August 21, 2025 • 43 mins
Bloomberg’s Caroline Hyde discusses concerns about AI valuations amid the Nasdaq 100's worst losing streak in five months. Plus, Thoma Bravo Managing Partner Holden Spaht discusses its planned acquisition of Dayforce for $12.3 billion. And Google puts AI at the center of its new Pixel devices.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hide in New York
and Evvelow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up tech stocks They waiver,
I mean, the NASA one hundred's worst losing streak in
five months. Concerns about AI valuations dominate that as we
speak with Tom of Bravo about its acquisition of hr
software provided day.
Speaker 3 (00:36):
Force in what is set to become one of the
investment firm's largest ever deals.
Speaker 2 (00:40):
And Google introduces new consumer gadgets including smartphones, a watch,
and wireless earbuzz with AI front and center. But first
we turn our attention to these markets. We have been
read throughout most of the training day, but certain stocks
are doing their best to lift us into the green.
We're off by only a tenth of a percent, but
still that's three days of an ASA one hundred, the
(01:01):
longest losing streak. Sains back in April in video doing
its best to pullus higher.
Speaker 3 (01:06):
So two in fact is Palenteer.
Speaker 2 (01:07):
But check out how much Plenteer has been down over
the course of what had been a six day losing streak.
Eroding seven hundred billion dollars worth more than seventy three
billion dollars worth sorry of its market valuation, and we
have seen question marks over more broadly the evaluation among
so many of these AI winners.
Speaker 3 (01:26):
But let's get a take on this.
Speaker 2 (01:28):
What prompted some of the questioning of the valuations and
whether it will hold.
Speaker 3 (01:31):
Denny Fish is with US portfolio.
Speaker 2 (01:33):
Manager of course, of the Global Technology and Innovation team
of rich Annis Henderson Investors. It's a firm with one
and fifty seven billion dollars in assets and management. It
just launched its own artificial intelligence ETF yesterday. We're looking
at some of the names Denny in that ETF. Tough
timing amid the current pressure on some of the companies.
Speaker 3 (01:54):
What do you make of this questioning?
Speaker 4 (01:57):
Yeah, so, you know, importantly, the reason we launched this
fund is we believe this is the most profound technology
shift that we will see in our lifetimes. So whatever
happens over the next couple of months is going to happen.
But the direction of travel over the next twenty years
we think is very positive as it relates to AI.
And if we just you know, reflect back over the
(02:17):
last twenty five years and the cloud, the social and
the mobile boom. You know, that was you know, twenty
plus years of value creation. And you know, we think
AI has the potential to be even larger than that.
You know, and with that, you know, and and and
you know, given you know your question on valuations, it depends,
you know, I mean, they're clearly pockets of the market
(02:39):
where things are more speculative and very highly valued. So
you know, you you talked about Pollunteer for example, you know,
is a good example of a company that trades it
a very elevated multiple, great company, great fundamentals, extremely high valuation.
And then you know, you can come back to names
like Taiwan Semi Canductor, or you know, the trades at
(03:01):
a team's earnings multiple, or you know Nvidia that's still
trades that are reasonable multiple given its earnings growth rate
with really powerful secular trends, and you can get more
comfortable in areas like that, and so you know, our
whole goal also, you know, just to put a finer
point on this is you know, AI is going to
affect the entire economy. So the purpose of our fund
(03:24):
is it's going to be heavy with tech as you
can see in terms of the top holdings, but also
you'll find you know, names and financial services, consumer, healthcare,
industrial and other areas of the economy as well.
Speaker 2 (03:37):
It's about where you think AI is going to enable
enhancelled benefits. So I'm interested by the fact that you
got eaten in their Blackstone with thinking real estate, with
thinking power. How much has that not been priced into
these sorts of companies yet, Denny.
Speaker 4 (03:51):
Well, I think if we're looking you know, at the
next five to ten years, you can make a case
for you know, the companies that you know, we've populated
in the portfolio right out of the gate. And I mean,
you know, you you mentioned power. You know, it's probably
the single biggest constraint to deploying data centers right now
at the scale that we need and the density that
(04:13):
we need is getting you know, power available. And then
once you can get the power available, then you have
to cool the data centers. And there's an entire ecosystem
around that that specializes in, you know, in those dynamics,
and you know, clearly we want to participate in that,
you know, over the longer term.
Speaker 2 (04:31):
What's really interesting is about the application of AI. So yes,
it's about the infrastructure that goes in and the power
that we talk about the real estate, but then it's
actually what it does for businesses. You talk about financials,
talk about healthcare. What do you make of this MIT
research report that everyone seems to be worrying about the
fact that ninety five percent of all pilots fail.
Speaker 4 (04:48):
Well, we're in that phase right now. And you know,
you know, I was in the valley during the dawn
of the commercial Internet, and there were a lot of
failures at that point in time too. And you know,
during that period, you know, we had a boom, we
had a bust, and you know, and then it actually
created some of the most powerful companies on the planet
(05:09):
today and you know, laid the foundation for you know,
these these multi year trends. And so I think kind
of depends what you're doing. You know, there are clear
applications out there. Clearly people are getting you know, value
out of things like chat, GPT, deep research co pilots
being widely deployed, and then you have a lot of
experimental stuff that's going on in companies and it's the
(05:30):
nature of the beast that you know, you're generally gonna
you know, fail a little bit out of the gate,
and you learn from that the technology gets better, people
get sharper in terms of deploying the technology and figuring
out how to use it, how to change their behaviors.
And then you look back and you know, three or
five years and you're like, wow, I kind of you know,
misforced for the trees, Denny, what.
Speaker 3 (05:51):
Was interesting you referenced the dot com era.
Speaker 2 (05:54):
Just recently Intel was back at a profit in terms
of its price versus future profit.
Speaker 3 (06:01):
It's valuation was akin to the dot com era. It
was so high.
Speaker 2 (06:05):
What do you make of soft putting in money? I
know that's in the latest fund and also the government.
Speaker 4 (06:11):
Yeah, so you know, Intel is an interesting one on
the valuation. The reason the multiple so high is because
earnings have absolutely collapsed. And so you know that that
pe equation, when the ego is a lot lower, the
pe goes up a lot. So not necessarily because the
market's been enthusiastic about Intel, but rather you know the
financial performance of the company. And then you know, I
(06:33):
just think, you know, you know, SoftBank confessing in Intel.
It's it's a little bit curious, you know, potentially or
or particularly given that you know they have their ownership
in arm uh. You know, they're participating in Stargate.
Speaker 3 (06:47):
UH.
Speaker 4 (06:47):
They bought amp here. So it's it almost feels like
a little bit of a hedge just because we're going
to be undersupplied with semiconductor content for years. It feels
like and you know, that and power are very significant constraints.
And I think if you just kind of look at
the behaviors we've seen so far and some of the
assets of soft banks selling down kind of feels like
(07:10):
they're selling down some of their traditional holdings that they've
had and things like you know, T Mobile for example,
and they're redeploying that into AI infrastructure and then the
US government. You know, I just don't know, because I mean,
there's a reason a Taiwan semi conductor has done as
well as they've done. They've just they've had leadership now
for a decade. Their competencies are just you know, much
(07:33):
more pronounced than Intel. Intel has been in a hole
for a long time. You know, Pat Gelsinger gave it
a shot for you know, almost five years. We have
a lot of respect for lip Bhutan. We invested with
him at Cadence Design for years. Exceptional leader but you know,
Intel's not going to get fixed overnight, and there's nothing
the government can do to change the disparity between Intel's
(07:58):
process technology in Taiwan Semiconductor.
Speaker 2 (08:01):
Danny Fish of Janis Henderson Investors, fascinating to have you
on and thanks for talking us through the new ETF.
What name isn't in that ATF is Apple Many Field.
Perhaps it's lagging you on AI. Some other news coming
to us from Apple as Apple TV plus price is
going to be on the rise thirty percent to thirteen
dollars a month starting August the twenty first. Apple is
saying it's annual price, more broadly for streaming services is unchanged.
Speaker 3 (08:27):
It's commenting on.
Speaker 2 (08:27):
The streaming price hike in an email statement, we're off
by four tens percent.
Speaker 3 (08:31):
Coming up, we're going to be talking.
Speaker 2 (08:33):
To Toma Bravo managing partner there hold in Spain is
the private equity giant agrees to.
Speaker 3 (08:38):
Buy HR software firm day Force. This is Blomberg Tech,
Toma Bravo.
Speaker 2 (08:57):
It's just announced that it's agreed to purchase HR software
day Force, paying seventy dollars a share in cash. Following
day Force a twel point three billion dollars. Leased to
say that blueberg Brief and kid Danny Berga joins us
for a key conversation on the.
Speaker 5 (09:09):
Mattap Carolin, thank you so much, and yes, let's underscore
how large this deal is. At twelve point three billion dollars,
it is the largest deal ever for Toma Bravo and
certainly one of the biggest this year for this market.
I am pleased to say that joining Caroline and Us
now is Toma Bravo managing partner hold in Space Holden.
Speaker 3 (09:26):
Thank you so much, and.
Speaker 5 (09:28):
Your biggest deal ever at a time when your rivals
have kind of been languishing trying to even get deals done,
and when they do it's kind of in the single
digit billions. So why the size of deal and why
this one now?
Speaker 6 (09:42):
Yeah, well, thank you so much, first of all, Danny
for having me. It's a very exciting day, a very
exciting transaction for Toma Bravo. And look, we don't think
so much about, you know, the size of the deal.
We think a lot more about the fundamentals and what
we can do with the company. This company day for
us is an incredibly special company. We have followed it.
I met the founder who's still the CEO of the
(10:05):
company before he even merged his company into Sarridian in
twenty twelve. And so we've tracked this company for a
very long time. It's a very unique company in a
very important space. It's got product leadership in a big market,
and so we've followed this This deal has been in
the works for a long time with our firm, and
(10:26):
it has all the characteristics and attributes that we look
for in to Mobravo in terms of the quality of
the revenue, in terms of the product leadership that it has,
in terms of its AI roadmap, great management team, and
so we're just really excited to be able to have
this opportunity.
Speaker 5 (10:42):
Weld, And you've been following this company for a while,
but a lot of folks have had their eyes on
human capital management companies. Just earlier this year, Paychecks for example,
acquired pay Core. A lot of public companies getting bought
up in human capital management. What are you seeing and
what are your peer seeing that public markets are not well?
