July 15, 2025 • 46 mins
Bloomberg’s Ed Ludlow discusses changes to US trade restrictions that will allow Nvidia and AMD to sell some AI chips to China. Plus, AI and Crypto Czar David Sacks and Energy Secretary Chris Wright both join from the inaugural Pennsylvania Energy and Innovation Summit. And Cognition AI agrees to buy Windsurf.
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Vla Lowe in San Francisco.
Speaker 2 (00:23):
This is Bloomberg Tech coming up a US reversal as
Nvidia and AMD are set to resume some AI chip
sales to China. Plus, we're live from the inaugural Pennsylvania
Energy and Innovation Event. Our conversations with US Energy Secretary
Chris Wright and White House AI and cryptos are David Sachs.
An AI startup Commission has agreed to buy what remains
(00:45):
of Windsor for an undisclosed sum. Both CEOs join us
later this hour. Let's get back to our top story,
and that is that Nvidia and AMD will start selling
some AI chips back into China after the adminutetration and
US government signaled that they would secure the licenses and
approvals to do so. Nvidia continues to for hire a
(01:07):
fresh record highs four point two trillion dollar market cap company.
We know the story there, Jensen Wang right now is
in China, AMD trading at its highest level since October.
There are many questions about why now, Let's get out
to Washington, DC, Bloomberg's Mike Sheppard, and that's where I start.
The timing of this mic. Very interesting. What do you
(01:27):
make of it?
Speaker 3 (01:29):
Well, it's fascinating.
Speaker 4 (01:30):
This announcement today from in video in the overnight hours
comes less than a week after Jensen Wang sat down
with President Donald Trump in Washington and the White House
for a closed door meeting. Now we don't know what
was said in private between the two men, but one
thing we do know is that Jensen Wang has been
clear in his message that US export controls that have
(01:52):
hit his company particularly hard had been a failure and
that put US competitiveness at risk. His vision is that
if is unable to sell a modified and slowed down
version of its AI chip into China, the US will
be seeding that market in essence to Nvidia's chief Chinese rival,
Huawei Technologies, and that would set the stage, potentially ed
(02:14):
for Huawei to then start exporting some of that AI
technology into other countries where in Vidio would also like
to have a toe hold and bigger footprint. For Jensen Wong,
he really wants the global rollout of AI to be
defined by what he calls the American stack of technology
rather than the Chinese one ad.
Speaker 2 (02:34):
I think we need to talk about Nvidia's business here
as well. Right, this is the H twenty chip, and
when they stopped shipping the H Chinese to China, we
were able to quantify the impact at least to the
top line of Nvidia's business. What do we know will
happen in the second half of this year in terms
of sales and what business they can claw back.
Speaker 4 (02:54):
Well, when they released their results for the first quarter,
they did report a four point five billion dollars write
down related to those export curbs on the AGE twenty chip.
And remember the H twenty chip have been redesigned specifically
for the Chinese market to meet earlier rounds of US
export curbs that were enacted on national security grounds. Now
(03:15):
they should they stay in place, would have hit the
bottom line even further. This coming quarter. They were projecting
law sales up to eight billion dollars, but that could
all change.
Speaker 2 (03:26):
Here ed there's the trade and business case, and then
there's the politics. This was Treasury Secretary Scott Besson speaking
on Bloomberg Television earlier today.
Speaker 5 (03:35):
You might say that that was a negotiating chip that
we used in Geneva and in London.
Speaker 6 (03:43):
It was all part of a mosaic.
Speaker 5 (03:46):
They had things we wanted, we have things they wanted, and.
Speaker 6 (03:50):
We're in a very good place.
Speaker 5 (03:52):
I expect to meet my Chinese counterpart, the Vice premiere
in the next few weeks.
Speaker 2 (03:58):
Was this a boggaining chip literally that played into trade
talks between the US and China.
Speaker 4 (04:04):
Well, it certainly is something that Chinese officials would have
raised during the talks, and for the first time, US
officials are indicating that the chip export curbs actually emerged
as something in the negotiation. So it's unclear where they rank,
but certainly it helped the US gain access to those
rare earth exports from China that American customers had suddenly
(04:25):
found difficulty buying as China began to slow down its
sales of those crucial products to automakers and other buyers.
Speaker 2 (04:32):
Here bloombergs Mike Shepherd in Washington, d C. Thank you
very much. We have some breaking news crossing the Bloomberg
terminal and it involves poly Market. According to Bloomberg's reporting,
both a DOJ and a CFTC investigation into where the
polymarket was accepting trades from US based users that were
in violation of its previous settlement agreements with the federal
(04:55):
regulatory bodies have been dismissed. That's according to a Bloomberg source,
who says that these two investigations from the BIDE era
are now being terminated. We'll bring you more on that
story as we get it, but it's just broken across Bloomberg.
The sick were Crypto. It's been an eventful week in markets.
We had tech earnings, but it's also Crypto week, which
is underway. Joining us now to discuss is Catherine Dowling
(05:16):
Bitwise Asset Management, General Counsel and Chief Compliance Office. And
I've got to Katain. I want to ask you for
your reaction to that story we just broke. I'll go
over the reporting. There were two investigations into Polymarket, the
US Justice Department and also the CFTC looking at where
the polymarket was accepting trades, but that was a bid
near investigation that our reporting says is over. What do
(05:39):
you make of that?
Speaker 6 (05:40):
You know?
Speaker 4 (05:40):
Ed?
Speaker 7 (05:40):
Thanks for having me, And it's funny. I spent some
hours on the plane last night and I looked at
the number of hours spent on Biden and Error lawsuits.
And investigations, and it was over ten years combined of
man and woman hours spent on these various investigations. What
I make of that is part of what we've seen
as this tectonic shift of let's get back to fundamentals
(06:04):
and let's make sure that if we're investigating different businesses
that there's really some there there.
Speaker 2 (06:09):
And that really.
Speaker 7 (06:10):
Plays into the whole theme of Crypto Week, which is
getting to the clarity that the industry has been asking
for for years.
Speaker 2 (06:19):
You're a former assistant U attorney in the Economics Crime Unit,
so it's great timing to have you on the program.
It is crypto week, and what's so interesting on the
Bloomberg terminal, there's a lot of contradicting reports right There
was a report last night that bitcoin has a lot
of room to run because it is Crypto Week and
everyone's sort of enthusiastic and talking about it. Actually there's
a bit of profit taking this morning. What is the
(06:40):
main tailwind right now that you're seeing for this industry.
Speaker 7 (06:43):
The main tailwind is having this basis for institutional capital
to enter. When you're looking at from the sidelines, there's
still a ton of institutional capital on the sidelines. Why
Because although there's been talk for years, as I just said,
about getting to this clarity, we're really finally seeing that
momentum actually happen. We're seeing that momentum happen in legislation.
(07:06):
We're seeing that momentum happen in bipartisan support and voting
behind these key legislative initiatives.
Speaker 6 (07:13):
And that's key.
Speaker 7 (07:14):
All of the complexity that we saw behind some of
these cases that have been dismissed that we've just been
talking about. That complexity is what breeds the insecurity is
what keeps capital out. They're looking in, they're waiting for
that moment. They see the promise of the technology, but
they just can't get their arms around the regulatory insecurity
they see and they sense. So now we're heading in
(07:37):
that direction. You know, someone asked me yesterday Crypto Week,
is this just the crypto industry being loud, And I said, no,
this is actually coming from Congress. That is a huge difference,
and that's the momentum shift we're seeing. We have bipartisan
support with the realization knowing from you know, years of
work for many in the industry that we need to
(07:57):
get that clarity and we're heading finally in that correct.
Speaker 2 (08:01):
Direction, Catherine. This week, the House will vote on bills
to regulate stable coins during Crypto Week. Your expectation quickly
of what's going to happen.
Speaker 7 (08:10):
Expectation is that stable coin is heading towards signature, that
momentum has been there. It's you know, it's something, it's
it's a piece that you can understand. These are you know,
centralized intermediaries that should be regulated. It's hard to have,
you know, bipartisan disagreement about that fact. Yes, you can,
(08:31):
you know, quibble about the language and you know how
we how we write it up. But I think there's
no disagreement that this is an area that should be regulated,
you know, and this is all on the heels of
the circle IPO. So we can see that moving forward.
Clarity that'll that hopefully will we'll get through the House,
and then we'll see what the Senate does with that.
Speaker 6 (08:52):
Will they take clarity.
Speaker 7 (08:53):
Will they create their their own where we've been hearing
about the Senate version that's going to come out, So
we'll see whether those two get squashed together or whether
the Senate will book at clarity. And some of that
will just depend on the politics that plays out over
the next few days during the Crypto Week.
Speaker 2 (09:10):
Catherine Dowling a bit wise asset management. Great to have
you back on the show, Thank you very much. Coming up,
we go live from Pittsburgh where we speak with the
US Energy Secretary Chris Wright. That conversation you do not
want to miss, and it's coming up next. This is
Bloomberg Tech. Pittsburgh is host to the inaugural Pennsylvania Energy
(09:41):
and Innovation Summit. The event kicks off today with President
Trump set to attend in just a few hours. For
a look at the future of US energy and tech.
Bloomberg's Tyler Kendall is standing by Tyler, Thanks so much, Ed.
Speaker 8 (09:55):
And I'm pleased to say that I'm joined by the
US Energy Secretary, Christopher Wright.
Speaker 6 (09:59):
Secretary right, thank you.
Speaker 8 (10:01):
So much for joining Bloomberg. And I want to start
with one of the main reasons why we're here in Pittsburgh.
There is this surging demand for energy to help power
artificial intelligence, and the administration focuses a lot on its
deregulation agenda. Do you think that you can accomplish your
goals fast enough to keep up with what has been
a surge and energy consumption.
Speaker 3 (10:23):
I think we will.
Speaker 9 (10:24):
You're right, it's a challenge. I mean, our the agenda
of President Trump is to unleash American energy. The last
four years the Biden administration was more to shackle American energy.
But you're right, there's rapidly rising demand and what we
as the government need to do is enable private businesses
to build the things they want to build and invest
in the things they want to build. We're not going
(10:45):
to do this building ourselves, but we're going to enable
private businesses to do it.
Speaker 8 (10:49):
Well, I'm glad that you brought up private businesses and
to kind of put a finer point on this idea
of urgency. We actually heard from Mark Zuckerberg yesterday pledging
billions that Meta is going to invest in data, but
it is raising concerns about an energy crisis.
Speaker 6 (11:03):
To fuel it.
Speaker 8 (11:04):
I'm wondering, have you spoken to Zuckerberg or Meta about
their plans.
Speaker 9 (11:09):
Oh, we speak Meta extensively about their plans, and yeah,
there's a number of the hyperscalers that have huge investment opportunities.
