hire a team
to help build unique local applications will advance its capabilities
(37:31):
in Indian languages ed okay.
Speaker 2 (37:34):
Coming up in the program, we're going to speak with
Zendex CEO about new AI capabilities the company's launching and
how it feels it differentiates itself and what is a
very crowded AI powered service market. Final block of the
show coming up this is Bloomberg.
Speaker 3 (37:49):
Tech customer relationship management provider Zendesk. It's unveiled new AI
capabilities with its platform, aiming to offer clients tangible business
(38:10):
results from an AI upgrade.
Speaker 4 (38:11):
These include new video.
Speaker 3 (38:13):
Voice tools as well as of course new AI agents.
Speaker 4 (38:15):
To help streamline workflows.
Speaker 3 (38:17):
Let's talk about all of this with zens CEO Tom Egemeier.
Tom tangible, talk to us about what is tangible?
Speaker 4 (38:24):
How do you measure it?
Speaker 14 (38:26):
We measure it by something called automated resolutions. So the
only way we charge one of our customers is if
we solve the problem for their consumer, the business they're
dealing with, or the employee.
Speaker 6 (38:37):
They're dealing with.
Speaker 14 (38:37):
And so it's a really unique model where it's all
about AI actually working, not AI theoretically working.
Speaker 3 (38:45):
What does it allow your customers to do that they
can't with rivals or that they haven't done before.
Speaker 6 (38:50):
Tom, It's really simple.
Speaker 14 (38:53):
Our customers are wanting a complete platform where sometimes they're
going to want their customers to self serve, sometimes are
going to want AI agents solving the problems, and sometimes
they're going to want human agents solving the problems. Our
platform is an end to end platform that our companies
that we work with can choose how consumers, businesses, employees
interact with them, and we have that whole platform, Tom.
Speaker 2 (39:17):
The promise and utility of an agent, everyone repeats time
and time again is its ability to communicate outside of
the system you're building. Right, It needs to be able
to actually meaningfully, meaningfully access other systems. How hard has
that been to build? Like, there's a real data and
security challenge there.
Speaker 14 (39:35):
That's the core strength of zdesk. We're going to process
about eight hundred billion API requests this year on pace
for a trillion next year, and so the core foundation
in our architecture is connecting to other systems, and so
that's why we're now going to finish the year at
about two hundred million dollars of aiarr twenty thousand customers
(39:57):
that are both aid and unpaid. We believe the largest
customer service AI provider in the world. And the reason,
we think is that foundational element of security API requests
connecting to different systems, because I totally agree with you, Ed,
it's all about connecting to different systems.
Speaker 2 (40:13):
So you're going to run a trillion API request next year,
how does that reflect in your operating costs? And literally
give me more on the revenue number that I think
you just flick that.
Speaker 14 (40:24):
Yeah, we're going to end the year about two hundred
million dollars of arr for AI, and that is not
allocating part of our existing revenue to AI. That's our
new AI products that we've launched in the last two years,
AI agents, AI Copilot.
Speaker 6 (40:39):
And quality assurance.
Speaker 14 (40:40):
We really believe those API requests are key. And how
does that work is that we've got a foundational architecture
that is dedicated to not just conversations, but making sure
that you can have actions from our AI agents, and
those actions are key to getting things done, key to
getting those resolution rates up, automated resolution rate.
Speaker 6 (41:01):
And we think that's what differentiates us.
Speaker 3 (41:03):
I really feel it's your private equity background that leads
you to bring us so much tangible, hard evidence whether
it's what actually the clients are using it for on
whether it's not your arr numbers but using your pee
brain right now.
Speaker 4 (41:16):
I mean, we keep.
Speaker 3 (41:17):
Talking about a bubble, an AI bubble. The worry about
future productivity and actual revenue streams from these startups.
Speaker 4 (41:22):
Tom, what do you say to those that are non believers?
Speaker 14 (41:26):
What I say to those that are non believers is
what I tell my kids that are twenty three and twenty.
You have to learn AI to succeed in the business
world for the next twenty or thirty years. You need
to be an AI prompt engineer yourself.
Speaker 3 (41:39):
We believe there's a.
Speaker 14 (41:40):
Course hype about AI right now, but that the fact
that we're doing We just passed a trillion tokens with
open Ai.
Speaker 6 (41:47):
They announced it two days ago at their developer conference.
Speaker 14 (41:50):
We're one of only about twenty or less companies that
are doing that.
Speaker 6 (41:54):
That tells you the hype is not hype.
Speaker 14 (41:56):
The hype is real because we're able to go automate
up to eighty per We have customers that are automitting
eighty percent of interactions.
Speaker 6 (42:03):
Already with higher customer satisfaction.
Speaker 14 (42:05):
So of course there's hype about this, but there's actually
tangible results that our customers are seeing with their consumers,
businesses and employees.
Speaker 2 (42:14):
Tom, great to have you back on the program, CEO
of Zendesk.
Speaker 6 (42:17):
We really appreciate your time. Thank you, Caro.
Speaker 2 (42:20):
I think we better go back to the broad idea
of circular financing.
Speaker 6 (42:24):
But the XAISPV debt thing.
Speaker 2 (42:27):
You know, I'm just looking at markets, at what's up,
and like not drawing a cause or link, but there
seems to be a lot being placed in what Jensenmong
said on another network this.
Speaker 3 (42:36):
Morning, and what he said is, oh, by the way, yes,
we give money to these companies, and he wish you'd
give more, perhaps to Elon Musk, but that they don't
have to buy just En Vidio and GPUs. I think
it's interesting that AMD's traveling so.
Speaker 2 (42:51):
Hard today and that is exactly where my mind was at.
And AMD is kind of the outperformer in this session.
We have a lot more to come this week. But yeah,
six percent gain two in videos two percent. I think
he couldn't have been any more clearly.
Speaker 6 (43:08):
Last thing. We're still concerned about debt.
Speaker 4 (43:14):
Yeah, I think more broadly.
Speaker 3 (43:16):
Sorry, you just cut out a little bit of their ed,
but at the moment. I think we've got to keep
on talking about where the investment a cycle is going
and keep questioning it because we are healthy balance of
cynicism and reality. But that does it for this edition
of Bloomberg Tech Head.