Speaker 6 (11:01):
You know, that's an interesting question. You know, we've so
day Force really fits our profile very well because it's
because of its revenue quality characteristics. So you know, just
to go back for the history for a minute, because
it's important to realize how unique this company is. When
David also founded this company, he codd an original product
and his thesis was, you know, core HR systems and
(11:25):
then payroll systems and workforce management systems were all separate systems,
separate databases, separate architecture. And David came with a very
innovative thought is why shouldn't all that exist in one database,
in one system. It provides a lot more customer value
one basically end the end unified platform and the employee
life cycle. So he came in and built a product
(11:47):
that does all of that, everything from recruiting performance management
to if I'm an hourly worker, I clock in and
I know in real time how much money I've earned,
and if I need to get paid, I get paid immediately.
They do the tax withholding for you. So it's a
really unique that value proposition that he built the company
on is still unique in this big growing market today.
(12:12):
And so look, we and this company has been probably
in the seventh or eighth inning of a services to
software transformation, and so what we're what we're really looking
to do is just accelerate what they're already doing as
a public company in a private context. And just to
answer maybe the last part of your question, this company
(12:32):
is having a historic year, right So, a couple weeks
ago they announced their earnings. They forty percent year over
year bookings growth for the first half of the year.
Recurring revenue is reaccelerating, which is kind of unusual in
enterprise software right now, and the market kind of yawned,
and we think there's a big disconnect and a big
opportunity to basically continue on the path that the company's on,
(12:56):
but accelerating it in a private context.
Speaker 2 (12:59):
To be fat, anst hadn't yawned, there's only one cell
rating and they'd liked the earnings in many ways because,
as you mentioned, David, who set up this business thirty
years ago, has been able to take on the new iteration,
this generative AI. And I'm really interested, therefore, holden as
to how much generative AI can add value at this moment.
Is that already baked in, because we're all questioning valuations
(13:19):
of generative AI related companies right now.
Speaker 6 (13:23):
Yeah, So, generative AI is a huge part of our
investment thesis here, as it is for most of our
software companies. But we think, I mean, I'm just taking
a step back in this human capital management space. Every
company in the world right now is thinking about how
to maybe reorganize themselves, how to infuse AI into their organization,
(13:45):
maybe how to change their organizational structure and hierarchies to
account for AI. What kind of skills are needed and
how much do they need to pay for those skills.
These are all people problems, and so we think this
space of general human capital management should be is a
great opportunity for AI. For those companies that have data,
(14:07):
they know how to protect the data, that have customer relationships,
and so we think it's a huge opportunity. They have
a really ambitious AI roadmap. They're already selling some AI
skews today, but there's a really ambitious roadmap for next
year to roll this, to roll out a bunch of
AI agents, and we think we can just help them
accelerate that path to basically an agentic AI human capital
(14:30):
management software company.
Speaker 5 (14:31):
Well, then, just on that point, we would love to
get your views on an MIT related study that seems
to have gotten this market maybe a little bit worked up.
The study that ninety five percent of companies who took
on AI generative AI pilots, ninety five percent of them
sold zero return on investment. Given your work with these
types of companies and incorporating genitive AI ninety five percent,
(14:55):
does that number seem right to you?
Speaker 6 (14:58):
Look, well, I would say we we focus. That's really interesting,
by the way, because I do think there has been
an issue with people really trying to measure ROI on
their projects. Everybody's using it, everybody is using it, everybody
knows it's the next big thing. But is ROI really
being you know, measured in it? And are people giving
customers things that they may not they may not want,
(15:20):
And so we've taken a very measured approach. We think
there's a real benefit to these SaaS companies that have
incumbency and they have data advantages. But I think at
that enterprise level, I think, look, obviously there's been a
lot of uh, the easy ones have been the call
center and product development. Those have been the two biggest
areas for AI. I'd say cases that have generated really
(15:43):
positive ROI. But I think there's also a lot of
sprawl too. There's a lot of tools being sold that
maybe aren't being totally utilized. You see that in some
of these earnings announcements. So I think it's just important
to be careful to ensure that there's connectivity between the
customer's roadmap and your roadmap. So we think it's really important,
but we are taking a little bit more measured approach
(16:05):
because if you sell something a customer that they're not
using or don't need, that creates problems down the road.
Speaker 2 (16:10):
It's been great having you both join, in particular Danny Berger,
thank you for helping us bring the conversation, Tom a
brother managing partner Holden Spain fascinating, particularly on that MIT
report coming up. The CEO of Data Breaks joins us
to discuss the company's latest funding round and whapping valuation
of over one hundred.
Speaker 3 (16:25):
Billion is a breen bag tech Data Bricks. It's raising
new funding and evaluation.
Speaker 2 (16:43):
That tops one hundred billion dollars the series K investment
marks get this more than sixty percent increase in the
data analytics software providers value because it's.
Speaker 3 (16:51):
A last raised money in December. Data Bricks CEO Ali
Godsi joins us.
Speaker 2 (16:56):
Now, extraordinary growth, but extraordinary growth in apples of ai
that you're currently building and helping with businesses translate their data.
Speaker 3 (17:04):
How do you accelerate that?
Speaker 7 (17:05):
Yeah, that's why we did this investment round. We were
looking at the product portfolio and there's two areas we
really want to invest in, and that's how we did
the fundraise.
Speaker 8 (17:13):
One islake Base.
Speaker 7 (17:15):
So agents and AI is also going to revolutionize databases.
I know we're thinking about how it's affecting society, but
the database market is one hundred and five billion dollars
TAM and what.
Speaker 8 (17:26):
We saw in the data is that eighty percent of.
Speaker 7 (17:28):
The databases are now being created not by humans but
by AI agents. So that's why we want to invest
it in our database product called lake Base. And the
other side is a product we have called Agent Bricks,
where we really investing it in how do we actually
help automate tasks with agents at enterprises with high quality
and high fidelity without hallucinations. So that's why we're doing this.
(17:51):
We're investing it in those two areas that we think
have huge potential.
Speaker 2 (17:54):
I can you kind of translate for audience, how different
the technology is needed to cater for an AIA rather
than a human.
Speaker 7 (18:01):
Yeah, so the agents move much much much faster. You know,
we think we're slower, we take our time. These things
just go all the time, right, there's no stopping and
they can do it in perils.
Speaker 8 (18:12):
So there's many, many of them doing it.
Speaker 7 (18:14):
So what you need to make sure, For instance, if
you're providing infrastructure for them, like a database, you have
to make sure that the cost of that is low
because they're going to spawn up and try many many things.
It's almost like you can imagine that you have, you know,
one hundred interns unleashed, running off trying lots of different things.
Speaker 8 (18:30):
So you'd like to lower the cost of it.
Speaker 7 (18:32):
You want to make it super fast because if they're
trying to use a database and the database.
Speaker 8 (18:36):
Is slow, now you've slowed down all of the interns.
So you don't want to do that.
Speaker 7 (18:40):
So those are some of the things you have to
do differently, move faster, lower the cost, and let them
experiment more because they're going to try lots of stuff
and then they're going to pick the best result. That's
not how humans operate because we're more expensive. We take
our time, and then we're sort of you know, measure twice,
cut once kind of approach, which is not the case
with the agents.
Speaker 2 (18:58):
Let's talk about expensive humans as you've been adding I
think about fifty percent by the end of this year, right,
adding three thousand to your headcount. How expensive are those
humans at the moment? Ali, given the talent wars we.
Speaker 7 (19:09):
See, Yeah, I mean it's it's I thought already that
things were very expensive a few years ago, and we
pay top of the top of the market.
Speaker 8 (19:16):
We compete with say Google, Meta and so on.
Speaker 7 (19:19):
But I would say the last twelve months or six
months even have been insane. I mean, it just keeps
going higher and higher.
Speaker 2 (19:25):
Two hundred million, Hi, Ali, Like, are you having to
counteract that?
Speaker 9 (19:29):
Yeah?
Speaker 7 (19:29):
I mean, look, we're seeing insane offers out there. If
the talent is really that good, we will pay up. However,
it is also the other side of it, which is
they're going to work together with their coworkers, and you
want to have equity and fairness. If you have two
people that have the same background, that they're equally good
just because someone started six months ago, you don't want
to suddenly have them make one tent of the person
(19:52):
that's sitting right next to them. So if you don't
keep that equity in mind, then people get unhappy, they.
Speaker 8 (19:57):
Talk, and then they will move around.
Speaker 7 (19:58):
And that's why we' seeing so much char learn in
the AI market right now. People are switching jobs, you know,
from this company and then back again and so on.
So you want to also be a little bit thoughtful
about it. But yeah, you have to pay up otherwise
that's the price to pay right now, What.
Speaker 2 (20:11):
About paying up for M and A because I know
that you've raised funds potentially to do that.
Speaker 3 (20:14):
What sort of.
Speaker 7 (20:15):
Companies, Yeah, I mean, we're looking at across the board,
right like this database technology I talked about right late, Base,
which is separated computer storage for postcrafts. That's that's came
through an acquisition that we did for you know, billion dollars.
So we were continuing to be very very interested in these,
you know, in Burder's talent. AI is very interesting because
you know, on the one hand, we hear about these
(20:35):
companies that have crazy evaluations, right one hundred billion plus.
On the other hand, Yeah, but on the other hand,
there's a lot of startups that started three years ago,
two years ago, and you know, if the if the
revenue is not there and the business isn't working out,
but they have amazing talent and they have great, great
ideas maybe they didn't just have channel distribution, that those
(20:57):
are great and you can actually get them for you know,
I guess in the big scheme of things that you
could say cheap.
Speaker 2 (21:03):
Let's just talk about these so called crazy valuations AALI,
because I know your phone has been running off the hook,
and then particularly the last few weeks, people wanting to
allocate more towards you.
Speaker 3 (21:14):
Do you think that would happen right here?
Speaker 2 (21:15):
Right now we suddenly see a slight rectification in valuations
in the public markets.
Speaker 3 (21:20):
Are things cooling down? Are you worried by.
Speaker 2 (21:22):
MIT reports reporting of a lack of impact of AI
pilots for example.
Speaker 8 (21:28):
No, I mean, I've been pretty vocal about this as well.
Speaker 7 (21:30):
You know, I'm very bullish on agents being able to
do all kinds of tasks. But we're looking at very
early innings and some people are already declaring success as
if we were done.
Speaker 8 (21:40):
We're not. We're at the very beginning.
Speaker 7 (21:42):
When it comes to agents, for instance, one of the
biggest challenges is that you know, when you unleash these agents,
you know, the hundreds in terns that go off, they
make errors, and you know, right out.
Speaker 8 (21:52):
Of the box you might have thirty percent errors.
Speaker 7 (21:54):
Would you hire a person that makes thirty percent of
a time completely crazy mistakes?
Speaker 8 (21:59):
No, So we have to get the quality up.