We're excited about that.
Speaker 2 (11:17):
This is the.
Speaker 9 (11:18):
Newest energy intensive industry to arise. That's what artificial intelligence
is energy intensive industry, taking the most sophisticated, most expensive
form of energy electricity and turning it into intelligence to
transform more world and protect our nation. So yeah, Meta
has huge investment plans, as does Amazon and Microsoft and
Google and the other players in that space, and we
(11:41):
need all of them will invest.
Speaker 6 (11:43):
It's a few hundred billion dollars this year. In fact,
you'll hear at the.
Speaker 9 (11:47):
Conference today announcements it was seventy and I think now
ninety billion dollars just in the state of Pennsylvania.
Speaker 8 (11:53):
When you hear big investments though, and how much energy
that is going to take, what's your level of concern
though that there is going to perhaps be such a
great demand, Can the US really.
Speaker 2 (12:04):
Keep up with it?
Speaker 6 (12:05):
Absolutely?
Speaker 9 (12:07):
United States energy production because of the shale revolution just
exploded in the last ten.
Speaker 6 (12:12):
Or twelve years.
Speaker 9 (12:13):
Pennsylvania is a massive energy producer today. Pennsylvania exports more
energy out of its state than any other.
Speaker 6 (12:20):
State except for Texas.
Speaker 9 (12:22):
And Pennsylvania could massively grow its energy production, just doesn't
have enough pipeline capacity to move that natural gas out
of the state. So what's going to happen is more
of that gas or additional gas will be consumed in
Pennsylvania turned into electricity generated intelligence and keep the United
States ahead of China in the AI race.
Speaker 8 (12:42):
So I want to talk about oil, and I also
want to welcome in our audience that has just joined us.
We are talking to the US Energy Secretary, Christopher Wright.
I'm Tyler Kendall. I want to show you some of
these statistics that our analysts have. Bloomberg pulled that the
US oil rig account has dropped thirteen percent since late February.
It's in the midst of its longest traction since twenty twenty.
I know that there were some incentives in the reconciliation package,
(13:05):
but what further incentives is the administration considering to help
get forward these oil breaks to continue drilling.
Speaker 2 (13:15):
Mostly it's get out of the way.
Speaker 9 (13:17):
You know, we had the Biden administration had four years
all of government approach to try to, as they said,
end fossil fuels. Now, that didn't work very well. We
went from eighty two percent of American energy coming from
fossil fuels before Biden took office to eighty two percent
exactly the same when he left office. Those are just
simply the energy sources that power our country and our
(13:39):
world today, but it's get out of the way of
the marketplace right now. US production has grown so fast
as has other places in the world that prices are
maybe at the low end of profitability for producers here,
so you see a pullback and activity.
Speaker 2 (13:54):
You're going to see with these new.
Speaker 9 (13:55):
Investments and economic growth in the United States, We're going
to see growth in demand for oil and of course
that'll probably bump prices back up a little bit keep
drillers active.
Speaker 8 (14:03):
Well, you mentioned there perhaps a lower price environment. And
part of this also when we're talking about costs that
these companies are facing, has to do with tariffs. And
I wanted to ask you about copper in particular, which
is essential to data centers and getting energy to help
power AI. What sort of impact is a fifty percent
copper terraff set to go into effect on August first,
(14:24):
going to have when we're talking about the cost for
energy infrastructure.
Speaker 9 (14:28):
Well, I think the biggest impact of that fifty percent
terra fund coffer is going to speed up copper mining
in the United States. We have enormous copper resources here.
We have some huge minds that have been trying to
get going for years. We want to get copper production
growing rapidly in this country. Copper, like steel, is just
essential to everything that happens in the world.
Speaker 8 (14:48):
Should we expect the energy industry to get some sort
of tariff car vouts moving forward?
Speaker 9 (14:54):
I believe the President plans no special carveouts. He wants
to reindust the United States of America.
Speaker 6 (15:01):
There's a lot of tools to do that.
Speaker 9 (15:03):
Make it easy to invest in the United States, make
it attractive to invest the United States, and tariffs are
an additional element of that toolbox.
Speaker 8 (15:11):
I'm sure you're talking to industry, though. Is a carve
out on the table? Are there any negotiations underway for say,
the oil industry to get a carve out when it
comes to the equipment that they use in the field,
like copper or steal for example.
Speaker 9 (15:24):
No discussions right now. We are hearing from the industry,
and of course this is true. If you incrementally raise
the cost of projects, that hurts the economics of them.
We want to do everything we possibly can to maximize
investments in the United States so jobs and opportunity come
here to our country.
Speaker 8 (15:41):
Lastly, I just want to ask you a geopolitical question,
because we did hear from President Trump yesterday threatening one
hundred percent so called secondary tariff on countries that import
Russian energy supplies. If that were to go into effect,
what would that do to prices in the global energy market?
Speaker 9 (15:59):
Something like that would likely drive oil prices up. I
think President Trump's strong agenda there is to end the
war in Ukraine. Our hope is that that large pressure
will have an impact on Russia and we can bring
just a brutal war in Eastern Europe to an end.
That's President Trump's goal is prosperity at home and piece abroad,
(16:20):
and the old formulas weren't working very well in that respect.
So yeah, President Trump has very different tools, very different
negotiating skills, and very different level of boldness. I think
we're going to see tremendous growth in piece abroad and
prosperity at home.
Speaker 8 (16:35):
All Right, we have to leave it there. US Energy
Secretary Christopher Wright, thank you so much for your time.
This has been a conversation here in Pittsburgh on the
sidelines of the Pennsylvania Energy and Innovation Summit.
Speaker 6 (16:45):
I'll toss it back to you.
Speaker 2 (16:47):
Blue Bogs Tyler Kendo with US Energy Secretary Chris Wright. Okay,
coming up on the program. We're speaking with Niraptalia, co
founder and CEO next Tool. That conversation is up next
Bloomberg Tech. The neighborhood networking service next Door, has launched
(17:19):
a redesigned app with features aimed at making the platform
more useful, including safety, local news, and service recommendations. Nextdoor
CEO president and co founder Nera Avtalia joins us, Now, now, look,
let's be honest about this. I have a sense of
deja vu because I think we've done a Nextdoor two
point oh before, so I'd say this is maybe next
(17:39):
Door three point zero, But give me the basics of
why you've done it and what you've done well.
Speaker 6 (17:43):
This is an entirely new Nextdoor.
Speaker 10 (17:45):
So whether we call it two point oh three point
zero or a ten point zero doesn't matter, because for consumers,
this is going to feel and operate like a completely
new app, but grounded in what Nextdoor has always cared about,
and that is safety, alerts, local and recommendations from trusted neighbors.
Speaker 2 (18:02):
The thing that you and I have discussed a lot
in the past is the scale of Nextdoor, so forty
six million active users going forward with this new focus,
what's the metric that you judge success by, is it
the user base or something else?
Speaker 6 (18:15):
Well, it is engagement, and you're right.
Speaker 10 (18:17):
We have over one hundred million verified neighbors who've joined Nextdoor,
but the potential for Nextdoor, we believe, is much greater.
We can and should be one of those social networks
that has over a billion users, and so we have
work to do, and over the last year, the work
that we've done is to create a better product to
enable more engagement, which will translate the more users translate
(18:39):
in more revenue translate into profits, et cetera.
Speaker 2 (18:42):
The thing I hear a lot in the moment in
the domain of social media is time spent actually including
generative AI tools. So how do you do the conversion
somebody that is a registered user or active user to
somebody that spends a lot of time on the platform,
but using the new offerings that you've put in place.
Speaker 10 (19:00):
Well, ultimately, the real ambition of any consumer application is
to turn into a daily habit. And so whether you're
coming every day for a few minutes or whether you're
spending hours every single day, that's where we start. And
today many of our users are only coming weekly or
several times per week. So the first thing we do
is we ask ourselves, how can we turn this into
(19:20):
something that you check the minute that you wake up
in the morning, and you check before you go to
bed at night. Because there are so many things happening
around us, and if things are happening on the neighborhood,
they should be on next door. So that's been our
focus and our ambition for the new next Door.
Speaker 2 (19:34):
That makes a very interesting, almost academic question, which is
if you want next door to be the first thing
someone looks at when they wake up and the last
thing before they go to bed, who's next Door's closest competitor.
Speaker 10 (19:45):
Well, it's a great question, and I think our greatest
competitor is really ourselves.
Speaker 6 (19:50):
When we talk.
Speaker 10 (19:50):
About next store competitive Well, it is, though, because we
have an ambition and we have an expectation for what
we can deliver to our users that we have not
in the past, and so we need to do better.
We need to build better product, We need to enable
stronger local community. There is no one else today who's
built an entire geospatial platform based on where people live.
(20:13):
There are lots of local services sites, there are lots
of local news sites, but there's no one who's bringing
it all together. So if we can do so successfully,
we can be that indispensable, essential neighborhood network that.
Speaker 2 (20:25):
Brings in the local news component. I found this fascinating.
Why go into local news. We're in an environment where
the big social platforms increasingly are pulling back from news
on the platform by choice. That was something that you're
sort of jumping into head first.
Speaker 10 (20:45):
Well, there's a great quote from the famous venture capitalist
Michael Moritz that I just read a couple of weeks ago,
and the quote is local news is as important to
a city as air, water, and gas. And we believe
that at Nextdoor, local news is what compels citizens to
have civic discourse, it's what helps keep communities stronger. And
(21:06):
so as part of this new Nextdoor, we're doing something
that we haven't done in our fourteen year history. We
are inviting local publishers to come to our platform and
use it as a distribution mechanism to take their great
journalism and spread it to our users. And so we
have thirty five hundred local publishers publishing fifty thousand articles
(21:26):
every week, and now our users can read that news,
they can stay in form, they can engage in conversation
and it's something that isn't happening to your point on
any of the other social platforms today.
Speaker 2 (21:38):
And by talking about m and A, because these strategies,
which include local news, there are different mechanisms you can
use to grow. How do you think about m ANDA
and moving into the new domains that you want Nextdoor
to win in.
Speaker 10 (21:51):
Well, every single advisor that I've talked to, either as
a private company CEO or as a public company CEO,
has said the same thing. You have to operate your
company as if it will be around forever as a
single independent entity. And so that's the way that we
think about next Door. As a public company, we always
have to listen to any conversation that comes our way,
(22:12):
but I will tell you we are one hundred percent
focused on achieving our potential as a standalone independent entity.
Speaker 2 (22:20):
Near Avtealia, CEO, president and co founder of next Door.
Back here on the program, coming up deals for AI
startups continue as Cognition AI agrees to buy the remainder
of windsor we'll hear from both of the CEOs. Next.