Speaker 4 (43:29):
What for you got Tomorrow?
Speaker 6 (43:30):
Yeah?
Speaker 2 (43:30):
Huge balance of the week remains. We'll be live from
Bloomberg screen Time in Los Angeles, speaking with the absolute
best of the entertainment industry.
Speaker 6 (43:39):
And then something big happens after that.
Speaker 4 (43:43):
And Friday, Yeah big.
Speaker 3 (43:44):
After that we switch gears and go all in on
defense tech, speaking with the leaders of Android, Palenteers so
many more. You do not want to miss out on
a phenomenal rest of the weekend.
Speaker 6 (43:53):
This was a big show. So recap the podcast.
Speaker 2 (43:55):
You know where to find it on the Bloomberg platforms, online, Apple, Spotify,
iHeart and as lows have you told me at open
hourdem Day you listen to the show as a podcast
when you drive to work. Love that from LA and
San Francisco. This is Bloomberg Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde and New York
and Eva Low in sentences, go.
Speaker 2 (00:23):
This is Bloomberg Tech coming up. Elon Musk's XAI taps
big name investors, including Nvidia in a curious piece of
financing for GPUs. Bloomberg breaks the story wide open.
Speaker 3 (00:35):
Plus, Tesla unveils cheaper versions of its top selling EV models.
Speaker 4 (00:39):
Will it help with falling sales numbers? We'll discuss.
Speaker 2 (00:42):
We sit down with the UK Minister for AI to
discuss increased investment between the UK and US on tech
innovation and a whole lot more.
Speaker 3 (00:51):
First, that's check in on these markets that rally once again,
if you're looking in then aw's that one hundred ed
It is your key players, it is the in video's mds.
We're talking so much about the relentless intertwining of generative
AI players at the moment in the market. But what's
notable is we still are thinking about fundamentals. We are
still thinking about how far we've come from the lows
of April.
Speaker 4 (01:09):
But what are you looking at underneath the hood.
Speaker 2 (01:11):
Let's get to our top story overnight, Bloomberg broke details
of a financing mechanism that Xai is using for the
GPUs that are going in Colossus too. Our understanding from
sources is that an SPV or special purpose vehicles formed.
They use debt inequity to get the capitol by the GPUs.
XAI rents or leases those GPUs from the investors and
(01:36):
pays them that fee over time. In Video is involved,
it's getting involved in the equity piece. This morning, in
Video CEO Jensen one confirmed a whole chunk of our reporting. Carrow,
this is very complicated. Let's get into the specifics.
Speaker 4 (01:51):
Let's do exactly that.
Speaker 3 (01:52):
Sticking with the two key players in Video and Xai,
bloom most common.
Speaker 4 (01:56):
ROYO is with us.
Speaker 3 (01:57):
You help break the story with Ed and I just
want to get to grips of how creative this financing
actually is. How often do we see SPVs being set
up to buy GPUs and use them as underlying assets.
Speaker 5 (02:09):
Hi, thank you for having me. We've seen aspvs in
the past before used for other type of assets. It's
quite common in Wall Street to basically use assets as
collateral instead of putting corporate debt, but it's becoming much
more interesting and much more common to see tech giants
basically do this type of deals because they don't want
to put a lot of debt on the corporate balance sheet.
(02:32):
So I think we're going to see more of these
in the future.
Speaker 2 (02:36):
Common It's been a busy couple of days chasing this one, right.
So the structure is twenty billion dollars, most of it
is debt and there is some equity in there. And
this morning in Video's CEO Jensen One went on another
network and in an interview essentially confirmed in vidious participation.
(02:56):
Just give us the rest of the details that we
put in that story.
Speaker 5 (03:00):
Sure, So it will be at least twenty billion of
capital basically to buy the chips that xa I will
use for this data center in Memphis. And there's going
to be like a variety of Wall Street investors in
the dead We know Apollo is in a diameter. We
reported as well. The equity will have a number of
investors as well, including Valor, who's leading the financing. But yeah,
(03:24):
and Videos invested in the equity, which is really interesting
given that they're basically using that money to buy their
own chips.
Speaker 6 (03:31):
Where do we go from here?
Speaker 2 (03:32):
I mean It's really difficult because I feel there's a
lot more reporting to be done. The piece of the
mechanism that I'm trying to get my head around is
that there's an SPV and Xai rents and leases the chips.
We think over a five year period, what are the
investors get in return, Like are they going to get
a stake in Xai? Are they just being paid rent basically?
(03:53):
And then that covers their debt obligations.
Speaker 5 (03:55):
What do we know, Well, well, from what do we know,
they get the least payments, which is how they can
amortiz with debt overtime. So basically you get like yeah,
like monthly quarterly payments for the financing, so you kind
of like pay down the debt that way. But the
idea from what we understand is basically at the end
of it, you still have like the chips that have
some value right after the five years, so that stays
(04:18):
within that SPV.
Speaker 2 (04:20):
I would say just very quick that we haven't heard
from Elon Musk or Xai, Gensen, Wang and Nvidia haven't
responded to us formerly other than declining to comment, so
we'll keep a track of this one. Bloomberg's Carmen a Roya.
It's great to work with you in the newsroom. Thank you.
So that latest funding on Nvidia into ex Ai only
adds into what is now complex web of aideals that
(04:41):
have been occurring. It's the topic of today's Big Take,
looking at the circular transactions happening within the AI market.
Bloomberg's Ai editor Seth Figgerman joins us, Now there is
this big one trillion dollar headline figure and if you
draw up a mad web with red string on a
ball of where everything's going, it all kind of touches
(05:03):
in Nvidia and open Ai. Give us the top line
of the big Take.
Speaker 7 (05:08):
Well, we did try to draw that mad web of
red string and our graphic, and also thank YOUEV for
the extra newspeg overnight with the great scoop on video.
But yes, I think ultimately we have seen something resembling
circular or interconnected deals for a lot of the A boom.
But it's getting to the point where it's harder to ignore.
There are just dozens of investments and business partnerships and
(05:28):
chip agreements primarily that all lead back one or two
steps are moved to Nvidia and open Ai, and the
size and scope of these have just grown exponentially, particularly
as open ai itself has kind of gone from saying
we're going to spend billions to possibly trillions on the
infrastructure of the support this sect. Also, I think, as
in Vidia has become a four point five trillion dollar
company that's very eager to keep the good times going
(05:49):
by spreading the money around.