Speaker 7 (22:01):
That's what Agent Bricks is focused on, how to we
iterate and improve the quality. So I do think we
have to pace the investments and the expectations on the ROI.
What's timeline if we're thinking that, you know, these agents
are just going to work everywhere right now, and that's
not the case. It's going to take us years to
be able to see the impact of AI across the
board in organizations. You know, maybe even five years. It's
(22:24):
still going to be very impactful. It's still something that's
investing in. But you have to get that timeline right.
Speaker 2 (22:29):
Always talking straight to us, Sally god Sie, we so
appreciate it.
Speaker 3 (22:32):
Day to Bricks CEO.
Speaker 2 (22:33):
Congrats on the series K Coming up, Google bets on
AI for its new devices. Will have the details what
the company has just launched. This is bloombag Tech. Welcome
(22:55):
back to bloombag Tech. We take a look at these
markets because it's been a volatile day of trade.
Speaker 3 (23:00):
More broadly, we could be on track for three days.
Speaker 2 (23:02):
Of losses on the Nastak one hundred worst stretch of
losses going back to March of this year. We're currently
off by three tens a percent Meta, dragging us a
little bit lower Netflix one points perspective on the downside.
On the higher side is like some nvidio. Let's look
at a rebound for Pan Andeer as well, because it
had had six straight days of losses running into today.
We get a little bit of a reprieve, but only
(23:23):
a tenth of a percent. More than seventy billion dollars
of market cap wiped off of this retail fan favorite.
As people question that valuation, you know, looking at profit
to price, price to profit in the future, well it's
training almost two hundred times. Looking at Intel on the downside,
off by a quarter of percent one and a quarter.
That's as we question what dilution or discount the US
government might get after the euphoria, the soft bank and
(23:45):
the US are indeed.
Speaker 3 (23:46):
Putting in money.
Speaker 2 (23:47):
And we finished on Google having a rather nice day,
up by four tens percent, a come off of its highs.
But all of this is following Google's introduction of new
consuming gadgets including phones, earbuds, smart watch, all with the
company's latest Gemini AI.
Speaker 3 (24:00):
Really at the heart of it all.
Speaker 2 (24:01):
We spoke with Rick Ostolo, his Google's SVP for Platforms
and Devices, about the company's launch event.
Speaker 9 (24:07):
Gemini is a huge part of Google strategy. We've made
so much progress with it. We've got the best models around,
we have the best AI assistant. We are just so
excited about what we've talked about today. And I personally
love using the vo video model. You saw a video
of my dog talking in the show, which was really
(24:28):
fun to put together.
Speaker 3 (24:28):
Ke poodle across something.
Speaker 9 (24:30):
Yeah, he was his Portuguese water dog who somehow speaks English.
But it was really really fun to put that together.
And this is kind of the power of AI. Now
you can do things for fun, you can be a
lot more productive with it, and Gemini is the thing
that powers it all for us.
Speaker 3 (24:46):
I mean, Steph Curry is doing things with sports.
Speaker 2 (24:47):
You had Alex Cooper there caller Daddy doing things with camera.
I'm interested though, how this sets you apart. What are
you offering do you think versus the competition? How am
I going to be able to use it in a
wholly different way than currently I could with a.
Speaker 3 (25:01):
Competitive out of that?
Speaker 9 (25:02):
Yeah, well, I mean I think AI in general just
transforms all of these products on the phone. It's going
to make it so much easier to interoperate with your phone.
You just talk to the AI and it'll do things
for you. You can show your camera to the AI and
it'll give you hints about what to do, like if
you're trying to do a project at home, like fix
some plumbing or fix some shelves, whatever it is, AI
can help. And we're really excited about our partnership with
(25:26):
Stephen Curry to apply this AI technology to personal coaching.
And you know, he's I can't think of a better
person to work with than him. He has sleep coaches,
nutrition coaches, fitness coaches, and he wanted to work with
us to bring this kind of capability for personal coaching
to everyone. And so that's what that partnership is all about.
Speaker 2 (25:48):
We're really excited to work with stuff and in many ways,
what you were helping oversee the purchase of fitbit back
in the day, it's now in the main factor of
a watch that you've got on.
Speaker 3 (25:56):
What form factors are we yet to see?
Speaker 2 (25:59):
We've got you've got the pods in your ears, you've.
Speaker 3 (26:01):
Got the watch, you've got the phones right.
Speaker 9 (26:04):
And I think there might be a few coming next Well,
we're bringing Gemini to a bunch of surfaces you use
every day, but probably be used very differently, like automotive.
There'll be Gemini in your car, on your television, in
your smart speakers and smart displays. But I think a
really exciting thing that'll come in the future is Gemini
(26:24):
and classes. So we're working on smart classes that'll run
Gemini as the main way you interact.
Speaker 3 (26:29):
And for a year that you think that that'll be
coming out, is it?
Speaker 9 (26:32):
It'll be sometime next year. It will be pretty exciting
to see.
Speaker 2 (26:37):
Costallone Google's SVP of Platforms and Devices. Let's talk a
little bit more about all of this. Carolina Milanesi, she's
the president and principal Analystic Creative Strategies.
Speaker 3 (26:45):
We were in Brooklyn together yesterday. Were I love reading.
Speaker 2 (26:48):
Your report on this, and you said, look, Google avoided
any risky moves, so we didn't get the glasses in
the here and now. But the prowess you see is
that Gemini is just full force within these devices.
Speaker 3 (26:59):
Absolutely, it's all about AI.
Speaker 10 (27:01):
It's about really getting consumers to understand the power of
that AI can bring and as Rick was saying, it's
different things to different people. So what was amazing for
me yesterday will see the breath of people that they
were able to reach with all the guests that they had,
both from an age demographic but also from what is
the hook that you want? It can be editing, it
(27:23):
can be taking the best shot, it can be getting fitter.
Speaker 2 (27:26):
And it can be photography. Andre de Wagner they had
over there. They had of course sports when it came
to Steph Curry or indeed Landon Norris was there. We
also thought about the way in which community is going
to use it for camera and for editing.
Speaker 3 (27:40):
Is that really that important?
Speaker 2 (27:41):
When do you think the camera is really going to
be the standout feature of so.
Speaker 10 (27:45):
Many camera is already the sendout feature for so many consumers.
Speaker 2 (27:49):
They take pixels had a better camera than anyone for ages.
Speaker 3 (27:52):
That's what they kept on reminding us. But people are
still buying apples as dead it is.
Speaker 10 (27:55):
But it's about what you can do from an editing perspective. Now,
it's not just about taking the best shot and taking
the friction away that there is today in getting to
their editing. So being able to tell an AI agent
Gemini or something else. How you want the picture to
look like, and what.
Speaker 2 (28:13):
It really compares and contrast with is Apple's lacking right
the fact that we're going to be so easily integrating
Gemini AI from a spoken word perspective and it's Siri
is just so behind the curve. Do you think they're
going to eat any market share that?
Speaker 10 (28:28):
I think it's always hard from a high end perspective
to see churm from Apple to anywhere else because user
consumer have more device than just their phone, and so
you're talking about a difficult choice to make.
Speaker 3 (28:42):
We also still have.
Speaker 10 (28:43):
A very beginning of DEI shift. Consumers are not walking
into a store asking for an AI phone. We talked
about is for Apple in June, but I do think
that time is sticking for Apple and we need to
see something sooner rather than later.
Speaker 2 (28:59):
Instead, this almost helps Google show off the Android ecosystem.
You might not get a Google Pixel, but you might
get a Samsung and probably through this demonstration you can
see how well integrated that it's going to be as well.
How do they navigate this sort of frenemie moment?
Speaker 10 (29:13):
Yeah, I think it's definitely first about the best of
Google on Pixel, and then you started to see Samsung
getting closer to their ecosystem and putting aside their aspirations
with Bisbee and really building on the power of Gemini.
So Motorola has been doing the same thing. So it's
definitely about the ecosystem, but also feeling that in my view,
(29:37):
Pixel is the answer to Apple within the Android world.
Speaker 2 (29:41):
And they got a foldable phone, which in any way
goes head to head with the DOUGHI indorsed Samsung, but
Apple has.
Speaker 3 (29:48):
No foldable right now.
Speaker 2 (29:49):
I thought what was really interesting was when they put
them out on the market. Next week, we get the phones,
but watch us. A little bit later, I asked Rick
about whether it was a supply chain issue. He said, no,
are there any supply chain issues for these companies right now?
It guess it's chip correct designed and house what made
my TSMC? How does this whole come together?
Speaker 10 (30:06):
I think, to be honest with you, as a marketing
strategy is more of a supply issue. Is about getting
before Apple and after Apple. Right we know that the
expectation is beginning of September usually for Apple, and so
getting in with the mass market product before the iPhone
is out, and then with something that is more appealing
(30:27):
to steal a niche market but very powerful users with
the foldable towards holiday season.
Speaker 2 (30:36):
I think what really resonated did in your note was
the confidence that Google had at this event. I mean
it was just celebrity filled. It felt like you were
at a TV event. That was the whole idea and
narrative of it. Have they got the right to be
this confident right now?
Speaker 3 (30:50):
Do you think?
Speaker 10 (30:51):
I think is empowering for them instead of always focusing
on chasing Apple, to actually feel confidence in the product
that they have, which are iterative from last year but solid.
And I think that finding the confidence in their branding
is very important and broadening the addressable market that they're
(31:13):
aiming for is not just tech buyers anymore, is mass
market consumers.
Speaker 2 (31:18):
Subway takes call a Daddy, had a lot for the
gen Z and the younger millennials. Currently, a Melnac loved
having a hair president and principal analyst at Creative Strategies
coming up, Runway CEO Christoval Venezuela is joining us to
talk about the company's blue tools for video.
Speaker 3 (31:33):
And games creation. Says Blomberg Tech.
Speaker 2 (31:48):
M AI startup Runway, which shook up Hollywood with a
video generation tools centering the world of gaming. Announcing today
is Runway Game World's beta, which.
Speaker 3 (32:06):
Takes a step towards real time game creation.
Speaker 2 (32:08):
Runway CEO and co founder Crystal Weal Venezuela joins us
now and because, well, how changeable or what a complete
shift is this for the gaming industry, because consumers are
going to be able to use it, but what does
it mean for the actual studios too?
Speaker 8 (32:24):
Yeah, it's massive.
Speaker 11 (32:25):
It's a big change in the same way that AI
was a big change for Hollywood as well. And now
it's important to understanding that organize. There are two parts
of how AI is affecting games. On the one end,
you have the real time rendering component of it that
we're working towards, basically means you're going to be able
to create pixels in a real time manner. And the
other one is the mechanics. Right, so how do games
(32:48):
manifest itself? What are the interactions that users would have
with them? From consumers to preach everyone and so game
World for us, it's kind of fland exploration and our
first product and the mechanics of non linear stories with
AI creating these worlds in real time and having players
experiment with them.