This is Bloomberg Tech. Welcome back to Bloomberg Tech. There
(22:50):
is so much happening in the AI domain that is
moving markets as well. Let's start with call we call,
We've pushing a lot higher. There's news out of Pennsylvania
this morning that the company's going to invest six billion
dollars into an AI data center there. Now, remember Pennsylvania,
Pittsburgh in particular, is all the focus this morning as
Cene McCormack hosts that inaugural Innovation and Energy Summit. We're
(23:14):
going to get to a lot more of that. But
the stock really pushing higher, a lot of momentum for
coreweed up eight percent. There is our top story, and
it is a clear top story. Nvidia and AMD shares
both pushing higher after announcing plans to resume sales of
some AI chips into the Chinese market. Why they've secured
assurances from Washington and the administration that they will get
(23:38):
the approvals and licenses needed to do so. We will
get much more into that throughout the remainder of this program. Now,
as Chipstock saw on that news that semiconductors will be
able to sell more of their product to China, the
Trump administration is still working out its trading relationship with Beijing.
Earlier Bloomberg's Amory Horden spoke with Treasury Secretary Scott Besson.
Listened to this.
Speaker 6 (23:58):
I can tell you one thing that we do not want.
Speaker 5 (24:02):
Is a digital Belton road springing up around the world
because other countries or China are substituting for our American
chip manufacturers.
Speaker 11 (24:17):
This is the same chip though, that the Trump administration
blocked with export controls in April. So why the change
in policy now, Emery.
Speaker 5 (24:27):
You might say that that was a negotiating chip that
we used in Geneva and in London.
Speaker 11 (24:36):
So this was part of the trade talks when it
comes to Washington and Beijing. Yes, was it a quid
pro quo then, as you said, it wasn't, But was
it potentially to make sure that you can get the
licenses when it comes to rare earths.
Speaker 6 (24:51):
I think it was all part of a mosaic.
Speaker 5 (24:55):
They had things we wanted, we have things they wanted,
and we're in.
Speaker 6 (24:59):
A very good place.
Speaker 5 (25:00):
I expect to meet my Chinese counterpart, the Vice Premiere,
in the next few weeks.
Speaker 11 (25:06):
So when and where will that needing take place.
Speaker 6 (25:11):
We're still working on that.
Speaker 5 (25:12):
The Chinese leadership has a big conclave at the beginning
of August, so we're trying to work out whether that
could be in a third country before or after that conclave.
Speaker 11 (25:23):
Well, the administration released the framework of the Geneva and
London talks.
Speaker 5 (25:29):
Well, we have released some of it, and I'll tell
you that now having settled on tariffs on the export controls,
we can move on to the next stage of talks.
And I think it's very important both for the global economy,
for the US economy and for the Chinese economy for
(25:52):
US to move on and talk about China opening its
markets and the increase domestic and consumer production.
Speaker 6 (26:02):
There.
Speaker 11 (26:03):
Are you hoping to get to that next phase before
August twelfth, when that's currently the daytunt between these two economies.
Speaker 5 (26:12):
Yeah, Look, I think we're in a very good place,
and I tell market participants not to worry about August twelfth.
Speaker 2 (26:22):
Shower's Treasury Secretary Scott Besson speaking with Bloomberg's Amory Hoard.
And let's get back to Pittsburgh where the inaugural Pennsylvania
Energy and Innovation summits underway, and we're going to speak
with AI and Crypto taking center stage of the energy
and its Digital future joining us now delighted, Say David Sachs,
White House, AI and cryptos, our senior policy advisor to
(26:43):
the President. David, welcome back. It's great to have you
as always on the program. The focus is good in Vidia,
thank you, David. The focus is in video and AMD's
ability to now sell in a limited way chips back
into the Chinese market. Just your reaction generally to that, Well, we.
Speaker 12 (27:03):
Still have a policy of not selling our state of
the art advanced the man conductors to China, and the
Age twenty is not that it's a heavily deprecated chip,
and that's why the Biden administration allowed the sale of
the Age twenty to China.
Speaker 6 (27:16):
And this is a continuation.
Speaker 12 (27:18):
Of that policy in the larger rubric of the trade
negotiations that Secretary Besson was talking to you about. So
this is a heavily deprecated chip. I think that, like
Secretary Besson said, there are some things that China wants
from us, or are the things we want from China,
and this is all part of the overall trade negotiation.
Speaker 2 (27:36):
David, you advised the president on AI policy as well
as cryptopolicy. Do you have any sense of when he
met with Jensen One last week at the White House.
What case mister Wong made to the President that it
was the right thing to get the American technology stacked
back into China.
Speaker 12 (27:54):
Well, Jenson has been making the case publicly for competing
in China, and I think there are a lot of
merits to the argument. If you look at developments over
the past year, Huawei has advanced very rapidly. They have
a new technology called cloud Matrix, which which networks together
three hundred and eighty four of their Huawei as send chips. Now,
(28:15):
the Huawei chip is not as good as the Nvidia chip.
The Nvidia chip is three times more powerful. But if
you network together enough of those chips, you can route
force your way to a similar kind of result. And
that is what Huawei has been developing, is this cloud
Matrix three eighty four. And there have been reports, including
from Bloomberg, that they've started exporting that technology or they've
(28:36):
been seeking to export it. So Huawei is becoming much
more competitive. And if you give the whole Chinese market
to Huawei, it's a huge subsidy for their R and
D R and it basically forces Chinese companies that might
be willing to use AGE twenty to use the Huawei
chip and to basically figure out basically to figure out
(28:56):
the bugs, work out the kinks of the cloud matrix system,
and help Huawei scale that up. So I think there
is a compelling argument here that you just don't want
to hand Huawei the entire Chinese market when in Nvidia
is capable of competing for a big slice of it
worth a deprecated, less capable chip. Again, we're not selling
our latest greatest chips to China, but we can deprive
(29:18):
Huawei of basically having this giant market share in China
that they can then use to scale up and compete
with us globally. So I think this policy is nuanced
and I think it makes a lot of sense.
Speaker 2 (29:29):
The reporter you're referring to that Bloomberg had was that
Huawei was going out to some of the Gulf nations
and also some of the Southeast Asian nations and offering
prior generations of their chip, but also the cloud matrix
that you mentioned. The concern being that in dealing with
third countries, you know that be some Chinese access to
(29:50):
other nations technology. How involved have you been, David in
these kinds of talks and in framing that the presidents
thinking that actually just having direct access to lower performance
compute is okay with China right now.
Speaker 12 (30:06):
Well, look, I don't want to I'm not going to
discuss what I talked to the President about, but I
mean I can tell you what I think, which is
the Bloomberg story discussed hoh. Huawei was basically trying to
make available the Huawei Assen chip, which is their current chip,
which is basically put together in a rack system with
cloud matrix, to create a viable competitor to in Nvidia,
(30:26):
and I think it is a viable competitor. I think
in Vidia and AMD and other American companies have a
better product. But if we don't compete across the world,
then we will hand the market to China. And one
of the reasons that the President went to the Gold
States on that trip is to encourage business relations between
the US and the Gold State. He signed massive investment
(30:48):
deals and one of the deals that we signed was
this new AI Acceleration Partnership where we want to create
a pathway for the Gold States like UEE to buy
American technology, to buy American and to create data centers
on the American tech stack and I can tell you
that I don't quite understand why this has proven to
be so controversial in Washington. But where these nations, like
(31:11):
the Gold States, they have two choices. They can go
with an American technology or they can go with the
Chinese technology. And if you don't let them buy the
American technology, you're pushing them into the arms of China.
And a lot of people said, well, China won't be
ready to sell for years, But now we see that
there are reports that Huawei is out there trying to
sell and export the Huawei as sent chip. So I
(31:33):
think it's very important that we enable our American companies
to compete in the global market, that we don't tie
their hands, that we don't hobble them, because again, this
is zero sum game. That market share will either belong
to our companies like Nvidia, or it's going to belong
to Chinese companies like Huawei. There's a very simple test
for this. Just look at market share. If five years
(31:54):
from now we look across the world and we see
that in Nvidia or other American companies have eighty percent
more market share, it means that we won the AI race.
But if we look across the world in five years
and see that Huawei has eighty percent market share, then
it means that we lost the AI race. So I
think it's very important that we do everything we can
to encourage American exports to be sure. We can name
(32:16):
our security standards. But this is a very easy trust
but verify situation. The chips that we're talking about are
really mainframe computers. They're eight feet tall, they're thirty six
hundred pounds. It's very easy to send inspectors into data
centers and count the server racks to make sure that
they're where they're supposed to be, so the security concerns
can be addressed. I understand that there are some security concerns,
(32:39):
but I think they're very easily handled, And what we
need to be doing is making sure that we win
the AI race globally by making American technology the global
standard and not letting not creating a Huawei Bolton Road.
Speaker 2 (32:52):
Live on Bloomberg Television and radio worldwide, we're in conversation
with David Sack, Senior policy advisor for AI and Crypto
the AI and cryptos David I wrote my newslet earlier
this week about the analogy that Jensen Wong has been
using the American Technology Stack should be akin to the
US dollar as the world's reserve currency. That's how he
(33:14):
would like the administration to approach it. Do you share
that view and see some truth in that analogy.
Speaker 12 (33:21):
Well, here's the way I see it, and this is
really I think a Silicon Valley view, because I'm ultimately
I've been a founder and investor in Silicon Valley for
twenty five years. And what we see is that the
winning technology companies are always the ones that create the
biggest ecosystem. They have the most developers on their platform,
they have the most apps in their app store, and
so they work very, very hard to create a partner ecosystem.
(33:43):
And I think that the United States needs to do
something similar with the American Technology Stack. We want the
most other countries using our technology because again it's a
zero sum game. And it's not just the chips, it's
the operating system that runs on those chips, it's the
AI models that then are run in these data sets.
We want all of that to be American made and
American powered, and look to be sure there are security
(34:06):
concerns and we can address them. I don't think that's
that hard, but if we hobble our American companies and
don't let them participate in the global market again, we
are creating We're playing into China's arms and playing into
their digital soult road. So I think, to me, this is.
Speaker 6 (34:20):
A pretty easy question.
Speaker 12 (34:22):
I think we do want American technology to be the
global standard.
Speaker 6 (34:26):
It is a little bit like the dollar.
Speaker 12 (34:28):
There is a network effect there. The reason why everyone
loves the dollars because they know that everybody.
Speaker 6 (34:32):
Else will accept it as well.
Speaker 12 (34:34):
So we do want to have the strongest dollar, We
want to be the reserve currency, and we do want
our technology to be the global standard.
