May 14, 2024 • 43 mins
Bloomberg's Caroline Hyde and Ed Ludlow break down why Amazon Web Services CEO Adam Selipsky is stepping down from the job. Plus, OpenAI unveils its updated AI model as Google kicks off its developer conference, and the CEO of Buy-Now-Pay-Later firm Klarna joins as the company eyes its long-awaited IPO.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news from Marhart where Innovation,
money and power Collie in Silicon Valley, NBN. This is
Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2 (00:31):
I'm Caroline Heinde and Bloomberg's world headquarters in New York,
and I met Ludlow in San Francisco.
Speaker 3 (00:36):
This is Bloomberg Technology coming up.
Speaker 2 (00:38):
Amazon Web Services CEO Adam Slipski is stepping down from
the job. Details to come.
Speaker 4 (00:44):
Plus Open Ai unveils its updated AI models as Google
kicks off It's AI event today for coverage ahead, and we.
Speaker 2 (00:52):
Sit down with the CEO of the buy now, pay
later firm Klana as a company eyes that long awaited IPO,
But first set's check in on what's already training on
these public markets, and maybe a little bit of a
reprieve in some animal spirits even though we see that
PPI number that produce a price index coming in hotter
than anticipated, but you get more granular and maybe there's
sign of cooling in some of the key areas that
(01:13):
the FED will be focusing on from inflatory pressures here
in the US and managing to pull up some four
tens percent on the Nasdaq, and notably, even though we
saw an initial knee jerk sell off, we're back to
rallying on the bond market, particularly at the two year yield.
I'm also shining light on what's happening on those highly
shortened names. Basically, what's happening with the likes in gamestoc
AMC Another extraordinary rally, no fundamental reason, but we go
(01:34):
a long they particularly high short interest stocks, those that
are widely beed against by the broader market. We're up
seven percent on that particular index. Move on, have a
look at what's happening on the world a Bitcoin. Actually
no move across or read across from the meme frenzy
to the crypto frenzy. Today Bitcoin just selling off a
little bit.
Speaker 3 (01:51):
In fact, we've.
Speaker 2 (01:52):
Heard from some key players within the cryptosphere and thinking
of Might Novogratz saying, actually, look, we're going to be
ranged brown from fifty five to seventy five thousand. We're
currently at six two thousand. Let's call it today, ed,
what are you watching on the micro.
Speaker 4 (02:03):
There is a lot of technology to fit in today's show.
Let's go to China and the US listed shares of
Ali Barbera and Tencent Ali Barbera. The story is low
single digit growth in e commerce and cloud. There's fighting
talk about AI and fighting talk about the spending power
of the Chinese consumer, but those US listed shares are
lower compare contrast with Tencent. They're seeing a lot of
(02:24):
ad growth, particularly in video, and we Chat is seeing
a really big surge in usage. Hour later in the program,
we'll go to team coverage on those two key China names,
and you mentioned it Google Io. Later today Alphabet will
show its hand, we think on its next offerings in
our official intelligence.
Speaker 3 (02:42):
Let's get to our top story.
Speaker 4 (02:44):
And that is Amazon and Amazon Web Services or AWS,
the cloud unit of Amazon. The company announcing that Adams
Lipski is stepping down as CEO of AWS effective June third.
Matt Garman, who started as an intern and am in
two thousand and five, was one of the early product
leaders in AWS, will take over as the CEO. The
(03:07):
shares are off session lows, but still down around eight
tens of a percent in this Tuesday session, and the
market asking questions, well, is this bad for Amazon's cash cow?
And who on earth is Matt Garman. Let's get out
to Seattle. Bloomberg's Matt Day joins us, and let's start
with the news at hand. Why is Adam Zelyipsky stepping
down as CEO? And should we be worried? I suppose
(03:29):
about the health of AWS.
Speaker 5 (03:31):
I should listened to Amazon CEO Andy Jase tell it, No,
we shouldn't be worried, he said. When he recruited Adam Selipski,
who was his right hand in building the WS business,
back to Amazon in twenty twenty one, they'd had a conversation, said, listen,
give me a few years and get the next generation
of leaders in shape, and then we'll talk later. Andy
Jesse said, Adam Selipsky is considering other challenges. We don't
(03:52):
know what those might be. Nobody detailed that in their
emails to staff today. We just know that he is
out as of next month.