Speaker 2 (33:04):
I mean, I think about the first time that we
first started bringing you on the show and hearing from
how much you were well disrupting Hollywood.
Speaker 3 (33:12):
But Hollywood has now come to embrace.
Speaker 2 (33:13):
You, using Amazon, using it in the latest works that
they're doing, and creating Christa.
Speaker 7 (33:18):
Well.
Speaker 2 (33:18):
How has the gaming studio reaction been. Has it been
bristling or has it been accepting.
Speaker 11 (33:23):
It's somehow very similar to what I think Hollywood went
through a year and a half ago. I think it's
totally new. It takes time, but now I think most
of them have started to embrace it and understand it.
It's a radical technology or changes how you do your
work and need to embrace it. You need to understand it.
There's things that work really well, there's some things that
don't really work really well. But really it's about like
(33:45):
using it more. And so I would say that games
and the gaming world is where I would say Hollywood
was a year ago, and now as models progress get better,
become more usable, you start seeing most of those companies
now starting to adopt it.
Speaker 2 (34:00):
I mean you can see the impact because it's being
used in features by big tech companies and big filmmakers Christovelt,
But how are you measuring impact for those that are
about to take it on? We're all talking about this
MIT study about whether or not ninety five percent of
these pilots for general to AI are failing. How do
you prove out that your technology as value?
Speaker 11 (34:21):
Yeah, well you have to make sure it helps users somehow.
And look there's a challenge. And I think the challenge
that I think media and Vollywood recognize overtirement is these
are not tools that will make moves for you. And
I think there was a big assumption another time where
like many people thought, you just came into runway tight
movie and you get a movie out. Unfortunately, that's not
(34:41):
what the tchnology is doing. It's much more about you
being in control and you friending the right time. But
also you need to rewire your brain a little bit.
You need to retrain the mental models of how this
STAMLA you can help you. And that takes time. And
so how we manage to do that change with our
companies and customers and userss We help them and sometimes
we go and work alongside them. We have technical artists
(35:04):
that you can think about them as like for deploy
engineers that sit together with our companies and users and
enterprises and help them understand how run we can fit
in particular parts of our workload. You're a left For example,
it's our latest video generation model that allows you to
edit video in ways that you just couldn't do before.
And it works completely different from anything you've seen before,
(35:26):
and so it's not going to work based on what
you know you have to. There's an adjustment period, and
that adjustment period is critical for me. It's very similar
to perhaps how the cloud was a big change for
companies like it requires you to redo and reorganize some
of your teams to prepurpolous.
Speaker 3 (35:42):
I'm talking about reorganizing teams.
Speaker 2 (35:44):
I mean Mark Zuckerberg's been busy at that, and we
understand that previously hid perhaps eyed up Runway wanting to
be able to buy that to bring in for the
AI prowess. You not to back that's off the table,
But how many offers are you getting full runway? And
how you putting your employees that you might not jump
ship again.
Speaker 11 (36:04):
I've been working on this for like almost seven eight years,
and I think we're now hitting an interesting inflection point.
It's getting too exciting for us to think about not
being independent like we want to remain independent. We have
the resources need, We have the best team in the
world doing that, some of the best research in the world.
Now is an inflection point in both quality, adoption penetration.
(36:24):
It's a really exciting time to build Runway, and I
think there's still a long way to go for.
Speaker 3 (36:28):
Us first gaming product.
Speaker 2 (36:30):
We thank you for talking us to game wels and
so much more that you've been doing with the LF
model and plenty more. Crystaval Venezuela, CEO and co founder Runway,
always great to catch up now. Sticking with AI deep Seek,
it just unveils and update to an older model that
it says surpasses a seminal are one on key benchmarks now.
Deep Seat said in a we chat post that the
new version answers queries much faster and marks the startup's
(36:52):
first step towards creating an AI agent and close to
the home in the US. Open AI CFO Sarah Fryar
has just told Bloomberg that the company could take a
page out of Amazon's playbook, following an approach inspired by Amazon,
which found success renting out at spare Cloud computing capacity.
Open ai could in the future sell access to data
(37:13):
centers and other physical infrastructure needed for aims, showing KAfari
was there for that conversation bringing out teasing out those
pieces of information because so far really does have to
think about the profitability of this business in the longer term.
Speaker 3 (37:28):
That's right if you think about it.
Speaker 12 (37:29):
So you know, I was also recently at a media
dinner with Sam Maltman when he said we planned to
spend trillions on infrastructure in the near future and that
economists might call that crazy, but they are marching on.
So as open ai starts to put this immense and
precedence in amount of capital rate toward data center expansion,
they're building expertise in that. And I think the long
term play here as well, how could we in the
(37:50):
future potentially market and capitalize on.
Speaker 2 (37:52):
That expertise and be able to drive up revenues to
be getting better financing for the future of their own
infrastructure spend. At the moment, they've been funding that spend
by raising money and venture any nuance there, she really
did talk about how they've been able to sort of
raise more than they anticipated.
Speaker 12 (38:08):
Yes, you know, they were planning on ten billion, and
one piece of THEIRNCH funding around. She said that they
have actually gotten to eleven billion because of access investor interest,
and more broadly, they're actually looking beyond just you know,
equity financing at this point. They're also, as Friar told us,
interested in debt and debt financing and they have said
(38:30):
that banks and private equity firms have approached them about this.
Speaker 2 (38:33):
So interesting as we see how Metro has been financing
some of its data center needs, getting into the world
of private credit with Pimco and blue Out, what more
about the growth of the business when we're just coming
off the back of GPT five and some of the
throws around that. And they had to make some difficult choices,
particularly when it came to well, how nice the chatbot
is the people and how they bring back other models
(38:55):
and they're like.
Speaker 3 (38:57):
That's right.
Speaker 12 (38:57):
So it was definitely a bumpy rollout, I think bumpy
or they expected right. Also at that dinner, Alman you know, said,
we know, we messed up on.
Speaker 3 (39:06):
The emotional attachment.
Speaker 12 (39:07):
I think they did not realize that people fully had
to the older version of the chatbot, and they were
all sort of a lot of users were angry that
Opening initially deprecated the older model. However, I think overall
the bigger pictures that chat GBT is still you know,
the market leader right on consumer usage, just on chatbot
usage overall, and they still have this voracious demand as
(39:30):
Fryer put it, for the use of their products that
requires intensive compute and.
Speaker 2 (39:34):
As racious demand to fund it as we were talking about.
And actually eventually retail want to be owning a piece
of this company more people democratization so spoken about eventually
they need to IPO.
Speaker 3 (39:44):
But as a CFO, how is she thinking about that?
Speaker 12 (39:47):
Sofra, I mean for Sarah fry Or, her job is
both to raise these funds right for open A, but
also be able to allocate that compute for these customers.
Oftentimes they're having to decide in advance which customers are
actually going to get the compute power they need to
run all the chat shop t products.
Speaker 3 (40:06):
So it's it's a mix of fundraising.
Speaker 12 (40:07):
Of keeping customers happy, keeping consumers happy, and figuring out
all the right the financing and money for it.
Speaker 2 (40:14):
And then leave us to pulls showing KAfari talking us
through what was a fantastic conversation that she had with
Sarah Phire, CFO of open Ai. Now coming up SpaceX
other very highly valued private company tapping into luxury travel
as it expands its starlink services.
Speaker 3 (40:28):
Were on that next as the bluebgg tech.
Speaker 2 (40:40):
SpaceX has steadily built up it's starlink in flight Wi
Fi services for carriers like Air France, United, Virgin Atlantics
signing up. Now the company what's allying a Middle East
expansion as it holds discussions with the likes of Devi
based Emirates, Bloombergs Space reporter Sana Pashanka joins us now
with the details. How big a coup could this be
to get in with the Middle East and flies.
Speaker 13 (41:01):
Yeah, it would be a really big moment for starlink.
As you mentioned, these are luxury airlines and a lot
of them are stopping points for really long haul international flights,
So it could be, you know, bring in a lot of.
Speaker 3 (41:18):
Revenue for star languages.
Speaker 13 (41:20):
SpaceX's most profitable unit.
Speaker 3 (41:23):
Who has it been booting out the way?
Speaker 2 (41:25):
Which have been the previous Wi Fi offerers, which I
say many would say they've been frustrated with in the past.
His WiFi doesn't always feel that great on board.
Speaker 13 (41:35):
Yeah, so the previous The legacy operators are via sat SCS,
Intel SAD which was actually SCS acquired Intel SAD and
also Hughes, and those legacy operators have historically relied on
geostationary satellites which are much further away from Earth to
(41:56):
provide that Internet connectivity to airplanes.
Speaker 3 (42:00):
What does the negotiation period look like.
Speaker 2 (42:02):
How does Elon or indeed just SpaceX more broadly and
going over there win over these carriers.
Speaker 3 (42:10):
What is it that they have to prove out.
Speaker 13 (42:12):
So SpaceX It's been shown by third parties that Starlink
has delivered the fastest Wi Fi speeds across industry and
compared to those legacy operators, and that is in part
because their satellites are much closer to Earth, so you know,
the Internet has less distance to travel to getting to
those planes. But Starlink has a couple of negotiation tactics
(42:36):
that they use. They don't really allow airlines to announce
that they're using Starlink unless they'll equip on their whole fleet.
They also have put in this request that airlines offer
it to free for everyone on board, which you know
some airlines have, but some airlines have pushed back on
because they just want to offer it to their loyalty
(42:57):
customers and their loyalty program. So you know, they have
a couple of requests that they put in, but it
seems like the negotiations are unique for every airline and
every operator.
Speaker 2 (43:09):
Sana Pashanka bringing us the latest on that part of SpaceX.
Speaker 3 (43:13):
We appreciate it.
Speaker 2 (43:14):
Let's get back to the public markets right now, because
we're back under pressure then, as back one hundred is,
you'll see down now for three straight days, two and
a half percent lower. We've been questioning above the board
the frothy valuations. One of them we've really been keeping
an eye out is on Palanteer. Now, its valuation, it's
multiple is extraordinary. I mean trades two hundred times future profits.
We're down fourteen percent in the last five days. In fact,
(43:36):
it's been low for seven straight trading days, the longest
sell off we've seen since March twenty twenty three. We'll
see how Alex Karp is responding to some of those shorts,
finally winning out some money, made about a billion one
point six billion in the period of loss.