Speaker 2 (34:40):
David Bluemberg reported this morning that on July twenty third,
the President's going to speak in an event titled Winning
the AI Race, which you and the rest of the
All In Pod team will be posting. Essentially, I guess
that's going to be a moment where we'll have a
more a fuller sense of what the President and this
administration's big picture AI policy is going to be, what
(35:02):
the big goals are going to be.
Speaker 6 (35:04):
That's right.
Speaker 12 (35:04):
That's the President will be giving a keynote address at
a one day AI conference in Washington, DC on July
twenty third. It's co hosted by all In and Hill
and Valley Form, which is also a DC and Silicon
Valley policy group, and the President, I think, will be
giving his first major address on the topic of artificial
intelligence building on. There are mark studies giving here in
(35:25):
Pennsylvania today which are also AI related and related to
energy investment, the kinds of investments we have to make
to power the next generation of AI.
Speaker 2 (35:35):
David, you've been speaking there in Pittsburgh this morning. What's
the main focus on the energy side of this AI story?
Energy security is a national security priority, but just simply
whether or enough whether we will have enough energy resources
to power the goals of META and the other hyperscalers.
Speaker 12 (35:52):
Well, Pennsylvania is a huge energy producing state. I think
it's our second biggest energy producing state. They have abundant
natural gas, which I think in the near term is
going to be the power source for these data centers.
Speaker 6 (36:04):
I think in about.
Speaker 12 (36:05):
Five years we could start seeing nuclear scale up, and
the administration believes in that too. We want on all
of the above approach, But Pennsylvania is very big in
natural gas and there are major investments being announced here
for more basically fracking for more grid infrastructure, for more
power generation. All those things are needed to power data centers.
(36:27):
AI runs on GPUs that are incredibly power intensive, and
those these data centers in the future are going to
need more power. And the one area I think where
America is a little bit behind. I mean, I think
we're winning the AI race pretty much at every level
of the stack, except that the size of our power
grid has not increased very much over the past decade.
If you go over to China, they've roughly double the
(36:49):
size of their electric grid over the past decade, where
ours is only gone up by a couple of percent
a year. So this is an area where we need
to make major new investments. And the President is coming
to Pennsylvania today to announce many of those investments. And
I think you're gonna this has been a major priority
the administration, and I think you're going to see.
Speaker 3 (37:06):
A lot a lot more of this White House.
Speaker 2 (37:08):
AI and cryptos are David Sex, Thank you very much.
Coming back on Bloomberg Tech. Okay, coming up deals for
AI startups continue. As Cognition AI agrees to buy the
remainder of Windsurf, We're going to hear from both of
those CEOs. Next, this is Bloomberg Tech. Internally, the companies
(37:41):
were saying, it's the perfect fit. What happened? Why did
it happen? Windsurf CEO Jeff Wang and Cognition AI CEO
Scott Woo join us now live on Bloomberg Tech. Scott,
I'll start with you with that simple question, how did
all of this come together? Please?
Speaker 13 (37:58):
Yes, absolutely, And so I think we all found the
news around this found out about the news around the
same time on Friday afternoon, and we were looking at
this and saying, Wow, there's there's such a clean fit
of all of these things, you know, both in terms
of kind of the products, which is Windsurf is one
of the leading IDEs, Cognition builds Devin the first AI
software engineer Agent, and so there's a clear offering of
(38:21):
ID and agent. At the same time, both of us
have a very clear enterprise focus in terms of how
we do business and even kind of the customers that
we have, the team that we have and so on,
and it just seems like such a great fit.
Speaker 2 (38:34):
Jeff, what I was hearing over the weekend is that
some of the investors on both sides might have played
a role in sort of brokering that this was a
good idea? Is there some truth to that?
Speaker 14 (38:44):
Actually, the way that the other deal panned out was
there it should have been a clean cut. So there
were kind of like conversations going. But you know, as
job as interim CEO, you have to find a lot
of options for the future of the company, and I
think after talking to Scott it was it was a
done deal. In my mind, it was just a perfect fit.
Speaker 2 (39:04):
Scott. What's so interesting is like the conviction that Cognition had,
Why were you able to move so quickly and just say,
you know what, this is a great deal for us.
Speaker 13 (39:14):
Yeah, yeah, absolutely. Look, I think we are in the
AI code space. I think Winter is a very kind
of different complimentary offering in this space. But naturally, you know,
we see it. We've tried the product ourselves, We've used
it a lot, and it helps us just get to
conviction very quickly. And Jeff and I talked and I
think especially with everything going on, it was clear that,
you know, the sooner that we could get to an outcome,
(39:34):
I think the better for the team and for the
customers as well.
Speaker 2 (39:39):
What role did did Google or even Barren play in
this Jeff, we're trying to unpick a series of deals
and chronologies that kind of happened very quickly.
Speaker 14 (39:51):
I have to say that the whole Google situation was
meant to be a clean cut.
Speaker 3 (39:56):
So everything at Windsorf was intact.
Speaker 14 (40:00):
The product, the IP, the go to market team, the
marketing team, even the enterprise engineering team, and it just
so happened that these are the components that Cognition was
looking for. So I wanted to just be clear, like
it was structured in a way where it was a clean.
Speaker 3 (40:13):
Cut from Google.
Speaker 2 (40:16):
What was the mood Wins Jeff. On Friday when the
Google licensing and at Quahia was confirmed.
Speaker 14 (40:24):
Yeah, I had to do an all hands to the
team and I had to tell them the news, and
I had to say that was probably the hardest day
for two hundred and fifty people at the company's lives,
and I was immediately in action. I don't think I
slept maybe three hours over the last the next seventy
two hours, and my only goal was to get the
best solution for the company. And I think now that
(40:46):
we're with Cognition, everything is intact. We have an amazing
core engineering team with Cognition now and we also have Windsurf.
The products still everything is the same, and now we
also have Devin and then we have the.
Speaker 3 (40:59):
Four ground agent and the background agent.
Speaker 14 (41:01):
This is like an amazing combo for the company.
Speaker 2 (41:05):
Scott, would would you kindly go over the basics of
the terms of the deal, like was this a cash.
Speaker 3 (41:10):
Or stop deal?
Speaker 2 (41:11):
It started Friday and by the beginning of this week
it was done.
Speaker 13 (41:16):
Yeah, yeah, yeah. What I can say is that wind
Surf employees are you know, every single winter employee has
an immediate consideration as part of this deal. And then
from here on out we are all just one team,
and so wind Surf employees are now part of Cognition.
We were working on this together and excited to get moving.
Speaker 2 (41:37):
When I first learned about Windsurf, it was in the
form of Codium and Jeff this questions you and Varren
and then the big news was open AI and Windsurf.
When did you kind of get the sense that that
wasn't going to happen. I know we're going back over
history a little bit here, but actually, you know, in
a few years time I might look back and go, wow,
(41:59):
that was a pretty old series of events. So when
did you look at it and say, okay, open AI
and Windsurf's not going to happen. What happens next?
Speaker 14 (42:07):
I think it was time so open Aye. Kind of
the rumors broke like three months ago. And if you
think about it, like if three months later there's no
progress and there's still drama, a lot of it is
reported in the news, I'll say that is a pretty
good signal that things are not progressing as fast as
you'd like. And I remember the founders of our company
(42:28):
were kind of like locked in a conference room for
I think six weeks, and I kind of got the
sense that things are probably going to shift in another direction.
Speaker 2 (42:38):
Scott, I'd love to talk about technology for a moment,
if that's okay. What is it that that Windsurf and
cognition can do together?
Speaker 13 (42:45):
Absolutely, and so wind Surface, you know, in one line
is an ide that makes it so that a developer
when they're at the keyboard can go faster and produce
code faster. And Devin is an AI software engineering agent
that you can.
Speaker 3 (42:57):
Delegate tasks to.
Speaker 13 (42:58):
And there is a lot of national integration of how
we can work together. You can imagine kicking off the
agent to go do kind of a first pass at
a project and then coming in and doing the finishing
touches yourself. With Windsurf, you can imagine using the ide
to plan and then once you have the task sorted out,
to be able to hand it off. And we're super
excited because I think both of us have always been
very focused on making software engineering work in.
Speaker 3 (43:21):
The real world, you know.
Speaker 13 (43:22):
And it's in the last few days actually, at Cognition,
for example, we've announced that both Goldman Sachs and City
Bank have been rolling out Devin to their teams. Windsurf
has been working with JP Morgan and similarly, you know,
when we go down the customer list, when we go
down the sectors, we found.
Speaker 6 (43:39):
A lot of natural partnership.
Speaker 2 (43:41):
Jeff I got the sense from reading but also speaking
to people over the weekend that kind of post Google,
the remainder of the Windsurf team felt a little bit
left out in the cold. But on the other hand,
that's a great team, you know. Was there a moment
where you kind of thought, okay, we can carry on
a loan or did the Cognition part of it just say,
you know what, we can be better by building with them.
Speaker 3 (44:03):
Yeah.
Speaker 14 (44:03):
So the funny thing is there's no way I can
tell the team at the all hands that, oh, we're
just gonna go.
Speaker 3 (44:09):
Get acquired, right.
Speaker 14 (44:10):
The first thing I had to do is make sure
there's achievable plan and it's not as exciting as before
of breaking frontier AI models, training and getting to the
next big thing. It was kind of picking the safe
route and making sure everybody could believe in a route
that we can do. And on the side, obviously it
was what is the best company that we can work
(44:30):
with and how can I get in touch with them?
But I had to keep all the options open there
and Cognition obviously was the best fit for us.
Speaker 2 (44:38):
Scott, I think I'm right in saying you've kind of
said on social media that this is a real acquisition,
but I would be grateful very quickly from each of you.
Your reflection on what's happened with all of these acquahis
and what you think the net results of it is.
Speaker 13 (44:52):
Yeah, you know, I think it started to come up
more in the market and I think it's frankly, it's
a bit disappointing, which is to your point exactly what
you said. You know, there are a lot of great
teams that have gotten left behind, and I think in
our case, I think you know, we were huge fans
of the Windsurf team from the beginning, and we saw
an opportunity to work together.
Speaker 2 (45:13):
And Jeff, we just have twenty seconds, but that your thoughts.
Speaker 14 (45:16):
I think me and Scott might have just invented a
new model for what's going on in the market right now.
Speaker 3 (45:23):
If there's acquahera is going on, there's a lot of
valuable pieces left.
Speaker 14 (45:28):
And I don't want to say pieces, but like even
what was left at Windsurf was incredible. And the other
important thing to note is all the investors bounder shares
were wiped off the cap table. It was an entirely
employee owned company, so a lot of people were very
happy yesterday, I think is the summary I'll say.
Speaker 3 (45:47):
But this might be the new model going forward.
Speaker 2 (45:50):
Jeff see wins Skullboys a cognition. We got it all in.