Speaker 3 (05:52):
Seth talk about the good times and really whether anxiety
is vindicated here.
Speaker 4 (05:57):
The worry on open aiyes front, is that at the moment.
Speaker 3 (05:59):
It's loss making, and so how does it eventually pay
this back? But you have to bet on its growth
and its ability to get revenue. Nvidia has the money,
and that's in many ways why Goldman, for example, is
saying this is not like the dot com era, even
if we are seeing these complex web of integrations and relationships.
Speaker 7 (06:17):
I think both things can be true. You know, ultimately,
a lot of what's backstopping the AI boom, as we
know are these very big tech companies with very healthy
balance sheets and massive cash stockpiles, including in Nvidia. On
the other hand, I think the graphic makes quite clear
and the story itself that increasingly a lot of these
companies are very bound up, particularly open AI affirmed that
while it's a decade old and a household name everywhere,
(06:38):
has never turned the profit and plans to spend you know,
hundreds of billions if not more, including through debt. So
you know, I think both things can be true. Is
it in Vigia about to go bust tomorrow because of this? No?
But is there a heightened exposure to all these companies
because they're tethering themselves to a handful of you know,
fast growing but still unprofitable AIS startups. Yeah, there's a
(06:59):
risk in.
Speaker 3 (07:01):
Meg Seth Fiegeman, thank you for talking us through what
is an amazing piece of data journalism as well.
Speaker 4 (07:05):
Go read it the Big Take.
Speaker 3 (07:07):
Let's get more investor analysis now, though carrosh life for
more as chief market strategistic BIMO Private Wealth has one
hundred fifteen million dollars in assets under management.
Speaker 4 (07:15):
And Carol, I'm interested in.
Speaker 3 (07:17):
There's a great line in that Big Take coming from
Stacy Ragson over at Bernstein saying basically, Sam Altman is
either going to drive this economy lower, We're going to
see the world economy tank or he's taking us to
the promised land.
Speaker 4 (07:30):
Which way are you seeing it going?
Speaker 8 (07:32):
I'm not sure it's either or First off, thanks for
having me. I'm joining you from Toronto today. Or we're
doing a Female Eurasia Group US Canada summit. So there's
a lot of discussions on AI and other things like
that going on here.
Speaker 5 (07:46):
But I'm not.
Speaker 8 (07:48):
Sure it's all good or all bad. It's someplace in between,
and there are a lot of things to watch. I
love the Big Take already. I caught it in the
middle of the night and sent it out to a
number of co workers, especially the graphic in they're showing
that circular nature that's very much like some of the
stuff we saw go on in previous bubbles. But as
(08:10):
your reporter commented on, you've got right now. It's backed
by big companies with very solid balance sheets, and they're
generating revenue off of that. The one thing that we
keep in mind for our investors, though, is that you've
also got a very concentrated stock market because of that
circular nature and the interrelated deals that they're all doing.
(08:31):
If investors start questioning one, you could get a ripple effect,
but it would be a rip effect. Perhaps you lead
to some sort of pullback, which we haven't had since April,
but we don't see it rippling through the economy and
taking known major suads of the economy. So it's a
very nuanced answer, but it's it's rarely ever all black
(08:54):
or all.
Speaker 4 (08:55):
White, Carol.
Speaker 3 (08:56):
What we are trying to see though, is actually who
takes the most the profits available from all these deals
in video clearly massively revenue generating and profit generating. But
then you think of Oracle and some of the questioning
about how much of a margin they make on a
three hundred billion dollar contract for open AI. How much
do you have to do the due diligence on individual
names right now?
Speaker 4 (09:17):
Well, I think you really do it.
Speaker 8 (09:18):
The market's not much because I mean one of the
phrases we've been using all week is the market seems
to be acting like no news on economic data or anything.
No news is good news, and off we go to
new highs. But you have to be very discerning. But
we've always been a combination of top down and bottom
up in what we're looking at things. And you also
(09:39):
have to, especially in a diversified portfolio, realize you might
be over concentrated even if you're doing individual securities. If
you own a passive index fund. If you own an
AI specific or a technology specific ETF, you've concentrated it
even more. And so it's doing some of that and
it's stepping back and doing some good portfolio hygiene looking
(10:00):
back perhaps at where we started the year, taking some
of those games off the table and shifting them around
to other sectors that are potential beneficiaries. Because we have energy,
we have nuclear, we have a lot of things that
have to happen for those for the switches to go
on in those data centers.
Speaker 2 (10:16):
Carol, you've had a decorated career of markets as a
chief investment officer. I just want to run the mechanism
that I reported overnight passed you again a special purpose
vehicle where you have both debt inequity pulled together by
a group of investors who buy GPUs and then in
this case XAI rents those GPUs or leases them from
(10:40):
the special purpose vehicle. I haven't heard of this structure before,
but just as a structural consideration in financial markets and
the debt load and where it's placed, how do you
react to that?
Speaker 8 (10:55):
I think it'll be a really interesting earning season because
I'm sure a lot of analysts will be asking those
detailed questions because we're starting from a place with a
lot of those companies other than perhaps Oracle, as I
understand it, we're starting from a place of pretty pristine
balance sheets. You also have tax benefits that accrue to
some where. I'm not sure exactly how their accounting works
(11:19):
in terms of who's expensing everything, who's capitalizing some but
you have to capitalize less stuff now, so if you've
got the earnings to support writing it off, it's less
damaging to the balance sheet. But it is indicative of
the fact that Wall Street staffed up at the end
of less year with an awful lot of deal making
people that I've had a lot of time to think
(11:41):
really creatively about how to put this stuff together. So
as an investor, it makes a job that much more
difficult because to your point, you really have to figure
out what's on the balance sheet, what's not on the
balance sheet.
Speaker 2 (11:52):
Carol, there's a lot we don't know as well, like
the tax consideration.
Speaker 6 (11:56):
I'm trying to get after it.
Speaker 2 (11:58):
Oracle one hundred billion dollar is a debt swinging to
negative free cash flow for the first time since nineteen
ninety two. I've been tracking the data do you.