Speaker 3 (43:51):
Now that does it for this edition of Bloomberg Tech.
Speaker 2 (43:54):
Don't forget to check out the podcast, It's The Bloomberg
Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hide in New York
and Evvelow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up tech stocks They waiver,
I mean, the NASA one hundred's worst losing streak in
five months. Concerns about AI valuations dominate that as we
speak with Tom of Bravo about its acquisition of hr
software provided day.
Speaker 3 (00:36):
Force in what is set to become one of the
investment firm's largest ever deals.
Speaker 2 (00:40):
And Google introduces new consumer gadgets including smartphones, a watch,
and wireless earbuzz with AI front and center. But first
we turn our attention to these markets. We have been
read throughout most of the training day, but certain stocks
are doing their best to lift us into the green.
We're off by only a tenth of a percent, but
still that's three days of an ASA one hundred, the
(01:01):
longest losing streak. Sains back in April in video doing
its best to pullus higher.
Speaker 3 (01:06):
So two in fact is Palenteer.
Speaker 2 (01:07):
But check out how much Plenteer has been down over
the course of what had been a six day losing streak.
Eroding seven hundred billion dollars worth more than seventy three
billion dollars worth sorry of its market valuation, and we
have seen question marks over more broadly the evaluation among
so many of these AI winners.
Speaker 3 (01:26):
But let's get a take on this.
Speaker 2 (01:28):
What prompted some of the questioning of the valuations and
whether it will hold.
Speaker 3 (01:31):
Denny Fish is with US portfolio.
Speaker 2 (01:33):
Manager of course, of the Global Technology and Innovation team
of rich Annis Henderson Investors. It's a firm with one
and fifty seven billion dollars in assets and management. It
just launched its own artificial intelligence ETF yesterday. We're looking
at some of the names Denny in that ETF. Tough
timing amid the current pressure on some of the companies.
Speaker 3 (01:54):
What do you make of this questioning?
Speaker 4 (01:57):
Yeah, so, you know, importantly, the reason we launched this
fund is we believe this is the most profound technology
shift that we will see in our lifetimes. So whatever
happens over the next couple of months is going to happen.
But the direction of travel over the next twenty years
we think is very positive as it relates to AI.
And if we just you know, reflect back over the
(02:17):
last twenty five years and the cloud, the social and
the mobile boom. You know, that was you know, twenty
plus years of value creation. And you know, we think
AI has the potential to be even larger than that.
You know, and with that, you know, and and and
you know, given you know your question on valuations, it depends,
you know, I mean, they're clearly pockets of the market
(02:39):
where things are more speculative and very highly valued. So
you know, you you talked about Pollunteer for example, you know,
is a good example of a company that trades it
a very elevated multiple, great company, great fundamentals, extremely high valuation.
And then you know, you can come back to names
like Taiwan Semi Canductor, or you know, the trades at
(03:01):
a team's earnings multiple, or you know Nvidia that's still
trades that are reasonable multiple given its earnings growth rate
with really powerful secular trends, and you can get more
comfortable in areas like that, and so you know, our
whole goal also, you know, just to put a finer
point on this is you know, AI is going to
affect the entire economy. So the purpose of our fund
(03:24):
is it's going to be heavy with tech as you
can see in terms of the top holdings, but also
you'll find you know, names and financial services, consumer, healthcare,
industrial and other areas of the economy as well.
Speaker 2 (03:37):
It's about where you think AI is going to enable
enhancelled benefits. So I'm interested by the fact that you
got eaten in their Blackstone with thinking real estate, with
thinking power. How much has that not been priced into
these sorts of companies yet, Denny.
Speaker 4 (03:51):
Well, I think if we're looking you know, at the
next five to ten years, you can make a case
for you know, the companies that you know, we've populated
in the portfolio right out of the gate. And I mean,
you know, you you mentioned power. You know, it's probably
the single biggest constraint to deploying data centers right now
at the scale that we need and the density that
(04:13):
we need is getting you know, power available. And then
once you can get the power available, then you have
to cool the data centers. And there's an entire ecosystem
around that that specializes in, you know, in those dynamics,
and you know, clearly we want to participate in that,
you know, over the longer term.
Speaker 2 (04:31):
What's really interesting is about the application of AI. So yes,
it's about the infrastructure that goes in and the power
that we talk about the real estate, but then it's
actually what it does for businesses. You talk about financials,
talk about healthcare. What do you make of this MIT
research report that everyone seems to be worrying about the
fact that ninety five percent of all pilots fail.
Speaker 4 (04:48):
Well, we're in that phase right now. And you know,
you know, I was in the valley during the dawn
of the commercial Internet, and there were a lot of
failures at that point in time too. And you know,
during that period, you know, we had a boom, we
had a bust, and you know, and then it actually
created some of the most powerful companies on the planet
(05:09):
today and you know, laid the foundation for you know,
these these multi year trends. And so I think kind
of depends what you're doing. You know, there are clear
applications out there. Clearly people are getting you know, value
out of things like chat, GPT, deep research co pilots
being widely deployed, and then you have a lot of
experimental stuff that's going on in companies and it's the
(05:30):
nature of the beast that you know, you're generally gonna
you know, fail a little bit out of the gate,
and you learn from that the technology gets better, people
get sharper in terms of deploying the technology and figuring
out how to use it, how to change their behaviors.
And then you look back and you know, three or
five years and you're like, wow, I kind of you know,
misforced for the trees, Denny, what.
Speaker 3 (05:51):
Was interesting you referenced the dot com era.
Speaker 2 (05:54):
Just recently Intel was back at a profit in terms
of its price versus future profit.
Speaker 3 (06:01):
It's valuation was akin to the dot com era. It
was so high.
Speaker 2 (06:05):
What do you make of soft putting in money? I
know that's in the latest fund and also the government.
Speaker 4 (06:11):
Yeah, so you know, Intel is an interesting one on
the valuation. The reason the multiple so high is because
earnings have absolutely collapsed. And so you know that that
pe equation, when the ego is a lot lower, the
pe goes up a lot. So not necessarily because the
market's been enthusiastic about Intel, but rather you know the
financial performance of the company. And then you know, I
(06:33):
just think, you know, you know, SoftBank confessing in Intel.
It's it's a little bit curious, you know, potentially or
or particularly given that you know they have their ownership
in arm uh. You know, they're participating in Stargate.
Speaker 3 (06:47):
UH.
Speaker 4 (06:47):
They bought amp here. So it's it almost feels like
a little bit of a hedge just because we're going
to be undersupplied with semiconductor content for years. It feels
like and you know, that and power are very significant constraints.
And I think if you just kind of look at
the behaviors we've seen so far and some of the
assets of soft banks selling down kind of feels like
(07:10):
they're selling down some of their traditional holdings that they've
had and things like you know, T Mobile for example,
and they're redeploying that into AI infrastructure and then the
US government. You know, I just don't know, because I mean,
there's a reason a Taiwan semi conductor has done as
well as they've done. They've just they've had leadership now
for a decade. Their competencies are just you know, much
(07:33):
more pronounced than Intel. Intel has been in a hole
for a long time. You know, Pat Gelsinger gave it
a shot for you know, almost five years. We have
a lot of respect for lip Bhutan. We invested with
him at Cadence Design for years. Exceptional leader but you know,
Intel's not going to get fixed overnight, and there's nothing
the government can do to change the disparity between Intel's
(07:58):
process technology in Taiwan Semiconductor.
Speaker 2 (08:01):
Danny Fish of Janis Henderson Investors, fascinating to have you
on and thanks for talking us through the new ETF.
What name isn't in that ATF is Apple Many Field.
Perhaps it's lagging you on AI. Some other news coming
to us from Apple as Apple TV plus price is
going to be on the rise thirty percent to thirteen
dollars a month starting August the twenty first. Apple is
saying it's annual price, more broadly for streaming services is unchanged.
Speaker 3 (08:27):
It's commenting on.
Speaker 2 (08:27):
The streaming price hike in an email statement, we're off
by four tens percent.
Speaker 3 (08:31):
Coming up, we're going to be talking.
Speaker 2 (08:33):
To Toma Bravo managing partner there hold in Spain is
the private equity giant agrees to.
Speaker 3 (08:38):
Buy HR software firm day Force. This is Blomberg Tech,
Toma Bravo.
Speaker 2 (08:57):
It's just announced that it's agreed to purchase HR software
day Force, paying seventy dollars a share in cash. Following
day Force a twel point three billion dollars. Leased to
say that blueberg Brief and kid Danny Berga joins us
for a key conversation on the.
Speaker 5 (09:09):
Mattap Carolin, thank you so much, and yes, let's underscore
how large this deal is. At twelve point three billion dollars,
it is the largest deal ever for Toma Bravo and
certainly one of the biggest this year for this market.
I am pleased to say that joining Caroline and Us
now is Toma Bravo managing partner hold in Space Holden.
Speaker 3 (09:26):
Thank you so much, and.
Speaker 5 (09:28):
Your biggest deal ever at a time when your rivals
have kind of been languishing trying to even get deals done,
and when they do it's kind of in the single
digit billions. So why the size of deal and why
this one now?
Speaker 6 (09:42):
Yeah, well, thank you so much, first of all, Danny
for having me. It's a very exciting day, a very
exciting transaction for Toma Bravo. And look, we don't think
so much about, you know, the size of the deal.
We think a lot more about the fundamentals and what
we can do with the company. This company day for
us is an incredibly special company. We have followed it.
I met the founder who's still the CEO of the
(10:05):
company before he even merged his company into Sarridian in
twenty twelve. And so we've tracked this company for a
very long time. It's a very unique company in a
very important space. It's got product leadership in a big market,
and so we've followed this This deal has been in
the works for a long time with our firm, and
(10:26):
it has all the characteristics and attributes that we look
for in to Mobravo in terms of the quality of
the revenue, in terms of the product leadership that it has,
in terms of its AI roadmap, great management team, and
so we're just really excited to be able to have
this opportunity.
Speaker 5 (10:42):
Weld, And you've been following this company for a while,
but a lot of folks have had their eyes on
human capital management companies. Just earlier this year, Paychecks for example,
acquired pay Core. A lot of public companies getting bought
up in human capital management. What are you seeing and
what are your peer seeing that public markets are not well?
Speaker 6 (11:01):
You know, that's an interesting question. You know, we've so
day Force really fits our profile very well because it's
because of its revenue quality characteristics. So you know, just
to go back for the history for a minute, because
it's important to realize how unique this company is. When
David also founded this company, he codd an original product
and his thesis was, you know, core HR systems and
(11:25):
then payroll systems and workforce management systems were all separate systems,
separate databases, separate architecture. And David came with a very
innovative thought is why shouldn't all that exist in one database,
in one system. It provides a lot more customer value
one basically end the end unified platform and the employee
life cycle. So he came in and built a product
(11:47):
that does all of that, everything from recruiting performance management
to if I'm an hourly worker, I clock in and
I know in real time how much money I've earned,
and if I need to get paid, I get paid immediately.