I'm really grateful to you buy Thank you. That does
it for this edition of balloon Berg Jet Tach. But
I've got to check out the Paul. You know where
to find it online on all the Bloomberg platforms. Back
in San Francisco. Unexpectedly, this is Bloomberg Tech,
Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Vla Lowe in San Francisco.
Speaker 2 (00:23):
This is Bloomberg Tech coming up a US reversal as
Nvidia and AMD are set to resume some AI chip
sales to China. Plus, we're live from the inaugural Pennsylvania
Energy and Innovation Event. Our conversations with US Energy Secretary
Chris Wright and White House AI and cryptos are David Sachs.
An AI startup Commission has agreed to buy what remains
(00:45):
of Windsor for an undisclosed sum. Both CEOs join us
later this hour. Let's get back to our top story,
and that is that Nvidia and AMD will start selling
some AI chips back into China after the adminutetration and
US government signaled that they would secure the licenses and
approvals to do so. Nvidia continues to for hire a
(01:07):
fresh record highs four point two trillion dollar market cap company.
We know the story there, Jensen Wang right now is
in China, AMD trading at its highest level since October.
There are many questions about why now, Let's get out
to Washington, DC, Bloomberg's Mike Sheppard, and that's where I start.
The timing of this mic. Very interesting. What do you
(01:27):
make of it?
Speaker 3 (01:29):
Well, it's fascinating.
Speaker 4 (01:30):
This announcement today from in video in the overnight hours
comes less than a week after Jensen Wang sat down
with President Donald Trump in Washington and the White House
for a closed door meeting. Now we don't know what
was said in private between the two men, but one
thing we do know is that Jensen Wang has been
clear in his message that US export controls that have
(01:52):
hit his company particularly hard had been a failure and
that put US competitiveness at risk. His vision is that
if is unable to sell a modified and slowed down
version of its AI chip into China, the US will
be seeding that market in essence to Nvidia's chief Chinese rival,
Huawei Technologies, and that would set the stage, potentially ed
(02:14):
for Huawei to then start exporting some of that AI
technology into other countries where in Vidio would also like
to have a toe hold and bigger footprint. For Jensen Wong,
he really wants the global rollout of AI to be
defined by what he calls the American stack of technology
rather than the Chinese one ad.
Speaker 2 (02:34):
I think we need to talk about Nvidia's business here
as well. Right, this is the H twenty chip, and
when they stopped shipping the H Chinese to China, we
were able to quantify the impact at least to the
top line of Nvidia's business. What do we know will
happen in the second half of this year in terms
of sales and what business they can claw back.
Speaker 4 (02:54):
Well, when they released their results for the first quarter,
they did report a four point five billion dollars write
down related to those export curbs on the AGE twenty chip.
And remember the H twenty chip have been redesigned specifically
for the Chinese market to meet earlier rounds of US
export curbs that were enacted on national security grounds. Now
(03:15):
they should they stay in place, would have hit the
bottom line even further. This coming quarter. They were projecting
law sales up to eight billion dollars, but that could
all change.
Speaker 2 (03:26):
Here ed there's the trade and business case, and then
there's the politics. This was Treasury Secretary Scott Besson speaking
on Bloomberg Television earlier today.
Speaker 5 (03:35):
You might say that that was a negotiating chip that
we used in Geneva and in London.
Speaker 6 (03:43):
It was all part of a mosaic.
Speaker 5 (03:46):
They had things we wanted, we have things they wanted, and.
Speaker 6 (03:50):
We're in a very good place.
Speaker 5 (03:52):
I expect to meet my Chinese counterpart, the Vice premiere
in the next few weeks.
Speaker 2 (03:58):
Was this a boggaining chip literally that played into trade
talks between the US and China.
Speaker 4 (04:04):
Well, it certainly is something that Chinese officials would have
raised during the talks, and for the first time, US
officials are indicating that the chip export curbs actually emerged
as something in the negotiation. So it's unclear where they rank,
but certainly it helped the US gain access to those
rare earth exports from China that American customers had suddenly
(04:25):
found difficulty buying as China began to slow down its
sales of those crucial products to automakers and other buyers.
Speaker 2 (04:32):
Here bloombergs Mike Shepherd in Washington, d C. Thank you
very much. We have some breaking news crossing the Bloomberg
terminal and it involves poly Market. According to Bloomberg's reporting,
both a DOJ and a CFTC investigation into where the
polymarket was accepting trades from US based users that were
in violation of its previous settlement agreements with the federal
(04:55):
regulatory bodies have been dismissed. That's according to a Bloomberg source,
who says that these two investigations from the BIDE era
are now being terminated. We'll bring you more on that
story as we get it, but it's just broken across Bloomberg.
The sick were Crypto. It's been an eventful week in markets.
We had tech earnings, but it's also Crypto week, which
is underway. Joining us now to discuss is Catherine Dowling
(05:16):
Bitwise Asset Management, General Counsel and Chief Compliance Office. And
I've got to Katain. I want to ask you for
your reaction to that story we just broke. I'll go
over the reporting. There were two investigations into Polymarket, the
US Justice Department and also the CFTC looking at where
the polymarket was accepting trades, but that was a bid
near investigation that our reporting says is over. What do
(05:39):
you make of that?
Speaker 6 (05:40):
You know?
Speaker 4 (05:40):
Ed?
Speaker 7 (05:40):
Thanks for having me, And it's funny. I spent some
hours on the plane last night and I looked at
the number of hours spent on Biden and Error lawsuits.
And investigations, and it was over ten years combined of
man and woman hours spent on these various investigations. What
I make of that is part of what we've seen
as this tectonic shift of let's get back to fundamentals
(06:04):
and let's make sure that if we're investigating different businesses
that there's really some there there.
Speaker 2 (06:09):
And that really.
Speaker 7 (06:10):
Plays into the whole theme of Crypto Week, which is
getting to the clarity that the industry has been asking
for for years.
Speaker 2 (06:19):
You're a former assistant U attorney in the Economics Crime Unit,
so it's great timing to have you on the program.
It is crypto week, and what's so interesting on the
Bloomberg terminal, there's a lot of contradicting reports right There
was a report last night that bitcoin has a lot
of room to run because it is Crypto Week and
everyone's sort of enthusiastic and talking about it. Actually there's
a bit of profit taking this morning. What is the
(06:40):
main tailwind right now that you're seeing for this industry.
Speaker 7 (06:43):
The main tailwind is having this basis for institutional capital
to enter. When you're looking at from the sidelines, there's
still a ton of institutional capital on the sidelines. Why
Because although there's been talk for years, as I just said,
about getting to this clarity, we're really finally seeing that
momentum actually happen. We're seeing that momentum happen in legislation.
(07:06):
We're seeing that momentum happen in bipartisan support and voting
behind these key legislative initiatives.
Speaker 6 (07:13):
And that's key.
Speaker 7 (07:14):
All of the complexity that we saw behind some of
these cases that have been dismissed that we've just been
talking about. That complexity is what breeds the insecurity is
what keeps capital out. They're looking in, they're waiting for
that moment. They see the promise of the technology, but
they just can't get their arms around the regulatory insecurity
they see and they sense. So now we're heading in
(07:37):
that direction. You know, someone asked me yesterday Crypto Week,
is this just the crypto industry being loud, And I said, no,
this is actually coming from Congress. That is a huge difference,
and that's the momentum shift we're seeing. We have bipartisan
support with the realization knowing from you know, years of
work for many in the industry that we need to
(07:57):
get that clarity and we're heading finally in that correct.
Speaker 2 (08:01):
Direction, Catherine. This week, the House will vote on bills
to regulate stable coins during Crypto Week. Your expectation quickly
of what's going to happen.
Speaker 7 (08:10):
Expectation is that stable coin is heading towards signature, that
momentum has been there. It's you know, it's something, it's
it's a piece that you can understand. These are you know,
centralized intermediaries that should be regulated. It's hard to have,
you know, bipartisan disagreement about that fact. Yes, you can,
(08:31):
you know, quibble about the language and you know how
we how we write it up. But I think there's
no disagreement that this is an area that should be regulated,
you know, and this is all on the heels of
the circle IPO. So we can see that moving forward.
Clarity that'll that hopefully will we'll get through the House,
and then we'll see what the Senate does with that.
Speaker 6 (08:52):
Will they take clarity.
Speaker 7 (08:53):
Will they create their their own where we've been hearing
about the Senate version that's going to come out, So
we'll see whether those two get squashed together or whether
the Senate will book at clarity. And some of that
will just depend on the politics that plays out over
the next few days during the Crypto Week.
Speaker 2 (09:10):
Catherine Dowling a bit wise asset management. Great to have
you back on the show, Thank you very much. Coming up,
we go live from Pittsburgh where we speak with the
US Energy Secretary Chris Wright. That conversation you do not
want to miss, and it's coming up next. This is
Bloomberg Tech. Pittsburgh is host to the inaugural Pennsylvania Energy
(09:41):
and Innovation Summit. The event kicks off today with President
Trump set to attend in just a few hours. For
a look at the future of US energy and tech.
Bloomberg's Tyler Kendall is standing by Tyler, Thanks so much, Ed.
Speaker 8 (09:55):
And I'm pleased to say that I'm joined by the
US Energy Secretary, Christopher Wright.
Speaker 6 (09:59):
Secretary right, thank you.
Speaker 8 (10:01):
So much for joining Bloomberg. And I want to start
with one of the main reasons why we're here in Pittsburgh.
There is this surging demand for energy to help power
artificial intelligence, and the administration focuses a lot on its
deregulation agenda. Do you think that you can accomplish your
goals fast enough to keep up with what has been
a surge and energy consumption.
Speaker 3 (10:23):
I think we will.
Speaker 9 (10:24):
You're right, it's a challenge. I mean, our the agenda
of President Trump is to unleash American energy. The last
four years the Biden administration was more to shackle American energy.
But you're right, there's rapidly rising demand and what we
as the government need to do is enable private businesses
to build the things they want to build and invest
in the things they want to build. We're not going
(10:45):
to do this building ourselves, but we're going to enable
private businesses to do it.
Speaker 8 (10:49):
Well, I'm glad that you brought up private businesses and
to kind of put a finer point on this idea
of urgency. We actually heard from Mark Zuckerberg yesterday pledging
billions that Meta is going to invest in data, but
it is raising concerns about an energy crisis.
Speaker 6 (11:03):
To fuel it.
Speaker 8 (11:04):
I'm wondering, have you spoken to Zuckerberg or Meta about
their plans.
Speaker 9 (11:09):
Oh, we speak Meta extensively about their plans, and yeah,
there's a number of the hyperscalers that have huge investment opportunities.
We're excited about that.
Speaker 2 (11:17):
This is the.