Speaker 8 (12:09):
Yeah, we track some of it, and we've got a
lot of analysts in our global asset management and capital
markets units that get really specific about that. I don't
as much anymore on a macro basis, but I listened
really hard, and I asked the questions, and I started
a couple of months ago asking the some of the
research teams, how are they financing these deals? How are
(12:30):
they dealing with you know, when does it shift to debt,
because at the time it was all coming out of
cash flow, and I wanted to understand too, what goes
right through the income statement so it's never showing up
on the balance sheet Because an Nvidia chip isn't going
to last twenty years, and anything less than twenty years
you can technically write off against earnings in the period
you do.
Speaker 6 (12:50):
It twenty years.
Speaker 2 (12:52):
So most investors I speak to you say try five years.
Carol Stone. Right, you've been brilliant. You've been brilliant. We're
really grateful for your time here, BG Tech, be MO,
Private Wealth Corosh Live.
Speaker 6 (13:02):
Thank you.
Speaker 2 (13:03):
Now, coming up on the program, we're going to take
another look at Tesla's cheaper, cheaper version of its top
selling EV models and if it can help with falling
sales numbers.
Speaker 6 (13:12):
That's next. This is Bloomberg Tech.
Speaker 3 (13:21):
Kees Left just unveiled new cheaper versions of its top
selling models, priced it under forty thousand dollars to make
them well more affordable in an effort to counteract the
loss of US incentives for electric cars.
Speaker 4 (13:33):
One of the most croterd L who covers Auto's joins
US Now for more.
Speaker 3 (13:36):
How much cheaper? Let's get specific on some of the
price data and what you're losing for that.
Speaker 9 (13:42):
Yeah, you know, it's somewhere in the range of eleven
or thirteen percent cheaper relative to what the base model
three and Model Y we're costing prior to this. However,
when you take into account the seventy five hundred dollars
text credit that's gone away and what it would have
cost you to buy those base models, you know, even
just you know, a week ago or so, these models
(14:05):
are are you know, two thousand dollars more expensive and
for less content? So you lose a second row screen,
you lose ambient lighting, you have less battery range, slower accelerations,
So you know, will this be helpful for the incremental
consumer who was maybe on the sort of line of
being able to afford versus not being able to afford
(14:27):
a Tesla. I think it does help Tesla's you know,
business in that regard. But it's also a case of,
you know, not necessarily a slam dunk if you're a consumer,
because you're giving up a lot for you know, for
for a lower price, and you know, there is a
real sort of value equation here here to do.
Speaker 2 (14:49):
We reported about twenty four hours ahead of time that
there would be a standard model Y. We did not
report that there would also be a three, and there was.
But I think if you could recap some of the
reporting we did on where they engineered out cost, because
the reaction on social media at least has been like,
hold on, so if you engineered out seventy percent of whatever,
(15:10):
why is it only thirteen percent cheaper.
Speaker 9 (15:13):
Yeah, it's a really good question. And I think, you know,
I go back even to April of last year and
when you were reporting on the sort of idea that
a twenty five thousand dollars Tesla was sort of falling
by the wayside. You know, Tesla sort of came right
out and sort of responded to those reports by saying
that they were going to introduce more affordable models, and
(15:35):
they sort of alluded to this idea of taking some
elements of this next generation you know, vehicle that they
were going to sort of incorporate into their existing lineup.
I don't get a whole I don't really get much
of a sense that they've actually done that.
Speaker 5 (15:51):
Here.
Speaker 9 (15:52):
It feels more like they've just decontented these vehicles. And so,
you know, to the extent that I have questions for
Musk and the management team, it's how much are you
actually sort of innovating your vehicles versus just taking things
out and then you know, charging consumers less because you've
taken cost off of your own cost of goods sould
(16:13):
And you know, that's pretty unclear at this juncture whether
they've actually, you know, done things with the batteries, with
the motors.
Speaker 6 (16:21):
Or have they just taken away content.
Speaker 2 (16:23):
Yeah, yeah, I mean the engineering side, that's what we
had heard. Blue Bells creator ow our Global Autos editor,
thank you so much. Let's continue the conversation with Steve Wesley,
founder and managing partner of the Wesley Group, a venture
firm with seven one hundred million dollars of assets, on
the massive management but we go to Steve because at
one time Steve sat on Tesla's board and shaired their
audit committee. He's also been involved at state level finance
(16:47):
at a high level for a long time.
Speaker 6 (16:50):
You heard all of the reporting.
Speaker 2 (16:51):
I'm sure you've been on Tesla's website and looked at
the vehicles. The story here is the impact that is
seventy five hundred dollar federal tax credit was having on
the EV market in America?
Speaker 6 (17:04):
Is it not?
Speaker 10 (17:06):
Well, it's going to have a big impact. Look, the
big question here is this is a step in the
right direction. Tesla's bringing prices down, But at thirty seven
K for the Model three, is that low enough to
attract the new class of buyers? And step back a bit.
Thirty seven k it's less than the average US internal
combustion and engine vehicle, which day stands at forty eight k.
(17:27):
But can Tesla's new model compete with the EV from
Volkswagen at hyunda A and the US at twenty seven thousand?
And how are they going to compete with those twenty
thousand dollars Chinese evs that bid is bringing into Europe.
So I think there's a chance the new slim down
Model Y. It's going to bring in some new buyers
(17:48):
for sure, but how much is it going to cut
into the premium market and are they going to end
up ahead at the end of the day. Looking forward,
battery prices are going to continue to drop. This may
be a stopgap measure, but Tesla, I believe, still needs
that twenty five thousand dollars model to get into new
(18:08):
developing markets and attract for first time entering buyers in
the US.
Speaker 2 (18:13):
You know, Tesla considers itself a technology company and the
leader in global engineering. Right when you were at Tesla,
it was about Model S principally and like that was
value for money because it was so performant and had
all of these bells and whistles with it. I guess
the root of my question is why would they release
(18:33):
this vehicle? You know, to many people, it doesn't live
up to that engineering or technology value that Tesla's given historically.
Speaker 10 (18:42):
I think you put your finger on the problem. Tesla's
a premium vehicle. They charge a premium and people expect
to have the latest and greatest, and I don't think
they're really seeing that. You see these other brands like
VIEID with twelve models and Swagen and the eight I
Think and General Motors with ten ge Whiz. Tesla has
(19:05):
only had five models in its history, and the cyber
truck barely accounts because that was a flop. People want
to see new technology, new products coming into market. I
really think they need that twenty five thousand dollars car.