They do the tax withholding for you. So it's a
really unique that value proposition that he built the company
on is still unique in this big growing market today.
(12:12):
And so look, we and this company has been probably
in the seventh or eighth inning of a services to
software transformation, and so what we're what we're really looking
to do is just accelerate what they're already doing as
a public company in a private context. And just to
answer maybe the last part of your question, this company
(12:32):
is having a historic year, right So, a couple weeks
ago they announced their earnings. They forty percent year over
year bookings growth for the first half of the year.
Recurring revenue is reaccelerating, which is kind of unusual in
enterprise software right now, and the market kind of yawned,
and we think there's a big disconnect and a big
opportunity to basically continue on the path that the company's on,
(12:56):
but accelerating it in a private context.
Speaker 2 (12:59):
To be fat, anst hadn't yawned, there's only one cell
rating and they'd liked the earnings in many ways because,
as you mentioned, David, who set up this business thirty
years ago, has been able to take on the new iteration,
this generative AI. And I'm really interested, therefore, holden as
to how much generative AI can add value at this moment.
Is that already baked in, because we're all questioning valuations
(13:19):
of generative AI related companies right now.
Speaker 6 (13:23):
Yeah, So, generative AI is a huge part of our
investment thesis here, as it is for most of our
software companies. But we think, I mean, I'm just taking
a step back in this human capital management space. Every
company in the world right now is thinking about how
to maybe reorganize themselves, how to infuse AI into their organization,
(13:45):
maybe how to change their organizational structure and hierarchies to
account for AI. What kind of skills are needed and
how much do they need to pay for those skills.
These are all people problems, and so we think this
space of general human capital management should be is a
great opportunity for AI. For those companies that have data,
(14:07):
they know how to protect the data, that have customer relationships,
and so we think it's a huge opportunity. They have
a really ambitious AI roadmap. They're already selling some AI
skews today, but there's a really ambitious roadmap for next
year to roll this, to roll out a bunch of
AI agents, and we think we can just help them
accelerate that path to basically an agentic AI human capital
(14:30):
management software company.
Speaker 5 (14:31):
Well, then, just on that point, we would love to
get your views on an MIT related study that seems
to have gotten this market maybe a little bit worked up.
The study that ninety five percent of companies who took
on AI generative AI pilots, ninety five percent of them
sold zero return on investment. Given your work with these
types of companies and incorporating genitive AI ninety five percent,
(14:55):
does that number seem right to you?
Speaker 6 (14:58):
Look, well, I would say we we focus. That's really interesting,
by the way, because I do think there has been
an issue with people really trying to measure ROI on
their projects. Everybody's using it, everybody is using it, everybody
knows it's the next big thing. But is ROI really
being you know, measured in it? And are people giving
customers things that they may not they may not want,
(15:20):
And so we've taken a very measured approach. We think
there's a real benefit to these SaaS companies that have
incumbency and they have data advantages. But I think at
that enterprise level, I think, look, obviously there's been a
lot of uh, the easy ones have been the call
center and product development. Those have been the two biggest
areas for AI. I'd say cases that have generated really
(15:43):
positive ROI. But I think there's also a lot of
sprawl too. There's a lot of tools being sold that
maybe aren't being totally utilized. You see that in some
of these earnings announcements. So I think it's just important
to be careful to ensure that there's connectivity between the
customer's roadmap and your roadmap. So we think it's really important,
but we are taking a little bit more measured approach
(16:05):
because if you sell something a customer that they're not
using or don't need, that creates problems down the road.
Speaker 2 (16:10):
It's been great having you both join, in particular Danny Berger,
thank you for helping us bring the conversation, Tom a
brother managing partner Holden Spain fascinating, particularly on that MIT
report coming up. The CEO of Data Breaks joins us
to discuss the company's latest funding round and whapping valuation
of over one hundred.
Speaker 3 (16:25):
Billion is a breen bag tech Data Bricks. It's raising
new funding and evaluation.
Speaker 2 (16:43):
That tops one hundred billion dollars the series K investment
marks get this more than sixty percent increase in the
data analytics software providers value because it's.
Speaker 3 (16:51):
A last raised money in December. Data Bricks CEO Ali
Godsi joins us.
Speaker 2 (16:56):
Now, extraordinary growth, but extraordinary growth in apples of ai
that you're currently building and helping with businesses translate their data.
Speaker 3 (17:04):
How do you accelerate that?
Speaker 7 (17:05):
Yeah, that's why we did this investment round. We were
looking at the product portfolio and there's two areas we
really want to invest in, and that's how we did
the fundraise.
Speaker 8 (17:13):
One islake Base.
Speaker 7 (17:15):
So agents and AI is also going to revolutionize databases.
I know we're thinking about how it's affecting society, but
the database market is one hundred and five billion dollars
TAM and what.
Speaker 8 (17:26):
We saw in the data is that eighty percent of.
Speaker 7 (17:28):
The databases are now being created not by humans but
by AI agents. So that's why we want to invest
it in our database product called lake Base. And the
other side is a product we have called Agent Bricks,
where we really investing it in how do we actually
help automate tasks with agents at enterprises with high quality
and high fidelity without hallucinations. So that's why we're doing this.
(17:51):
We're investing it in those two areas that we think
have huge potential.
Speaker 2 (17:54):
I can you kind of translate for audience, how different
the technology is needed to cater for an AIA rather
than a human.
Speaker 7 (18:01):
Yeah, so the agents move much much much faster. You know,
we think we're slower, we take our time. These things
just go all the time, right, there's no stopping and
they can do it in perils.
Speaker 8 (18:12):
So there's many, many of them doing it.
Speaker 7 (18:14):
So what you need to make sure, For instance, if
you're providing infrastructure for them, like a database, you have
to make sure that the cost of that is low
because they're going to spawn up and try many many things.
It's almost like you can imagine that you have, you know,
one hundred interns unleashed, running off trying lots of different things.
Speaker 8 (18:30):
So you'd like to lower the cost of it.
Speaker 7 (18:32):
You want to make it super fast because if they're
trying to use a database and the database.
Speaker 8 (18:36):
Is slow, now you've slowed down all of the interns.
So you don't want to do that.
Speaker 7 (18:40):
So those are some of the things you have to
do differently, move faster, lower the cost, and let them
experiment more because they're going to try lots of stuff
and then they're going to pick the best result. That's
not how humans operate because we're more expensive. We take
our time, and then we're sort of you know, measure twice,
cut once kind of approach, which is not the case
with the agents.
Speaker 2 (18:58):
Let's talk about expensive humans as you've been adding I
think about fifty percent by the end of this year, right,
adding three thousand to your headcount. How expensive are those
humans at the moment? Ali, given the talent wars we.
Speaker 7 (19:09):
See, Yeah, I mean it's it's I thought already that
things were very expensive a few years ago, and we
pay top of the top of the market.
Speaker 8 (19:16):
We compete with say Google, Meta and so on.
Speaker 7 (19:19):
But I would say the last twelve months or six
months even have been insane. I mean, it just keeps
going higher and higher.
Speaker 2 (19:25):
Two hundred million, Hi, Ali, Like, are you having to
counteract that?
Speaker 9 (19:29):
Yeah?
Speaker 7 (19:29):
I mean, look, we're seeing insane offers out there. If
the talent is really that good, we will pay up. However,
it is also the other side of it, which is
they're going to work together with their coworkers, and you
want to have equity and fairness. If you have two
people that have the same background, that they're equally good
just because someone started six months ago, you don't want
to suddenly have them make one tent of the person
(19:52):
that's sitting right next to them. So if you don't
keep that equity in mind, then people get unhappy, they.
Speaker 8 (19:57):
Talk, and then they will move around.
Speaker 7 (19:58):
And that's why we' seeing so much char learn in
the AI market right now. People are switching jobs, you know,
from this company and then back again and so on.
So you want to also be a little bit thoughtful
about it. But yeah, you have to pay up otherwise
that's the price to pay right now, What.
Speaker 2 (20:11):
About paying up for M and A because I know
that you've raised funds potentially to do that.
Speaker 3 (20:14):
What sort of.
Speaker 7 (20:15):
Companies, Yeah, I mean, we're looking at across the board,
right like this database technology I talked about right late, Base,
which is separated computer storage for postcrafts. That's that's came
through an acquisition that we did for you know, billion dollars.
So we were continuing to be very very interested in these,
you know, in Burder's talent. AI is very interesting because
you know, on the one hand, we hear about these
(20:35):
companies that have crazy evaluations, right one hundred billion plus.
On the other hand, Yeah, but on the other hand,
there's a lot of startups that started three years ago,
two years ago, and you know, if the if the
revenue is not there and the business isn't working out,
but they have amazing talent and they have great, great
ideas maybe they didn't just have channel distribution, that those
(20:57):
are great and you can actually get them for you know,
I guess in the big scheme of things that you
could say cheap.
Speaker 2 (21:03):
Let's just talk about these so called crazy valuations AALI,
because I know your phone has been running off the hook,
and then particularly the last few weeks, people wanting to
allocate more towards you.
Speaker 3 (21:14):
Do you think that would happen right here?
Speaker 2 (21:15):
Right now we suddenly see a slight rectification in valuations
in the public markets.
Speaker 3 (21:20):
Are things cooling down? Are you worried by.
Speaker 2 (21:22):
MIT reports reporting of a lack of impact of AI
pilots for example.
Speaker 8 (21:28):
No, I mean, I've been pretty vocal about this as well.
Speaker 7 (21:30):
You know, I'm very bullish on agents being able to
do all kinds of tasks. But we're looking at very
early innings and some people are already declaring success as
if we were done.
Speaker 8 (21:40):
We're not. We're at the very beginning.
Speaker 7 (21:42):
When it comes to agents, for instance, one of the
biggest challenges is that you know, when you unleash these agents,
you know, the hundreds in terns that go off, they
make errors, and you know, right out.
Speaker 8 (21:52):
Of the box you might have thirty percent errors.
Speaker 7 (21:54):
Would you hire a person that makes thirty percent of
a time completely crazy mistakes?
Speaker 8 (21:59):
No, So we have to get the quality up.
Speaker 7 (22:01):
That's what Agent Bricks is focused on, how to we
iterate and improve the quality. So I do think we
have to pace the investments and the expectations on the ROI.