Speaker 9 (11:18):
Newest energy intensive industry to arise. That's what artificial intelligence
is energy intensive industry, taking the most sophisticated, most expensive
form of energy electricity and turning it into intelligence to
transform more world and protect our nation. So yeah, Meta
has huge investment plans, as does Amazon and Microsoft and
Google and the other players in that space, and we
(11:41):
need all of them will invest.
Speaker 6 (11:43):
It's a few hundred billion dollars this year. In fact,
you'll hear at the.
Speaker 9 (11:47):
Conference today announcements it was seventy and I think now
ninety billion dollars just in the state of Pennsylvania.
Speaker 8 (11:53):
When you hear big investments though, and how much energy
that is going to take, what's your level of concern
though that there is going to perhaps be such a
great demand, Can the US really.
Speaker 2 (12:04):
Keep up with it?
Speaker 6 (12:05):
Absolutely?
Speaker 9 (12:07):
United States energy production because of the shale revolution just
exploded in the last ten.
Speaker 6 (12:12):
Or twelve years.
Speaker 9 (12:13):
Pennsylvania is a massive energy producer today. Pennsylvania exports more
energy out of its state than any other.
Speaker 6 (12:20):
State except for Texas.
Speaker 9 (12:22):
And Pennsylvania could massively grow its energy production, just doesn't
have enough pipeline capacity to move that natural gas out
of the state. So what's going to happen is more
of that gas or additional gas will be consumed in
Pennsylvania turned into electricity generated intelligence and keep the United
States ahead of China in the AI race.
Speaker 8 (12:42):
So I want to talk about oil, and I also
want to welcome in our audience that has just joined us.
We are talking to the US Energy Secretary, Christopher Wright.
I'm Tyler Kendall. I want to show you some of
these statistics that our analysts have. Bloomberg pulled that the
US oil rig account has dropped thirteen percent since late February.
It's in the midst of its longest traction since twenty twenty.
I know that there were some incentives in the reconciliation package,
(13:05):
but what further incentives is the administration considering to help
get forward these oil breaks to continue drilling.
Speaker 2 (13:15):
Mostly it's get out of the way.
Speaker 9 (13:17):
You know, we had the Biden administration had four years
all of government approach to try to, as they said,
end fossil fuels. Now, that didn't work very well. We
went from eighty two percent of American energy coming from
fossil fuels before Biden took office to eighty two percent
exactly the same when he left office. Those are just
simply the energy sources that power our country and our
(13:39):
world today, but it's get out of the way of
the marketplace right now. US production has grown so fast
as has other places in the world that prices are
maybe at the low end of profitability for producers here,
so you see a pullback and activity.
Speaker 2 (13:54):
You're going to see with these new.
Speaker 9 (13:55):
Investments and economic growth in the United States, We're going
to see growth in demand for oil and of course
that'll probably bump prices back up a little bit keep
drillers active.
Speaker 8 (14:03):
Well, you mentioned there perhaps a lower price environment. And
part of this also when we're talking about costs that
these companies are facing, has to do with tariffs. And
I wanted to ask you about copper in particular, which
is essential to data centers and getting energy to help
power AI. What sort of impact is a fifty percent
copper terraff set to go into effect on August first,
(14:24):
going to have when we're talking about the cost for
energy infrastructure.
Speaker 9 (14:28):
Well, I think the biggest impact of that fifty percent
terra fund coffer is going to speed up copper mining
in the United States. We have enormous copper resources here.
We have some huge minds that have been trying to
get going for years. We want to get copper production
growing rapidly in this country. Copper, like steel, is just
essential to everything that happens in the world.
Speaker 8 (14:48):
Should we expect the energy industry to get some sort
of tariff car vouts moving forward?
Speaker 9 (14:54):
I believe the President plans no special carveouts. He wants
to reindust the United States of America.
Speaker 6 (15:01):
There's a lot of tools to do that.
Speaker 9 (15:03):
Make it easy to invest in the United States, make
it attractive to invest the United States, and tariffs are
an additional element of that toolbox.
Speaker 8 (15:11):
I'm sure you're talking to industry, though. Is a carve
out on the table? Are there any negotiations underway for say,
the oil industry to get a carve out when it
comes to the equipment that they use in the field,
like copper or steal for example.
Speaker 9 (15:24):
No discussions right now. We are hearing from the industry,
and of course this is true. If you incrementally raise
the cost of projects, that hurts the economics of them.
We want to do everything we possibly can to maximize
investments in the United States so jobs and opportunity come
here to our country.
Speaker 8 (15:41):
Lastly, I just want to ask you a geopolitical question,
because we did hear from President Trump yesterday threatening one
hundred percent so called secondary tariff on countries that import
Russian energy supplies. If that were to go into effect,
what would that do to prices in the global energy market?
Speaker 9 (15:59):
Something like that would likely drive oil prices up. I
think President Trump's strong agenda there is to end the
war in Ukraine. Our hope is that that large pressure
will have an impact on Russia and we can bring
just a brutal war in Eastern Europe to an end.
That's President Trump's goal is prosperity at home and piece abroad,
(16:20):
and the old formulas weren't working very well in that respect.
So yeah, President Trump has very different tools, very different
negotiating skills, and very different level of boldness. I think
we're going to see tremendous growth in piece abroad and
prosperity at home.
Speaker 8 (16:35):
All Right, we have to leave it there. US Energy
Secretary Christopher Wright, thank you so much for your time.
This has been a conversation here in Pittsburgh on the
sidelines of the Pennsylvania Energy and Innovation Summit.
Speaker 6 (16:45):
I'll toss it back to you.
Speaker 2 (16:47):
Blue Bogs Tyler Kendo with US Energy Secretary Chris Wright. Okay,
coming up on the program. We're speaking with Niraptalia, co
founder and CEO next Tool. That conversation is up next
Bloomberg Tech. The neighborhood networking service next Door, has launched
(17:19):
a redesigned app with features aimed at making the platform
more useful, including safety, local news, and service recommendations. Nextdoor
CEO president and co founder Nera Avtalia joins us, Now, now, look,
let's be honest about this. I have a sense of
deja vu because I think we've done a Nextdoor two
point oh before, so I'd say this is maybe next
(17:39):
Door three point zero, But give me the basics of
why you've done it and what you've done well.
Speaker 6 (17:43):
This is an entirely new Nextdoor.
Speaker 10 (17:45):
So whether we call it two point oh three point
zero or a ten point zero doesn't matter, because for consumers,
this is going to feel and operate like a completely
new app, but grounded in what Nextdoor has always cared about,
and that is safety, alerts, local and recommendations from trusted neighbors.
Speaker 2 (18:02):
The thing that you and I have discussed a lot
in the past is the scale of Nextdoor, so forty
six million active users going forward with this new focus,
what's the metric that you judge success by, is it
the user base or something else?
Speaker 6 (18:15):
Well, it is engagement, and you're right.
Speaker 10 (18:17):
We have over one hundred million verified neighbors who've joined Nextdoor,
but the potential for Nextdoor, we believe, is much greater.
We can and should be one of those social networks
that has over a billion users, and so we have
work to do, and over the last year, the work
that we've done is to create a better product to
enable more engagement, which will translate the more users translate
(18:39):
in more revenue translate into profits, et cetera.
Speaker 2 (18:42):
The thing I hear a lot in the moment in
the domain of social media is time spent actually including
generative AI tools. So how do you do the conversion
somebody that is a registered user or active user to
somebody that spends a lot of time on the platform,
but using the new offerings that you've put in place.
Speaker 10 (19:00):
Well, ultimately, the real ambition of any consumer application is
to turn into a daily habit. And so whether you're
coming every day for a few minutes or whether you're
spending hours every single day, that's where we start. And
today many of our users are only coming weekly or
several times per week. So the first thing we do
is we ask ourselves, how can we turn this into
(19:20):
something that you check the minute that you wake up
in the morning, and you check before you go to
bed at night. Because there are so many things happening
around us, and if things are happening on the neighborhood,
they should be on next door. So that's been our
focus and our ambition for the new next Door.
Speaker 2 (19:34):
That makes a very interesting, almost academic question, which is
if you want next door to be the first thing
someone looks at when they wake up and the last
thing before they go to bed, who's next Door's closest competitor.
Speaker 10 (19:45):
Well, it's a great question, and I think our greatest
competitor is really ourselves.
Speaker 6 (19:50):
When we talk.
Speaker 10 (19:50):
About next store competitive Well, it is, though, because we
have an ambition and we have an expectation for what
we can deliver to our users that we have not
in the past, and so we need to do better.
We need to build better product, We need to enable
stronger local community. There is no one else today who's
built an entire geospatial platform based on where people live.
(20:13):
There are lots of local services sites, there are lots
of local news sites, but there's no one who's bringing
it all together. So if we can do so successfully,
we can be that indispensable, essential neighborhood network that.
Speaker 2 (20:25):
Brings in the local news component. I found this fascinating.
Why go into local news. We're in an environment where
the big social platforms increasingly are pulling back from news
on the platform by choice. That was something that you're
sort of jumping into head first.
Speaker 10 (20:45):
Well, there's a great quote from the famous venture capitalist
Michael Moritz that I just read a couple of weeks ago,
and the quote is local news is as important to
a city as air, water, and gas. And we believe
that at Nextdoor, local news is what compels citizens to
have civic discourse, it's what helps keep communities stronger. And
(21:06):
so as part of this new Nextdoor, we're doing something
that we haven't done in our fourteen year history. We
are inviting local publishers to come to our platform and
use it as a distribution mechanism to take their great
journalism and spread it to our users. And so we
have thirty five hundred local publishers publishing fifty thousand articles
(21:26):
every week, and now our users can read that news,
they can stay in form, they can engage in conversation
and it's something that isn't happening to your point on
any of the other social platforms today.
Speaker 2 (21:38):
And by talking about m and A, because these strategies,
which include local news, there are different mechanisms you can
use to grow. How do you think about m ANDA
and moving into the new domains that you want Nextdoor
to win in.
Speaker 10 (21:51):
Well, every single advisor that I've talked to, either as
a private company CEO or as a public company CEO,
has said the same thing. You have to operate your
company as if it will be around forever as a
single independent entity. And so that's the way that we
think about next Door. As a public company, we always
have to listen to any conversation that comes our way,
(22:12):
but I will tell you we are one hundred percent
focused on achieving our potential as a standalone independent entity.
Speaker 2 (22:20):
Near Avtealia, CEO, president and co founder of next Door.
Back here on the program, coming up deals for AI
startups continue as Cognition AI agrees to buy the remainder
of windsor we'll hear from both of the CEOs. Next.