Speaker 2 (03:59):
Some well and rest with family seems to insinuate before
he launches onto his next challenge. Memory was CEO of
Tableau for an interim basis in his long career with Amazon.
I'm interested, therefore, on who Mac Garmon is as we know,
like what an MBA intern turns now one of the
key executives.
Speaker 5 (04:16):
That's right, so Matt Garmon, he's a lifer at Amazon
joined and two thousand and five, is an intern two
thousand and six as a full timer and led some
of their initial services, helped set pricing the first names
for the products AWS put on the market, and since
then he's spent most of his time as an engineering leader.
He was leading one of thems on's most important divisions
of the sort of computing power for rent group, and
(04:38):
then back in twenty twenty he found himself running sales
and marketing, and to a lot of AWS insiders that
really looked like he was getting set up to succeed
Andy Jasse, the division's founding CEO. Turns out Andy brought
back Adam Sleipski instead. But this isn't a surprise anybody
who's been following either Matt Garman's trajectory or or AWSS.
Speaker 3 (04:56):
The market was a bit worried.
Speaker 4 (04:57):
There was a knee jerk reaction if you ca percentage
point decline and knee jet reaction. Matt and I guess
the idea is what happens next for AWS? Because Adams
Lipski left that still accounting for the majority of operating
income for the entirety of Amazon, and the new figure
they're giving us is this run rate of one hundred
(05:18):
billion dollars of revenue sum up where AWS sits today.
Speaker 3 (05:24):
So ABS is the biggest cloud computing company.
Speaker 5 (05:27):
But that said, they've had a bunch of pressure put
on them in the last year coming out of the pandemic.
A lot of their biggest corporate customers were looking to
cut costs. That dropped ABS's growth down to record lows.
They've bumped up beyond that, which the market seems to
like well enough, market likes even more though that they
have said that artificial intelligence.
Speaker 3 (05:44):
Revenue is starting to materialize.
Speaker 5 (05:46):
Last month they said AWS is on pace for it's
a couple billion dollar business over the course of a year,
which's not a particularly detailed number, but for a really,
really hot corner of technology. It's a sign that Amazon
is getting momentum after really getting kind of beaten out
of the gate in terms of generated AAI services in
the last couple of years. So, you know, AWS still
Amazon's cash cow, still accounts for, you know, the vast
(06:06):
majority of their operating profit quarter to quarter, you know,
but that set it's a business. It's been under pressure
for for the last couple of years, certainly.
Speaker 2 (06:12):
And MAP is it fair to characterize is it being
beaten out the gate or is it that it just
didn't use generative AI and it's lexicon quickly enough from
your perspective when we're anticipating what Google's about to unveil
for today, I.
Speaker 3 (06:26):
Think it is certainly a little bit of both.
Speaker 5 (06:27):
I mean, the Amazon's been working on machine learning and
AI services for years and years, as they will tell
you. You know, if you go back a couple of years
to win Open AI releases, you know that the chat
GPT that shocks the world. You know, Amazon wasn't really
even talking in the same lexicon at that point. Jenerative
A I wasn't in the conversation. And then when it
came to embedding, you know, generative AI products into into
services already on the market. Microsoft got there real quick,
(06:49):
Google got there real quick. Amazon, you know, caught up
and is working to catch up further. I guess, but
you know, I think it's pretty safe to say that
at least at the outset, there were a couple of steps.
Speaker 3 (06:57):
Behind that day things.
Speaker 2 (07:00):
Matt Garmon on All Things AWS, we thank you so much.
We've got to talk about Klana, the buy now, pay
later firm that well, as we all know, is eyeing
an IPO and we're wondering at what particular point they're
going to do. That is at the first quarter of
(07:21):
next year. That's according to reports right now, this comes
on the hills. What's been a busy year for IPO
offerings and also a busy year for integrating General to AI,
which this company is doing. I please say that Sebastian
see Murkowski is with us, is a clan a CEO,
and I want to start on what all investors are
so interested in is the fact that you are eyeing
the public markets.