What's timeline if we're thinking that, you know, these agents
are just going to work everywhere right now, and that's
not the case. It's going to take us years to
be able to see the impact of AI across the
board in organizations. You know, maybe even five years. It's
(22:24):
still going to be very impactful. It's still something that's
investing in. But you have to get that timeline right.
Speaker 2 (22:29):
Always talking straight to us, Sally god Sie, we so
appreciate it.
Speaker 3 (22:32):
Day to Bricks CEO.
Speaker 2 (22:33):
Congrats on the series K Coming up, Google bets on
AI for its new devices. Will have the details what
the company has just launched. This is bloombag Tech. Welcome
(22:55):
back to bloombag Tech. We take a look at these
markets because it's been a volatile day of trade.
Speaker 3 (23:00):
More broadly, we could be on track for three days.
Speaker 2 (23:02):
Of losses on the Nastak one hundred worst stretch of
losses going back to March of this year. We're currently
off by three tens a percent Meta, dragging us a
little bit lower Netflix one points perspective on the downside.
On the higher side is like some nvidio. Let's look
at a rebound for Pan Andeer as well, because it
had had six straight days of losses running into today.
We get a little bit of a reprieve, but only
(23:23):
a tenth of a percent. More than seventy billion dollars
of market cap wiped off of this retail fan favorite.
As people question that valuation, you know, looking at profit
to price, price to profit in the future, well it's
training almost two hundred times. Looking at Intel on the downside,
off by a quarter of percent one and a quarter.
That's as we question what dilution or discount the US
government might get after the euphoria, the soft bank and
(23:45):
the US are indeed.
Speaker 3 (23:46):
Putting in money.
Speaker 2 (23:47):
And we finished on Google having a rather nice day,
up by four tens percent, a come off of its highs.
But all of this is following Google's introduction of new
consuming gadgets including phones, earbuds, smart watch, all with the
company's latest Gemini AI.
Speaker 3 (24:00):
Really at the heart of it all.
Speaker 2 (24:01):
We spoke with Rick Ostolo, his Google's SVP for Platforms
and Devices, about the company's launch event.
Speaker 9 (24:07):
Gemini is a huge part of Google strategy. We've made
so much progress with it. We've got the best models around,
we have the best AI assistant. We are just so
excited about what we've talked about today. And I personally
love using the vo video model. You saw a video
of my dog talking in the show, which was really
(24:28):
fun to put together.
Speaker 3 (24:28):
Ke poodle across something.
Speaker 9 (24:30):
Yeah, he was his Portuguese water dog who somehow speaks English.
But it was really really fun to put that together.
And this is kind of the power of AI. Now
you can do things for fun, you can be a
lot more productive with it, and Gemini is the thing
that powers it all for us.
Speaker 3 (24:46):
I mean, Steph Curry is doing things with sports.
Speaker 2 (24:47):
You had Alex Cooper there caller Daddy doing things with camera.
I'm interested though, how this sets you apart. What are
you offering do you think versus the competition? How am
I going to be able to use it in a
wholly different way than currently I could with a.
Speaker 3 (25:01):
Competitive out of that?
Speaker 9 (25:02):
Yeah, well, I mean I think AI in general just
transforms all of these products on the phone. It's going
to make it so much easier to interoperate with your phone.
You just talk to the AI and it'll do things
for you. You can show your camera to the AI and
it'll give you hints about what to do, like if
you're trying to do a project at home, like fix
some plumbing or fix some shelves, whatever it is, AI
can help. And we're really excited about our partnership with
(25:26):
Stephen Curry to apply this AI technology to personal coaching.
And you know, he's I can't think of a better
person to work with than him. He has sleep coaches,
nutrition coaches, fitness coaches, and he wanted to work with
us to bring this kind of capability for personal coaching
to everyone. And so that's what that partnership is all about.
Speaker 2 (25:48):
We're really excited to work with stuff and in many ways,
what you were helping oversee the purchase of fitbit back
in the day, it's now in the main factor of
a watch that you've got on.
Speaker 3 (25:56):
What form factors are we yet to see?
Speaker 2 (25:59):
We've got you've got the pods in your ears, you've.
Speaker 3 (26:01):
Got the watch, you've got the phones right.
Speaker 9 (26:04):
And I think there might be a few coming next Well,
we're bringing Gemini to a bunch of surfaces you use
every day, but probably be used very differently, like automotive.
There'll be Gemini in your car, on your television, in
your smart speakers and smart displays. But I think a
really exciting thing that'll come in the future is Gemini
(26:24):
and classes. So we're working on smart classes that'll run
Gemini as the main way you interact.
Speaker 3 (26:29):
And for a year that you think that that'll be
coming out, is it?
Speaker 9 (26:32):
It'll be sometime next year. It will be pretty exciting
to see.
Speaker 2 (26:37):
Costallone Google's SVP of Platforms and Devices. Let's talk a
little bit more about all of this. Carolina Milanesi, she's
the president and principal Analystic Creative Strategies.
Speaker 3 (26:45):
We were in Brooklyn together yesterday. Were I love reading.
Speaker 2 (26:48):
Your report on this, and you said, look, Google avoided
any risky moves, so we didn't get the glasses in
the here and now. But the prowess you see is
that Gemini is just full force within these devices.
Speaker 3 (26:59):
Absolutely, it's all about AI.
Speaker 10 (27:01):
It's about really getting consumers to understand the power of
that AI can bring and as Rick was saying, it's
different things to different people. So what was amazing for
me yesterday will see the breath of people that they
were able to reach with all the guests that they had,
both from an age demographic but also from what is
the hook that you want? It can be editing, it
(27:23):
can be taking the best shot, it can be getting fitter.
Speaker 2 (27:26):
And it can be photography. Andre de Wagner they had
over there. They had of course sports when it came
to Steph Curry or indeed Landon Norris was there. We
also thought about the way in which community is going
to use it for camera and for editing.
Speaker 3 (27:40):
Is that really that important?
Speaker 2 (27:41):
When do you think the camera is really going to
be the standout feature of so.
Speaker 10 (27:45):
Many camera is already the sendout feature for so many consumers.
Speaker 2 (27:49):
They take pixels had a better camera than anyone for ages.
Speaker 3 (27:52):
That's what they kept on reminding us. But people are
still buying apples as dead it is.
Speaker 10 (27:55):
But it's about what you can do from an editing perspective. Now,
it's not just about taking the best shot and taking
the friction away that there is today in getting to
their editing. So being able to tell an AI agent
Gemini or something else. How you want the picture to
look like, and what.
Speaker 2 (28:13):
It really compares and contrast with is Apple's lacking right
the fact that we're going to be so easily integrating
Gemini AI from a spoken word perspective and it's Siri
is just so behind the curve. Do you think they're
going to eat any market share that?
Speaker 10 (28:28):
I think it's always hard from a high end perspective
to see churm from Apple to anywhere else because user
consumer have more device than just their phone, and so
you're talking about a difficult choice to make.
Speaker 3 (28:42):
We also still have.
Speaker 10 (28:43):
A very beginning of DEI shift. Consumers are not walking
into a store asking for an AI phone. We talked
about is for Apple in June, but I do think
that time is sticking for Apple and we need to
see something sooner rather than later.
Speaker 2 (28:59):
Instead, this almost helps Google show off the Android ecosystem.
You might not get a Google Pixel, but you might
get a Samsung and probably through this demonstration you can
see how well integrated that it's going to be as well.
How do they navigate this sort of frenemie moment?
Speaker 10 (29:13):
Yeah, I think it's definitely first about the best of
Google on Pixel, and then you started to see Samsung
getting closer to their ecosystem and putting aside their aspirations
with Bisbee and really building on the power of Gemini.
So Motorola has been doing the same thing. So it's
definitely about the ecosystem, but also feeling that in my view,
(29:37):
Pixel is the answer to Apple within the Android world.
Speaker 2 (29:41):
And they got a foldable phone, which in any way
goes head to head with the DOUGHI indorsed Samsung, but
Apple has.
Speaker 3 (29:48):
No foldable right now.
Speaker 2 (29:49):
I thought what was really interesting was when they put
them out on the market. Next week, we get the phones,
but watch us. A little bit later, I asked Rick
about whether it was a supply chain issue. He said, no,
are there any supply chain issues for these companies right now?
It guess it's chip correct designed and house what made
my TSMC? How does this whole come together?
Speaker 10 (30:06):
I think, to be honest with you, as a marketing
strategy is more of a supply issue. Is about getting
before Apple and after Apple. Right we know that the
expectation is beginning of September usually for Apple, and so
getting in with the mass market product before the iPhone
is out, and then with something that is more appealing
(30:27):
to steal a niche market but very powerful users with
the foldable towards holiday season.
Speaker 2 (30:36):
I think what really resonated did in your note was
the confidence that Google had at this event. I mean
it was just celebrity filled. It felt like you were
at a TV event. That was the whole idea and
narrative of it. Have they got the right to be
this confident right now?
Speaker 3 (30:50):
Do you think?
Speaker 10 (30:51):
I think is empowering for them instead of always focusing
on chasing Apple, to actually feel confidence in the product
that they have, which are iterative from last year but solid.
And I think that finding the confidence in their branding
is very important and broadening the addressable market that they're
(31:13):
aiming for is not just tech buyers anymore, is mass
market consumers.
Speaker 2 (31:18):
Subway takes call a Daddy, had a lot for the
gen Z and the younger millennials. Currently, a Melnac loved
having a hair president and principal analyst at Creative Strategies
coming up, Runway CEO Christoval Venezuela is joining us to
talk about the company's blue tools for video.
Speaker 3 (31:33):
And games creation. Says Blomberg Tech.
Speaker 2 (31:48):
M AI startup Runway, which shook up Hollywood with a
video generation tools centering the world of gaming. Announcing today
is Runway Game World's beta, which.
Speaker 3 (32:06):
Takes a step towards real time game creation.
Speaker 2 (32:08):
Runway CEO and co founder Crystal Weal Venezuela joins us
now and because, well, how changeable or what a complete
shift is this for the gaming industry, because consumers are
going to be able to use it, but what does
it mean for the actual studios too?
Speaker 8 (32:24):
Yeah, it's massive.
Speaker 11 (32:25):
It's a big change in the same way that AI
was a big change for Hollywood as well. And now
it's important to understanding that organize. There are two parts
of how AI is affecting games. On the one end,
you have the real time rendering component of it that
we're working towards, basically means you're going to be able
to create pixels in a real time manner. And the
other one is the mechanics. Right, so how do games
(32:48):
manifest itself? What are the interactions that users would have
with them? From consumers to preach everyone and so game
World for us, it's kind of fland exploration and our
first product and the mechanics of non linear stories with
AI creating these worlds in real time and having players
experiment with them.