This is Bloomberg Tech. Welcome back to Bloomberg Tech. There
(22:50):
is so much happening in the AI domain that is
moving markets as well. Let's start with call we call,
We've pushing a lot higher. There's news out of Pennsylvania
this morning that the company's going to invest six billion
dollars into an AI data center there. Now, remember Pennsylvania,
Pittsburgh in particular, is all the focus this morning as
Cene McCormack hosts that inaugural Innovation and Energy Summit. We're
(23:14):
going to get to a lot more of that. But
the stock really pushing higher, a lot of momentum for
coreweed up eight percent. There is our top story, and
it is a clear top story. Nvidia and AMD shares
both pushing higher after announcing plans to resume sales of
some AI chips into the Chinese market. Why they've secured
assurances from Washington and the administration that they will get
(23:38):
the approvals and licenses needed to do so. We will
get much more into that throughout the remainder of this program. Now,
as Chipstock saw on that news that semiconductors will be
able to sell more of their product to China, the
Trump administration is still working out its trading relationship with Beijing.
Earlier Bloomberg's Amory Horden spoke with Treasury Secretary Scott Besson.
Listened to this.
Speaker 6 (23:58):
I can tell you one thing that we do not want.
Speaker 5 (24:02):
Is a digital Belton road springing up around the world
because other countries or China are substituting for our American
chip manufacturers.
Speaker 11 (24:17):
This is the same chip though, that the Trump administration
blocked with export controls in April. So why the change
in policy now, Emery.
Speaker 5 (24:27):
You might say that that was a negotiating chip that
we used in Geneva and in London.
Speaker 11 (24:36):
So this was part of the trade talks when it
comes to Washington and Beijing. Yes, was it a quid
pro quo then, as you said, it wasn't, But was
it potentially to make sure that you can get the
licenses when it comes to rare earths.
Speaker 6 (24:51):
I think it was all part of a mosaic.
Speaker 5 (24:55):
They had things we wanted, we have things they wanted,
and we're in.
Speaker 6 (24:59):
A very good place.
Speaker 5 (25:00):
I expect to meet my Chinese counterpart, the Vice Premiere,
in the next few weeks.
Speaker 11 (25:06):
So when and where will that needing take place.
Speaker 6 (25:11):
We're still working on that.
Speaker 5 (25:12):
The Chinese leadership has a big conclave at the beginning
of August, so we're trying to work out whether that
could be in a third country before or after that conclave.
Speaker 11 (25:23):
Well, the administration released the framework of the Geneva and
London talks.
Speaker 5 (25:29):
Well, we have released some of it, and I'll tell
you that now having settled on tariffs on the export controls,
we can move on to the next stage of talks.
And I think it's very important both for the global economy,
for the US economy and for the Chinese economy for
(25:52):
US to move on and talk about China opening its
markets and the increase domestic and consumer production.
Speaker 6 (26:02):
There.
Speaker 11 (26:03):
Are you hoping to get to that next phase before
August twelfth, when that's currently the daytunt between these two economies.
Speaker 5 (26:12):
Yeah, Look, I think we're in a very good place,
and I tell market participants not to worry about August twelfth.
Speaker 2 (26:22):
Shower's Treasury Secretary Scott Besson speaking with Bloomberg's Amory Hoard.
And let's get back to Pittsburgh where the inaugural Pennsylvania
Energy and Innovation summits underway, and we're going to speak
with AI and Crypto taking center stage of the energy
and its Digital future joining us now delighted, Say David Sachs,
White House, AI and cryptos, our senior policy advisor to
(26:43):
the President. David, welcome back. It's great to have you
as always on the program. The focus is good in Vidia,
thank you, David. The focus is in video and AMD's
ability to now sell in a limited way chips back
into the Chinese market. Just your reaction generally to that, Well, we.
Speaker 12 (27:03):
Still have a policy of not selling our state of
the art advanced the man conductors to China, and the
Age twenty is not that it's a heavily deprecated chip,
and that's why the Biden administration allowed the sale of
the Age twenty to China.
Speaker 6 (27:16):
And this is a continuation.
Speaker 12 (27:18):
Of that policy in the larger rubric of the trade
negotiations that Secretary Besson was talking to you about. So
this is a heavily deprecated chip. I think that, like
Secretary Besson said, there are some things that China wants
from us, or are the things we want from China,
and this is all part of the overall trade negotiation.
Speaker 2 (27:36):
David, you advised the president on AI policy as well
as cryptopolicy. Do you have any sense of when he
met with Jensen One last week at the White House.
What case mister Wong made to the President that it
was the right thing to get the American technology stacked
back into China.
Speaker 12 (27:54):
Well, Jenson has been making the case publicly for competing
in China, and I think there are a lot of
merits to the argument. If you look at developments over
the past year, Huawei has advanced very rapidly. They have
a new technology called cloud Matrix, which which networks together
three hundred and eighty four of their Huawei as send chips. Now,
(28:15):
the Huawei chip is not as good as the Nvidia chip.
The Nvidia chip is three times more powerful. But if
you network together enough of those chips, you can route
force your way to a similar kind of result. And
that is what Huawei has been developing, is this cloud
Matrix three eighty four. And there have been reports, including
from Bloomberg, that they've started exporting that technology or they've
(28:36):
been seeking to export it. So Huawei is becoming much
more competitive. And if you give the whole Chinese market
to Huawei, it's a huge subsidy for their R and
D R and it basically forces Chinese companies that might
be willing to use AGE twenty to use the Huawei
chip and to basically figure out basically to figure out
(28:56):
the bugs, work out the kinks of the cloud matrix system,
and help Huawei scale that up. So I think there
is a compelling argument here that you just don't want
to hand Huawei the entire Chinese market when in Nvidia
is capable of competing for a big slice of it
worth a deprecated, less capable chip. Again, we're not selling
our latest greatest chips to China, but we can deprive
(29:18):
Huawei of basically having this giant market share in China
that they can then use to scale up and compete
with us globally. So I think this policy is nuanced
and I think it makes a lot of sense.
Speaker 2 (29:29):
The reporter you're referring to that Bloomberg had was that
Huawei was going out to some of the Gulf nations
and also some of the Southeast Asian nations and offering
prior generations of their chip, but also the cloud matrix
that you mentioned. The concern being that in dealing with
third countries, you know that be some Chinese access to
(29:50):
other nations technology. How involved have you been, David in
these kinds of talks and in framing that the presidents
thinking that actually just having direct access to lower performance
compute is okay with China right now.
Speaker 12 (30:06):
Well, look, I don't want to I'm not going to
discuss what I talked to the President about, but I
mean I can tell you what I think, which is
the Bloomberg story discussed hoh. Huawei was basically trying to
make available the Huawei Assen chip, which is their current chip,
which is basically put together in a rack system with
cloud matrix, to create a viable competitor to in Nvidia,
(30:26):
and I think it is a viable competitor. I think
in Vidia and AMD and other American companies have a
better product. But if we don't compete across the world,
then we will hand the market to China. And one
of the reasons that the President went to the Gold
States on that trip is to encourage business relations between
the US and the Gold State. He signed massive investment
(30:48):
deals and one of the deals that we signed was
this new AI Acceleration Partnership where we want to create
a pathway for the Gold States like UEE to buy
American technology, to buy American and to create data centers
on the American tech stack and I can tell you
that I don't quite understand why this has proven to
be so controversial in Washington. But where these nations, like
(31:11):
the Gold States, they have two choices. They can go
with an American technology or they can go with the
Chinese technology. And if you don't let them buy the
American technology, you're pushing them into the arms of China.
And a lot of people said, well, China won't be
ready to sell for years, But now we see that
there are reports that Huawei is out there trying to
sell and export the Huawei as sent chip. So I
(31:33):
think it's very important that we enable our American companies
to compete in the global market, that we don't tie
their hands, that we don't hobble them, because again, this
is zero sum game. That market share will either belong
to our companies like Nvidia, or it's going to belong
to Chinese companies like Huawei. There's a very simple test
for this. Just look at market share. If five years
(31:54):
from now we look across the world and we see
that in Nvidia or other American companies have eighty percent
more market share, it means that we won the AI race.
But if we look across the world in five years
and see that Huawei has eighty percent market share, then
it means that we lost the AI race. So I
think it's very important that we do everything we can
to encourage American exports to be sure. We can name
(32:16):
our security standards. But this is a very easy trust
but verify situation. The chips that we're talking about are
really mainframe computers. They're eight feet tall, they're thirty six
hundred pounds. It's very easy to send inspectors into data
centers and count the server racks to make sure that
they're where they're supposed to be, so the security concerns
can be addressed. I understand that there are some security concerns,
(32:39):
but I think they're very easily handled, And what we
need to be doing is making sure that we win
the AI race globally by making American technology the global
standard and not letting not creating a Huawei Bolton Road.
Speaker 2 (32:52):
Live on Bloomberg Television and radio worldwide, we're in conversation
with David Sack, Senior policy advisor for AI and Crypto
the AI and cryptos David I wrote my newslet earlier
this week about the analogy that Jensen Wong has been
using the American Technology Stack should be akin to the
US dollar as the world's reserve currency. That's how he
(33:14):
would like the administration to approach it. Do you share
that view and see some truth in that analogy.
Speaker 12 (33:21):
Well, here's the way I see it, and this is
really I think a Silicon Valley view, because I'm ultimately
I've been a founder and investor in Silicon Valley for
twenty five years. And what we see is that the
winning technology companies are always the ones that create the
biggest ecosystem. They have the most developers on their platform,
they have the most apps in their app store, and
so they work very, very hard to create a partner ecosystem.
(33:43):
And I think that the United States needs to do
something similar with the American Technology Stack. We want the
most other countries using our technology because again it's a
zero sum game. And it's not just the chips, it's
the operating system that runs on those chips, it's the
AI models that then are run in these data sets.
We want all of that to be American made and
American powered, and look to be sure there are security
(34:06):
concerns and we can address them. I don't think that's
that hard, but if we hobble our American companies and
don't let them participate in the global market again, we
are creating We're playing into China's arms and playing into
their digital soult road. So I think, to me, this is.
Speaker 6 (34:20):
A pretty easy question.
Speaker 12 (34:22):
I think we do want American technology to be the
global standard.
Speaker 6 (34:26):
It is a little bit like the dollar.
Speaker 12 (34:28):
There is a network effect there. The reason why everyone
loves the dollars because they know that everybody.
Speaker 6 (34:32):
Else will accept it as well.
Speaker 12 (34:34):
So we do want to have the strongest dollar, We
want to be the reserve currency, and we do want
our technology to be the global standard.
Speaker 2 (34:40):
David Bluemberg reported this morning that on July twenty third,
the President's going to speak in an event titled Winning
the AI Race, which you and the rest of the
All In Pod team will be posting. Essentially, I guess
that's going to be a moment where we'll have a
more a fuller sense of what the President and this
administration's big picture AI policy is going to be, what
(35:02):
the big goals are going to be.