But they've got to do both. They not only need
to bring new models and lower cost cars to market.
At the same time, they have to deliver on this
(19:26):
promise of getting full self driving out there, staying competitive
with Weemo. They've got some things to prove.
Speaker 3 (19:32):
Stee that is the technology that they're now betting on.
The innovation cycle moves towards robotics and wards to automation.
How integral is the cash cow of car sales to you.
Speaker 10 (19:44):
Well, again, they've got to do both. When you have
a company that's trading at a two hundred and fifty
price to earnings ratio, that's nosebleedy high. I mean, gosh,
in VideA is only at fifty to one. So they've
got to show that they can not only bring new
products to market, stay in the ballpark price wise. I'm
(20:05):
not sure a four k reduction really gets them there
and get licensing in new cities so they could show
that their full self driving is going national and hopefully international,
and that they're going to be a deliver on this
humanoid robots. They've got a tough road ahead to show
that they can stand up to the evaluation they currently have.
(20:27):
Now aren't argue with one point trillion dollar market cap,
but I'm not sure investors will buy that for.
Speaker 3 (20:33):
A long I mean, briefly, you just mention the valuation
difference between Nvidia and Tesla, but we know that Jensen
Wang saying I wish I put more money into Xai,
for example in the SPV because he wants to back
anything Elon does. Steve, what would it take for you
to be interested in buying back into Tesla as a shareholder, Well.
Speaker 10 (20:51):
You'd want to see real progress full self driving. You know,
just as the world's going all electric, it's going autonomous
faster than people realize. You're going to see that in
the next year with way moost growth. The question is
is Tesla going to be right in there as a
major competitor or not. At the same time, you're absolutely right,
we're heading into this new world of autonomy in everything
(21:13):
from the factory floor to vehicles, and people are going
to want to see this new humanoid robot can tessly
be cutting edge at new areas. Now, who wants to
bet against Elon Musk for all he's developed at SpaceX
Starlink and frankly you've got to give him credit for
reinventing the auto industry. But the last three years have
(21:33):
been lean and you look at three years of flat revenues.
People need to hear that new story and I think
they need to hear it soon.
Speaker 3 (21:41):
Steve Westley of the Wesley Group always great catching up
with the thank you now coming up. SoftBank gets in
on robotics, talking of it in a new deal, furthering
Masochi Soun's growing bets on the emerging tech and AI.
Speaker 4 (21:52):
Do's something that tech time now for talking.
Speaker 3 (22:02):
Tech and first up SoftBank as we used to buy
ABB's robotics unit, which supplies industrial arms and robots to
manufacturers in a factuck four million dollar deal.
Speaker 4 (22:10):
And this is says Softbag CEO.
Speaker 3 (22:11):
Masayoshi's son aims to build data centers across the US
in partnership with Open Ai and Oracle Plus.
Speaker 4 (22:17):
Ali Baba has set up an.
Speaker 3 (22:19):
In house robotics team part of its effort to develop
physical AI. The team sits within the unit responsible for
the company's main AI foundation models units. Leader Justin Lynd
says the focus will be motormodel models, which he predicted
would become foundational agents.
Speaker 2 (22:34):
Okay, coming up, we're going to speak with Kristin Smith, Solana.
Speaker 6 (22:37):
Policy Institute President.
Speaker 2 (22:39):
As signs of some Bitcoin support begin to fade a little,
a big crypto segment coming up next from San Francisco
and Los Angeles.
Speaker 6 (22:48):
This is Bloomberg Tech.
Speaker 2 (23:01):
Welcome back to Bloomberg Tech if you're just joining us,
So I thought'd give you a little bit of a
flavor of what tech's doing in financial markets. And now's
that one hundred up about a percentage point. There's buyers
for stocks in tech right now. It's mostly the chip name,
so they're pushing us higher, but some megacaps as well.
And of course we've been talking all morning about what's
happening with Xai and Nvidio and some other folks. And
I'm sure we'll do a bit more. And there are
(23:23):
one million bitcoin headlines on the Bloomberg terminal. That's not
an exaggeration. If I had time, I'd read them all
to you. But are about one hundred and twenty two thousand,
five hundred dollars per token on bitcoin. Bitcoin's five this
year right, rising thirty percent year to date, with the
help of easier monetary policy. By the way, a lot
of FED speakers over the next couple of days and
also a week of dollars played its part, But the
(23:45):
cryptocurrency's rally is poised to fizzle a support fades. A
part of that is some of that headline that I
was talking about on the Bloomberg terminal.
Speaker 6 (23:52):
Joining us now as.
Speaker 2 (23:53):
Kristen Smith, Solana Policy Institute President. Oftentimes when you come
on the program, something has happened. It might be a
piece of legislation or someone has said something. There are
many news stories tangentially linked to bitcoin right now, but
I don't see like one single catalyst that's holding up
an entire crypto industry.
Speaker 11 (24:13):
Well, I do think there is one common thread right
now among the crypto industry, and that's that this year
we have seen tremendous progress on the public policy front.
We've had a very strong leadership by the White House
with the executive orders, We've had the stable coin legislation,
the Genius Act sign into a lot this summer, and
then we have the SEC's Project Crypto, which is issuing
(24:37):
guidance for how securities laws apply to this space. And
so I do think as we look across crypto generally,
but specifically to Bitcoin and also Solana, which I care
deeply about, we have this common thread of it's okay
if you're an asset allocator or if you're in exchange
or a bank to be looking at this sector because
(24:58):
it's going to be a part of our financial future
going forward.
Speaker 6 (25:02):
Kristen, we have a government shut down.
Speaker 11 (25:05):
We do, we do well. Crypto markets never sleep, but
the government what the agencies do? Yes, I listen. I'm
not going to allow to you. It is a short
term setback to have the federal agencies shut down right now,
particularly with the SEC and the CFTC. We have over
ninety percent of the staff furloughed at those agencies right now,
(25:27):
and so that means routine things like approval of new
S ones or S three's have a real impact, particularly
when it comes to things like Solona exchange traded products
which are on the cusp of going live. We just
need to get the corporate finance staff at the SEC back.