Speaker 2 (33:04):
I mean, I think about the first time that we
first started bringing you on the show and hearing from
how much you were well disrupting Hollywood.
Speaker 3 (33:12):
But Hollywood has now come to embrace.
Speaker 2 (33:13):
You, using Amazon, using it in the latest works that
they're doing, and creating Christa.
Speaker 7 (33:18):
Well.
Speaker 2 (33:18):
How has the gaming studio reaction been. Has it been
bristling or has it been accepting.
Speaker 11 (33:23):
It's somehow very similar to what I think Hollywood went
through a year and a half ago. I think it's
totally new. It takes time, but now I think most
of them have started to embrace it and understand it.
It's a radical technology or changes how you do your
work and need to embrace it. You need to understand it.
There's things that work really well, there's some things that
don't really work really well. But really it's about like
(33:45):
using it more. And so I would say that games
and the gaming world is where I would say Hollywood
was a year ago, and now as models progress get better,
become more usable, you start seeing most of those companies
now starting to adopt it.
Speaker 2 (34:00):
I mean you can see the impact because it's being
used in features by big tech companies and big filmmakers Christovelt,
But how are you measuring impact for those that are
about to take it on? We're all talking about this
MIT study about whether or not ninety five percent of
these pilots for general to AI are failing. How do
you prove out that your technology as value?
Speaker 11 (34:21):
Yeah, well you have to make sure it helps users somehow.
And look there's a challenge. And I think the challenge
that I think media and Vollywood recognize overtirement is these
are not tools that will make moves for you. And
I think there was a big assumption another time where
like many people thought, you just came into runway tight
movie and you get a movie out. Unfortunately, that's not
(34:41):
what the tchnology is doing. It's much more about you
being in control and you friending the right time. But
also you need to rewire your brain a little bit.
You need to retrain the mental models of how this
STAMLA you can help you. And that takes time. And
so how we manage to do that change with our
companies and customers and userss We help them and sometimes
we go and work alongside them. We have technical artists
(35:04):
that you can think about them as like for deploy
engineers that sit together with our companies and users and
enterprises and help them understand how run we can fit
in particular parts of our workload. You're a left For example,
it's our latest video generation model that allows you to
edit video in ways that you just couldn't do before.
And it works completely different from anything you've seen before,
(35:26):
and so it's not going to work based on what
you know you have to. There's an adjustment period, and
that adjustment period is critical for me. It's very similar
to perhaps how the cloud was a big change for
companies like it requires you to redo and reorganize some
of your teams to prepurpolous.
Speaker 3 (35:42):
I'm talking about reorganizing teams.
Speaker 2 (35:44):
I mean Mark Zuckerberg's been busy at that, and we
understand that previously hid perhaps eyed up Runway wanting to
be able to buy that to bring in for the
AI prowess. You not to back that's off the table,
But how many offers are you getting full runway? And
how you putting your employees that you might not jump
ship again.
Speaker 11 (36:04):
I've been working on this for like almost seven eight years,
and I think we're now hitting an interesting inflection point.
It's getting too exciting for us to think about not
being independent like we want to remain independent. We have
the resources need, We have the best team in the
world doing that, some of the best research in the world.
Now is an inflection point in both quality, adoption penetration.
(36:24):
It's a really exciting time to build Runway, and I
think there's still a long way to go for.
Speaker 3 (36:28):
Us first gaming product.
Speaker 2 (36:30):
We thank you for talking us to game wels and
so much more that you've been doing with the LF
model and plenty more. Crystaval Venezuela, CEO and co founder Runway,
always great to catch up now. Sticking with AI deep Seek,
it just unveils and update to an older model that
it says surpasses a seminal are one on key benchmarks now.
Deep Seat said in a we chat post that the
new version answers queries much faster and marks the startup's
(36:52):
first step towards creating an AI agent and close to
the home in the US. Open AI CFO Sarah Fryar
has just told Bloomberg that the company could take a
page out of Amazon's playbook, following an approach inspired by Amazon,
which found success renting out at spare Cloud computing capacity.
Open ai could in the future sell access to data
(37:13):
centers and other physical infrastructure needed for aims, showing KAfari
was there for that conversation bringing out teasing out those
pieces of information because so far really does have to
think about the profitability of this business in the longer term.
Speaker 3 (37:28):
That's right if you think about it.
Speaker 12 (37:29):
So you know, I was also recently at a media
dinner with Sam Maltman when he said we planned to
spend trillions on infrastructure in the near future and that
economists might call that crazy, but they are marching on.
So as open ai starts to put this immense and
precedence in amount of capital rate toward data center expansion,
they're building expertise in that. And I think the long
term play here as well, how could we in the
(37:50):
future potentially market and capitalize on.
Speaker 2 (37:52):
That expertise and be able to drive up revenues to
be getting better financing for the future of their own
infrastructure spend. At the moment, they've been funding that spend
by raising money and venture any nuance there, she really
did talk about how they've been able to sort of
raise more than they anticipated.
Speaker 12 (38:08):
Yes, you know, they were planning on ten billion, and
one piece of THEIRNCH funding around. She said that they
have actually gotten to eleven billion because of access investor interest,
and more broadly, they're actually looking beyond just you know,
equity financing at this point. They're also, as Friar told us,
interested in debt and debt financing and they have said
(38:30):
that banks and private equity firms have approached them about this.
Speaker 2 (38:33):
So interesting as we see how Metro has been financing
some of its data center needs, getting into the world
of private credit with Pimco and blue Out, what more
about the growth of the business when we're just coming
off the back of GPT five and some of the
throws around that. And they had to make some difficult choices,
particularly when it came to well, how nice the chatbot
is the people and how they bring back other models
(38:55):
and they're like.
Speaker 3 (38:57):
That's right.
Speaker 12 (38:57):
So it was definitely a bumpy rollout, I think bumpy
or they expected right. Also at that dinner, Alman you know, said,
we know, we messed up on.
Speaker 3 (39:06):
The emotional attachment.
Speaker 12 (39:07):
I think they did not realize that people fully had
to the older version of the chatbot, and they were
all sort of a lot of users were angry that
Opening initially deprecated the older model. However, I think overall
the bigger pictures that chat GBT is still you know,
the market leader right on consumer usage, just on chatbot
usage overall, and they still have this voracious demand as
(39:30):
Fryer put it, for the use of their products that
requires intensive compute and.
Speaker 2 (39:34):
As racious demand to fund it as we were talking about.
And actually eventually retail want to be owning a piece
of this company more people democratization so spoken about eventually
they need to IPO.
Speaker 3 (39:44):
But as a CFO, how is she thinking about that?
Speaker 12 (39:47):
Sofra, I mean for Sarah fry Or, her job is
both to raise these funds right for open A, but
also be able to allocate that compute for these customers.
Oftentimes they're having to decide in advance which customers are
actually going to get the compute power they need to
run all the chat shop t products.
Speaker 3 (40:06):
So it's it's a mix of fundraising.
Speaker 12 (40:07):
Of keeping customers happy, keeping consumers happy, and figuring out
all the right the financing and money for it.
Speaker 2 (40:14):
And then leave us to pulls showing KAfari talking us
through what was a fantastic conversation that she had with
Sarah Phire, CFO of open Ai. Now coming up SpaceX
other very highly valued private company tapping into luxury travel
as it expands its starlink services.
Speaker 3 (40:28):
Were on that next as the bluebgg tech.
Speaker 2 (40:40):
SpaceX has steadily built up it's starlink in flight Wi
Fi services for carriers like Air France, United, Virgin Atlantics
signing up. Now the company what's allying a Middle East
expansion as it holds discussions with the likes of Devi
based Emirates, Bloombergs Space reporter Sana Pashanka joins us now
with the details. How big a coup could this be
to get in with the Middle East and flies.
Speaker 13 (41:01):
Yeah, it would be a really big moment for starlink.
As you mentioned, these are luxury airlines and a lot
of them are stopping points for really long haul international flights,
So it could be, you know, bring in a lot of.
Speaker 3 (41:18):
Revenue for star languages.
Speaker 13 (41:20):
SpaceX's most profitable unit.
Speaker 3 (41:23):
Who has it been booting out the way?
Speaker 2 (41:25):
Which have been the previous Wi Fi offerers, which I
say many would say they've been frustrated with in the past.
His WiFi doesn't always feel that great on board.
Speaker 13 (41:35):
Yeah, so the previous The legacy operators are via sat SCS,
Intel SAD which was actually SCS acquired Intel SAD and
also Hughes, and those legacy operators have historically relied on
geostationary satellites which are much further away from Earth to
(41:56):
provide that Internet connectivity to airplanes.
Speaker 3 (42:00):
What does the negotiation period look like.
Speaker 2 (42:02):
How does Elon or indeed just SpaceX more broadly and
going over there win over these carriers.
Speaker 3 (42:10):
What is it that they have to prove out.
Speaker 13 (42:12):
So SpaceX It's been shown by third parties that Starlink
has delivered the fastest Wi Fi speeds across industry and
compared to those legacy operators, and that is in part
because their satellites are much closer to Earth, so you know,
the Internet has less distance to travel to getting to
those planes. But Starlink has a couple of negotiation tactics
(42:36):
that they use. They don't really allow airlines to announce
that they're using Starlink unless they'll equip on their whole fleet.
They also have put in this request that airlines offer
it to free for everyone on board, which you know
some airlines have, but some airlines have pushed back on
because they just want to offer it to their loyalty
(42:57):
customers and their loyalty program. So you know, they have
a couple of requests that they put in, but it
seems like the negotiations are unique for every airline and
every operator.
Speaker 2 (43:09):
Sana Pashanka bringing us the latest on that part of SpaceX.
Speaker 3 (43:13):
We appreciate it.
Speaker 2 (43:14):
Let's get back to the public markets right now, because
we're back under pressure then, as back one hundred is,
you'll see down now for three straight days, two and
a half percent lower. We've been questioning above the board
the frothy valuations. One of them we've really been keeping
an eye out is on Palanteer. Now, its valuation, it's
multiple is extraordinary. I mean trades two hundred times future profits.
We're down fourteen percent in the last five days. In fact,
(43:36):
it's been low for seven straight trading days, the longest
sell off we've seen since March twenty twenty three. We'll
see how Alex Karp is responding to some of those shorts,
finally winning out some money, made about a billion one
point six billion in the period of loss.
Speaker 3 (43:51):
Now that does it for this edition of Bloomberg Tech.
Speaker 2 (43:54):
Don't forget to check out the podcast, It's The Bloomberg
Tech
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