Speaker 6 (35:04):
That's right.
Speaker 12 (35:04):
That's the President will be giving a keynote address at
a one day AI conference in Washington, DC on July
twenty third. It's co hosted by all In and Hill
and Valley Form, which is also a DC and Silicon
Valley policy group, and the President, I think, will be
giving his first major address on the topic of artificial
intelligence building on. There are mark studies giving here in
(35:25):
Pennsylvania today which are also AI related and related to
energy investment, the kinds of investments we have to make
to power the next generation of AI.
Speaker 2 (35:35):
David, you've been speaking there in Pittsburgh this morning. What's
the main focus on the energy side of this AI story?
Energy security is a national security priority, but just simply
whether or enough whether we will have enough energy resources
to power the goals of META and the other hyperscalers.
Speaker 12 (35:52):
Well, Pennsylvania is a huge energy producing state. I think
it's our second biggest energy producing state. They have abundant
natural gas, which I think in the near term is
going to be the power source for these data centers.
Speaker 6 (36:04):
I think in about.
Speaker 12 (36:05):
Five years we could start seeing nuclear scale up, and
the administration believes in that too. We want on all
of the above approach, But Pennsylvania is very big in
natural gas and there are major investments being announced here
for more basically fracking for more grid infrastructure, for more
power generation. All those things are needed to power data centers.
(36:27):
AI runs on GPUs that are incredibly power intensive, and
those these data centers in the future are going to
need more power. And the one area I think where
America is a little bit behind. I mean, I think
we're winning the AI race pretty much at every level
of the stack, except that the size of our power
grid has not increased very much over the past decade.
If you go over to China, they've roughly double the
(36:49):
size of their electric grid over the past decade, where
ours is only gone up by a couple of percent
a year. So this is an area where we need
to make major new investments. And the President is coming
to Pennsylvania today to announce many of those investments. And
I think you're gonna this has been a major priority
the administration, and I think you're going to see.
Speaker 3 (37:06):
A lot a lot more of this White House.
Speaker 2 (37:08):
AI and cryptos are David Sex, Thank you very much.
Coming back on Bloomberg Tech. Okay, coming up deals for
AI startups continue. As Cognition AI agrees to buy the
remainder of Windsurf, We're going to hear from both of
those CEOs. Next, this is Bloomberg Tech. Internally, the companies
(37:41):
were saying, it's the perfect fit. What happened? Why did
it happen? Windsurf CEO Jeff Wang and Cognition AI CEO
Scott Woo join us now live on Bloomberg Tech. Scott,
I'll start with you with that simple question, how did
all of this come together? Please?
Speaker 13 (37:58):
Yes, absolutely, And so I think we all found the
news around this found out about the news around the
same time on Friday afternoon, and we were looking at
this and saying, Wow, there's there's such a clean fit
of all of these things, you know, both in terms
of kind of the products, which is Windsurf is one
of the leading IDEs, Cognition builds Devin the first AI
software engineer Agent, and so there's a clear offering of
(38:21):
ID and agent. At the same time, both of us
have a very clear enterprise focus in terms of how
we do business and even kind of the customers that
we have, the team that we have and so on,
and it just seems like such a great fit.
Speaker 2 (38:34):
Jeff, what I was hearing over the weekend is that
some of the investors on both sides might have played
a role in sort of brokering that this was a
good idea? Is there some truth to that?
Speaker 14 (38:44):
Actually, the way that the other deal panned out was
there it should have been a clean cut. So there
were kind of like conversations going. But you know, as
job as interim CEO, you have to find a lot
of options for the future of the company, and I
think after talking to Scott it was it was a
done deal. In my mind, it was just a perfect fit.
Speaker 2 (39:04):
Scott. What's so interesting is like the conviction that Cognition had,
Why were you able to move so quickly and just say,
you know what, this is a great deal for us.
Speaker 13 (39:14):
Yeah, yeah, absolutely. Look, I think we are in the
AI code space. I think Winter is a very kind
of different complimentary offering in this space. But naturally, you know,
we see it. We've tried the product ourselves, We've used
it a lot, and it helps us just get to
conviction very quickly. And Jeff and I talked and I
think especially with everything going on, it was clear that,
you know, the sooner that we could get to an outcome,
(39:34):
I think the better for the team and for the
customers as well.
Speaker 2 (39:39):
What role did did Google or even Barren play in
this Jeff, we're trying to unpick a series of deals
and chronologies that kind of happened very quickly.
Speaker 14 (39:51):
I have to say that the whole Google situation was
meant to be a clean cut.
Speaker 3 (39:56):
So everything at Windsorf was intact.
Speaker 14 (40:00):
The product, the IP, the go to market team, the
marketing team, even the enterprise engineering team, and it just
so happened that these are the components that Cognition was
looking for. So I wanted to just be clear, like
it was structured in a way where it was a clean.
Speaker 3 (40:13):
Cut from Google.
Speaker 2 (40:16):
What was the mood Wins Jeff. On Friday when the
Google licensing and at Quahia was confirmed.
Speaker 14 (40:24):
Yeah, I had to do an all hands to the
team and I had to tell them the news, and
I had to say that was probably the hardest day
for two hundred and fifty people at the company's lives,
and I was immediately in action. I don't think I
slept maybe three hours over the last the next seventy
two hours, and my only goal was to get the
best solution for the company. And I think now that
(40:46):
we're with Cognition, everything is intact. We have an amazing
core engineering team with Cognition now and we also have Windsurf.
The products still everything is the same, and now we
also have Devin and then we have the.
Speaker 3 (40:59):
Four ground agent and the background agent.
Speaker 14 (41:01):
This is like an amazing combo for the company.
Speaker 2 (41:05):
Scott, would would you kindly go over the basics of
the terms of the deal, like was this a cash.
Speaker 3 (41:10):
Or stop deal?
Speaker 2 (41:11):
It started Friday and by the beginning of this week
it was done.
Speaker 13 (41:16):
Yeah, yeah, yeah. What I can say is that wind
Surf employees are you know, every single winter employee has
an immediate consideration as part of this deal. And then
from here on out we are all just one team,
and so wind Surf employees are now part of Cognition.
We were working on this together and excited to get moving.
Speaker 2 (41:37):
When I first learned about Windsurf, it was in the
form of Codium and Jeff this questions you and Varren
and then the big news was open AI and Windsurf.
When did you kind of get the sense that that
wasn't going to happen. I know we're going back over
history a little bit here, but actually, you know, in
a few years time I might look back and go, wow,
(41:59):
that was a pretty old series of events. So when
did you look at it and say, okay, open AI
and Windsurf's not going to happen. What happens next?
Speaker 14 (42:07):
I think it was time so open Aye. Kind of
the rumors broke like three months ago. And if you
think about it, like if three months later there's no
progress and there's still drama, a lot of it is
reported in the news, I'll say that is a pretty
good signal that things are not progressing as fast as
you'd like. And I remember the founders of our company
(42:28):
were kind of like locked in a conference room for
I think six weeks, and I kind of got the
sense that things are probably going to shift in another direction.
Speaker 2 (42:38):
Scott, I'd love to talk about technology for a moment,
if that's okay. What is it that that Windsurf and
cognition can do together?
Speaker 13 (42:45):
Absolutely, and so wind Surface, you know, in one line
is an ide that makes it so that a developer
when they're at the keyboard can go faster and produce
code faster. And Devin is an AI software engineering agent
that you can.
Speaker 3 (42:57):
Delegate tasks to.
Speaker 13 (42:58):
And there is a lot of national integration of how
we can work together. You can imagine kicking off the
agent to go do kind of a first pass at
a project and then coming in and doing the finishing
touches yourself. With Windsurf, you can imagine using the ide
to plan and then once you have the task sorted out,
to be able to hand it off. And we're super
excited because I think both of us have always been
very focused on making software engineering work in.
Speaker 3 (43:21):
The real world, you know.
Speaker 13 (43:22):
And it's in the last few days actually, at Cognition,
for example, we've announced that both Goldman Sachs and City
Bank have been rolling out Devin to their teams. Windsurf
has been working with JP Morgan and similarly, you know,
when we go down the customer list, when we go
down the sectors, we found.
Speaker 6 (43:39):
A lot of natural partnership.
Speaker 2 (43:41):
Jeff I got the sense from reading but also speaking
to people over the weekend that kind of post Google,
the remainder of the Windsurf team felt a little bit
left out in the cold. But on the other hand,
that's a great team, you know. Was there a moment
where you kind of thought, okay, we can carry on
a loan or did the Cognition part of it just say,
you know what, we can be better by building with them.
Speaker 3 (44:03):
Yeah.
Speaker 14 (44:03):
So the funny thing is there's no way I can
tell the team at the all hands that, oh, we're
just gonna go.
Speaker 3 (44:09):
Get acquired, right.
Speaker 14 (44:10):
The first thing I had to do is make sure
there's achievable plan and it's not as exciting as before
of breaking frontier AI models, training and getting to the
next big thing. It was kind of picking the safe
route and making sure everybody could believe in a route
that we can do. And on the side, obviously it
was what is the best company that we can work
(44:30):
with and how can I get in touch with them?
But I had to keep all the options open there
and Cognition obviously was the best fit for us.
Speaker 2 (44:38):
Scott, I think I'm right in saying you've kind of
said on social media that this is a real acquisition,
but I would be grateful very quickly from each of you.
Your reflection on what's happened with all of these acquahis
and what you think the net results of it is.
Speaker 13 (44:52):
Yeah, you know, I think it started to come up
more in the market and I think it's frankly, it's
a bit disappointing, which is to your point exactly what
you said. You know, there are a lot of great
teams that have gotten left behind, and I think in
our case, I think you know, we were huge fans
of the Windsurf team from the beginning, and we saw
an opportunity to work together.
Speaker 2 (45:13):
And Jeff, we just have twenty seconds, but that your thoughts.
Speaker 14 (45:16):
I think me and Scott might have just invented a
new model for what's going on in the market right now.
Speaker 3 (45:23):
If there's acquahera is going on, there's a lot of
valuable pieces left.
Speaker 14 (45:28):
And I don't want to say pieces, but like even
what was left at Windsurf was incredible. And the other
important thing to note is all the investors bounder shares
were wiped off the cap table. It was an entirely
employee owned company, so a lot of people were very
happy yesterday, I think is the summary I'll say.
Speaker 3 (45:47):
But this might be the new model going forward.
Speaker 2 (45:50):
Jeff see wins Skullboys a cognition. We got it all in.
I'm really grateful to you buy Thank you. That does
it for this edition of balloon Berg Jet Tach. But
I've got to check out the Paul. You know where
to find it online on all the Bloomberg platforms. Back
in San Francisco. Unexpectedly, this is Bloomberg Tech,
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