Or Similarly, new IPOs in the cryptospace like bitco are
impacted by the shutdown. But Congress is working, the Senate
(25:51):
is in and the legislative discussions are continuing there, and
so I think this is a short term set back
and as soon as the government opens up, we'll be
back on track.
Speaker 3 (26:00):
What's interesting is some of the froth or the constant headlines,
a million of them as ed references, but they were
all about digital asset treasuries at one point.
Speaker 4 (26:09):
And that seems to have cooled a lot.
Speaker 3 (26:11):
I'm even looking at Strategy, the office formerly known as
MicroStrategy now off by about seven percent in the last
few days alone. Is the wind coming out of that
particular trade sales?
Speaker 11 (26:21):
Well, I think there was a lot of interest over
the summer, and I think there is continued interest and
there will be some consolidation. But if you step back,
if you look at digital asset treasuries, what's going on
here is that for a long time, there were no
way for traditional investors to access exposure to crypto assets,
and digital asset treasuries have kind of filled that void.
(26:43):
In the more favorable regulatory environment, and I think what
we're seeing these digital asset treasuries do is, yes, they
are accumulating the token, but they're also participating in the network.
So in the case of Solana, they are staking it.
These stats are operating validators, and they're trying to be
good stewards of the treasuries in ways that are a
little bit more expansive than an ETF will be able
(27:06):
to do once those are approved. So I do think
dats are going to continue to play a role. I
think will likely probably see some consolidation among the dats
going forward. But I think if you think about it,
for a long time, these treasuries were held largely with
foundations that were limited in what they could do, and
you know with the treasuries of tokens they were sitting on.
(27:27):
So I think the dats are new and innovative model,
but it's also a way for investors to have a
different option for getting exposure to these assets. And with
something like Solana, we think this is going to be
the future rails for finance, and so it's a great
way to get exposure to the asset class.
Speaker 3 (27:46):
I'm looking at Silana up one hundred percent in the
last six months alone, Kristin. But this isn't just an
American story. This isn't just about regulatory clarity in America.
They see global assets. What are the countries are doing
it right right now?
Speaker 11 (27:58):
Yeah, Well, I think Dubai is one hub that is
particularly strong. I think Switzerland has also had a lot
of interest, and there's incredible excitement coming out of different
parts of Asia, and so yes, I think the fact
that this is a global technology is what makes it
so compelling. It means that you can have anyone who
has access to a phone on the same set of
(28:20):
rails and provide the same access to investors or access
to investment opportunities, and so I think it's a really
exciting potential. And I think as the US continues to
move along and get these good policies in place, we're
going to see more competition and maybe even a bit
of freeing up of some of the more restrictive policies
(28:40):
around the globe. But we are seeing competition, particularly out
of the Middle East and Asia.
Speaker 3 (28:45):
Christian Smith said on a policy it's always great to
have you back on the show.
Speaker 4 (28:49):
Thank you.
Speaker 3 (28:49):
Coming up, we continue the story of what's happening elsewhere
outside of the US because it's the UK Minister of
Aisha and Narayan is joining us.
Speaker 4 (28:58):
We're talking about the leeds.
Speaker 3 (28:59):
And the founders actually gathering in San Francisco for the
Tech Week upon US right now is a grupo tech.
Speaker 2 (29:19):
San Francisco is host to Tech Week, bringing companies and
leaders from around the globe. The discussion dominated by AI.
Speaker 6 (29:26):
Shocking.
Speaker 2 (29:27):
Joining us now is Kanishka Narayan, UK Minister for AI
and also Parliamentary Undersecretary for the State in the Department
of Science, Innovation and Technology and Minister welcome to the program.
We heard you know it's timely your visit s F.
Tech Week is a tech week, but you come here
with a large delegation of both on the policy side
(29:52):
but the companies themselves. Why what is it that you
hope to get out of being here?
Speaker 12 (29:57):
Well, I think AI is a central focus for us
in UK. It as a fundamental part of our growth mission.
And one of the things I'm most focused on here
is to talk up the UK US Tech Prosperity Deal.
It is a historic deal in its scale. We have
a record set of investments, the biggest ever investment by
Microsoft and cumulatively tens of billions getting into the UK
(30:18):
and deepening our collaboration. But fundamentally on scope, the UK
and US have a deep history of a special relationship.
Speaker 13 (30:23):
We are renewing and rewiring.
Speaker 2 (30:25):
That for the AI economy, mister Narron, the United Kingdom,
as Europe is, is very dependent on very large American
technology companies making investments and innovating. Is that a fair
statement to your mind? And how conscious is your government
of a dependence on both the software and hardware side.
(30:49):
What American companies are doing well?
Speaker 12 (30:51):
Again, I think in any marriage you talk about mutual
dependence and a mutual sense of recognition and acknowledgemental strengths.
In Britain we have an amazing AI economy. In particular,
we have deep Mind, the home of a bunch of
transformer models. We have a great chip design company in
arm located in the UK, and we have a budding
sense set of entrepreneurs for the future of AI as well.
(31:12):
And so we have a lot to offer to the analysis.
But of course we want to do it when recognizing
the deep transfer of the US has That's why I'm
here opening the doors for UK and US businesses to
work more closely together.
Speaker 4 (31:25):
Kenichika.
Speaker 3 (31:25):
You mentioned great names, but Deep Minds Open, owned by
Alphabet and Masioshi Son in Japan generally controls ARM a
little bit of it trades, and it trades on US indices.
Speaker 4 (31:36):
And I'm interested from.
Speaker 3 (31:37):
Your perspective therefore, how much you're likely to see AI
rewire that how much does the UK want them to
be dependent on the UK or you ultimately all still
about trade independence on other nations too well.
Speaker 12 (31:49):
I think Caroline as a great question, but the fundamental
thing I'd say is that we want to be open
to the world in terms of business. So if people
want to come and invest in fantastic talent and fantastic
businesses in the UK, we are open for business. At
the same time, of course, we want to make sure
that people coming through our universities, people wanting to build businesses,
have capital, have compute, and fundamentally have a deep community of.
Speaker 13 (32:10):
Support in the UK as well.
Speaker 12 (32:12):
A lot of what I'm here to do is to
try and be the drum for that and to make
sure that we're attracting the best folks to come and
build in the UK as well as built in the
UK for countries abroad and.
Speaker 4 (32:22):
Can get across the UK. I think that's what's really interesting.
Speaker 3 (32:25):
There's been this focus on it, not like the services
sector all being dominated in London, but spread out. I'm
really interested in the AI growth zones. Have you thought
about any more of the cities or the towns that
are going to benefit from these data centers and really
how much it does benefit those living there, because data
centers don't add that many jobs, they're a big.
Speaker 4 (32:42):
Stuck on power and water.
Speaker 12 (32:45):
Well, this is a really really critical question, Caroen, because
in the last wave of software and as a former
assass investor, I saw a huge amount of the gains
and the jobs concentrated in a very small number of
places for a small number of people. The whole point
of what we're doing on the AI revolution with our
growth zones program is to spread opportunity right across the
length and breast of Britain. And I represent a constituency
(33:05):
in Wales which has a beating heart of the compound
semiconductor industry. As exactly as you say, we are creating
five thousand jobs in the northeast near Newcastle for Premier
League followers. They'll know it very well and we are
keen on making sure that whilst it's the case that
there are some jobs with data centers, that that's the
start or the end of the journey. We want to
create a ton of jobs in adapting and using computed
(33:27):
from data centers, not just building them.
Speaker 2 (33:29):
In South Wales formerly known as Newport Way for Fab
now known as Vishay, I think that's right. I've got
a newspaper clipping on a board in my kitchen about that, Minister.
The financing of the infrastructure projects in the United States
are getting interesting, to say the least. We are reporting
on mechanisms where investors make a special vehicle raised capital
(33:53):
XAI in that example, leases the capacity the US government
has taking a stake in Intel for example. Caroline and
I have been talking a lot about n scale recently.
What options does the UK government see in accelerating the
build out, but also any direct mechanism that you might
be considering financially or otherwise to support those initiatives.
Speaker 12 (34:16):
Well, the broad thing I'd say is what is happening
I think across the market in terms of financing is
a recognition that there is very significant value creation and
value uplift from building out AI infrastructure, and so that
is the starting point for what is going on in
the market, and whether we invest in companies or whether
we invest more indirectly is an open question. The fundamental
(34:38):
thing that we're focused on is making sure we create
a fantastic scale of AI infrastructure. We have the right
level of compute and we have talents that can make
the most of it. N Scale is a great example,
the largest ever Series B in Europe for a British
company building outside of the United States, outside of the
United States building building out in the UK. You know,
I don't think there was a direct financing requirement there
(34:59):
at all, and so we're not going to be playing
with taxpayer money where.
Speaker 6 (35:03):
It's not required.
Speaker 12 (35:03):
What we are focused on is doing everything we can,
and I speak to the founders of NSCARE regularly as well,
everything we can on permitting, on planning, on wider support
to make sure that the value uplift of AI is
captured in the UK.
Speaker 2 (35:15):
This UK government has net zero obligations and so with AI,
could you explain to our global audience many people, by
the way, watch this program in the United Kingdom, how
you're going to have an energy policy that supports AI
and its energy demands well.
Speaker 13 (35:30):
Look, I think we have two things that we want
to make sure we do.
Speaker 12 (35:33):
We have a clean power mission by twenty thirty, which
is critical to what we ran the election on. We
have a deep democratic mandate for and we have an
AI revolution that we want to make the most of
as well. The trick here is to make sure that
the two of those reaffirm each other. We are building
AI infrastructure in places with renewable energy, and in turn,
we are using AI to make our renewable energy build
(35:53):
out way more efficient as well.
Speaker 3 (35:55):
Minister, it's a tough time for governments around the world
when it comes to spending versus the size of their
deficits or they're borrowing. And it's interesting that Andrew Bailey,
of course, the leader of the Bank of England, just
this week, talking to Bloomberg and the Economy written large
saying the UK must invest more in the AI if
they're going to ride this wave. What do you, as
someone who understands investment, tell the capital markets of the UK,
(36:19):
and indeed pension funds and those that are base there
in terms of actually driving capital investment not just coming
from the big US players into the United Kingdom.
Speaker 13 (36:28):
Well, Caroline, I think this is a central question.
Speaker 12 (36:30):
And the thing I say to everyone in the capital
markets in the UK and abroad.
Speaker 13 (36:33):
Is two things. One, it's time to put risk on.
Speaker 12 (36:36):
We want to try and make sure that we are
investing in the future of our people in the UK,
the future of our kids growing up and wanting to
build fantastic AI companies, and I want the capital markets
to be deep partners in that mission.
Speaker 13 (36:48):
But the second thing is there's not a one.
Speaker 12 (36:50):
Way ask, it's a two way exchange and the offer
from government is a very clear one. We are laser
sharp focused on making sure that when you invest with
a clear sense of taking on more risk in AI
infrastructure or we will be there hand in hand clearing
the way for you in terms of making sure it's
an efficient and easy.
Speaker 13 (37:07):
Build risk one.
Speaker 3 (37:10):
Kanishka and Iran, it's been great speaking with you. Enjoy
your time in San Francisco. The UK Minister for AI
now talking with AI Andthropic. It will open its first
office in India, becoming the latest American AI company to
expand in the rapidly growing market, known for, of course,
its engineering talent, and Robert plans to hire a team
to help build unique local applications will advance its capabilities
(37:31):
in Indian languages ed okay.
Speaker 2 (37:34):
Coming up in the program, we're going to speak with
Zendex CEO about new AI capabilities the company's launching and
how it feels it differentiates itself and what is a
very crowded AI powered service market. Final block of the
show coming up this is Bloomberg.
Speaker 3 (37:49):
Tech customer relationship management provider Zendesk. It's unveiled new AI
capabilities with its platform, aiming to offer clients tangible business
(38:10):
results from an AI upgrade.
Speaker 4 (38:11):
These include new video.
Speaker 3 (38:13):
Voice tools as well as of course new AI agents.
Speaker 4 (38:15):
To help streamline workflows.
Speaker 3 (38:17):
Let's talk about all of this with zens CEO Tom Egemeier.
Tom tangible, talk to us about what is tangible?
Speaker 4 (38:24):
How do you measure it?
Speaker 14 (38:26):
We measure it by something called automated resolutions. So the
only way we charge one of our customers is if
we solve the problem for their consumer, the business they're
dealing with, or the employee.
Speaker 6 (38:37):
They're dealing with.
Speaker 14 (38:37):
And so it's a really unique model where it's all
about AI actually working, not AI theoretically working.
Speaker 3 (38:45):
What does it allow your customers to do that they
can't with rivals or that they haven't done before.
Speaker 6 (38:50):
Tom, It's really simple.
Speaker 14 (38:53):
Our customers are wanting a complete platform where sometimes they're
going to want their customers to self serve, sometimes are
going to want AI agents solving the problems, and sometimes
they're going to want human agents solving the problems. Our
platform is an end to end platform that our companies
that we work with can choose how consumers, businesses, employees
interact with them, and we have that whole platform, Tom.
Speaker 2 (39:17):
The promise and utility of an agent, everyone repeats time
and time again is its ability to communicate outside of
the system you're building. Right, It needs to be able
to actually meaningfully, meaningfully access other systems. How hard has
that been to build? Like, there's a real data and
security challenge there.
Speaker 14 (39:35):
That's the core strength of zdesk. We're going to process
about eight hundred billion API requests this year on pace
for a trillion next year, and so the core foundation
in our architecture is connecting to other systems, and so
that's why we're now going to finish the year at
about two hundred million dollars of aiarr twenty thousand customers
(39:57):
that are both aid and unpaid. We believe the largest
customer service AI provider in the world. And the reason,
we think is that foundational element of security API requests
connecting to different systems, because I totally agree with you, Ed,
it's all about connecting to different systems.
Speaker 2 (40:13):
So you're going to run a trillion API request next year,
how does that reflect in your operating costs? And literally
give me more on the revenue number that I think
you just flick that.
Speaker 14 (40:24):
Yeah, we're going to end the year about two hundred
million dollars of arr for AI, and that is not
allocating part of our existing revenue to AI. That's our
new AI products that we've launched in the last two years,
AI agents, AI Copilot.
Speaker 6 (40:39):
And quality assurance.
Speaker 14 (40:40):
We really believe those API requests are key. And how
does that work is that we've got a foundational architecture
that is dedicated to not just conversations, but making sure
that you can have actions from our AI agents, and
those actions are key to getting things done, key to
getting those resolution rates up, automated resolution rate.
Speaker 6 (41:01):
And we think that's what differentiates us.
Speaker 3 (41:03):
I really feel it's your private equity background that leads
you to bring us so much tangible, hard evidence whether
it's what actually the clients are using it for on
whether it's not your arr numbers but using your pee
brain right now.
Speaker 4 (41:16):
I mean, we keep.
Speaker 3 (41:17):
Talking about a bubble, an AI bubble. The worry about
future productivity and actual revenue streams from these startups.
Speaker 4 (41:22):
Tom, what do you say to those that are non believers?
Speaker 14 (41:26):
What I say to those that are non believers is
what I tell my kids that are twenty three and twenty.
You have to learn AI to succeed in the business
world for the next twenty or thirty years. You need
to be an AI prompt engineer yourself.
Speaker 3 (41:39):
We believe there's a.
Speaker 14 (41:40):
Course hype about AI right now, but that the fact
that we're doing We just passed a trillion tokens with
open Ai.
Speaker 6 (41:47):
They announced it two days ago at their developer conference.
Speaker 14 (41:50):
We're one of only about twenty or less companies that
are doing that.
Speaker 6 (41:54):
That tells you the hype is not hype.
Speaker 14 (41:56):
The hype is real because we're able to go automate
up to eighty per We have customers that are automitting
eighty percent of interactions.
Speaker 6 (42:03):
Already with higher customer satisfaction.
Speaker 14 (42:05):
So of course there's hype about this, but there's actually
tangible results that our customers are seeing with their consumers,
businesses and employees.
Speaker 2 (42:14):
Tom, great to have you back on the program, CEO
of Zendesk.
Speaker 6 (42:17):
We really appreciate your time. Thank you, Caro.
Speaker 2 (42:20):
I think we better go back to the broad idea
of circular financing.
Speaker 6 (42:24):
But the XAISPV debt thing.
Speaker 2 (42:27):
You know, I'm just looking at markets, at what's up,
and like not drawing a cause or link, but there
seems to be a lot being placed in what Jensenmong
said on another network this.
Speaker 3 (42:36):
Morning, and what he said is, oh, by the way, yes,
we give money to these companies, and he wish you'd
give more, perhaps to Elon Musk, but that they don't
have to buy just En Vidio and GPUs. I think
it's interesting that AMD's traveling so.
Speaker 2 (42:51):
Hard today and that is exactly where my mind was at.
And AMD is kind of the outperformer in this session.
We have a lot more to come this week. But yeah,
six percent gain two in videos two percent. I think
he couldn't have been any more clearly.
Speaker 6 (43:08):
Last thing. We're still concerned about debt.
Speaker 4 (43:14):
Yeah, I think more broadly.
Speaker 3 (43:16):
Sorry, you just cut out a little bit of their ed,
but at the moment. I think we've got to keep
on talking about where the investment a cycle is going
and keep questioning it because we are healthy balance of
cynicism and reality. But that does it for this edition
of Bloomberg Tech Head.
Speaker 4 (43:29):
What for you got Tomorrow?
Speaker 6 (43:30):
Yeah?
Speaker 2 (43:30):
Huge balance of the week remains. We'll be live from
Bloomberg screen Time in Los Angeles, speaking with the absolute
best of the entertainment industry.
Speaker 6 (43:39):
And then something big happens after that.
Speaker 4 (43:43):
And Friday, Yeah big.
Speaker 3 (43:44):
After that we switch gears and go all in on
defense tech, speaking with the leaders of Android, Palenteers so
many more. You do not want to miss out on
a phenomenal rest of the weekend.
Speaker 6 (43:53):
This was a big show. So recap the podcast.
Speaker 2 (43:55):
You know where to find it on the Bloomberg platforms, online, Apple, Spotify,
iHeart and as lows have you told me at open
hourdem Day you listen to the show as a podcast
when you drive to work. Love that from LA and
San Francisco. This is Bloomberg Tech
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