Speaker 6 (07:39):
We're hearing as.
Speaker 2 (07:40):
Soon as Q one how much more Tea's crossing. I's
donning you having to be doing at the moment.
Speaker 7 (07:46):
I've heard that rumor as well, said, well, you know,
it's an interesting rumor. I but I think for US
it's always been like really critical. We wanted to establish
ourselves as a global business. That meant success in the
US meant both in awareness and in profitability. And now
with almost forty million users in the US and it
being a profitable and actually our largest market by revenue,
(08:08):
those kind of criteria has been met, so we're definitely ready.
Speaker 2 (08:10):
You'd been doing interesting partnerships with eber, You've been launching
a wait list for a credit card. We'll get into
those products in a moment. But when you say it's
an interesting rumor, could you go earlier than Q.
Speaker 7 (08:19):
One, Everything's possible, okay, ed.
Speaker 8 (08:25):
It?
Speaker 3 (08:26):
So, actually, good morning to you.
Speaker 4 (08:28):
Let's think about them where you might list in the
context of your business. You've grown thirty two percent in
this country over the last year.
Speaker 3 (08:38):
Why is that? Why are you seeing strength in the
US market?
Speaker 7 (08:42):
Well, I think that what's interesting Actually it comes back
to an interesting McKinsey study from fifteen and it showed
that in this market there is a growing number of
consumers that are very tired of the credit cards and
how credit cards work. There's a great Netflix documentary call
Credit Cards Explain. You will see all the bad practices
that banks have accumulated over the years to push people
into debt, to revolve to build up as big balances
(09:03):
as possible. And these group is self aware. A voiders
people that are looking for simple credit products, zero interest,
fixed installment. They're about twenty percent of the US population
and buy now, pay later speaks directly to this audience,
and I think that is the most important explanation for
the success in the US Sebastia.
Speaker 4 (09:23):
Later in the program, we're going to talk a lot
about Ali Barber's earnings, and I know that that China
is not something that's supper mined for you.
Speaker 3 (09:30):
But bear with me.
Speaker 4 (09:31):
They talked about the consumer in China having a lot
of cash, a lot of savings, but sentimentally they're not
prepared to spend. It's a really psychological market. Now, compare
and contrast that with the United States. A lot of
people I hear from are talking about credit card use
and credit card levels, but psychologically the US consumer seems
(09:53):
prepared to spend. What do you make of all that?
What do you see through your platform?
Speaker 3 (09:59):
Exactly that right.
Speaker 1 (10:00):
I was actually a little bit worried.
Speaker 7 (10:01):
Around Christmas when I saw the Christmas cells. I felt
that Christmas Cells this year was a little bit discount driven,
and I wasn't clear to how much was merchants kind
of trying to offload stock do through discount and how
much was consumer strength, so to speak. But I think
now with a few moments in the bag, you see
that like consumers spending in the US is holding up
quite well, and there is there is that demand. So
(10:22):
we're seeing that across all categories that we cover, and
as much as we're associated with kind of fashions so forth,
like with being live with Uber, with Airbnb, with a
lot of other big American brands, we can see that.
Speaker 1 (10:32):
Across the board.
Speaker 2 (10:33):
What's so interesting is you have been building up a
focus here in the US and you have got this
weight list for a credit card, but you meant to
be the anti credit card company. I thought this whole
idea that the spiraling debt that mounts there, how are
you doing it differently?
Speaker 3 (10:46):
Why do that differently?
Speaker 7 (10:48):
Well, I think that, Like the interesting thing is that
to me, the card is just a delivery mechanism. It
allows the consumers to use Klana everywhere, as opposed to
only the places where merchants have integrated US. And even
if we cover forty of the top one hundred US
retailers online today, we still want to.
Speaker 1 (11:00):
Make it available everywhere.
Speaker 7 (11:01):
Right, But I think the key difference versus the credit
card is how you use it now. When I used
to work at Burkeying back in the days when you
would swipe a card you would press one for debit
and two for credit, because it made a lot of
sense that you didn't use credit for every purchase, but
the banks abandoned that because they wanted you to build
up your monthly statement to be as big as possible,
to put everything on it. So it increases the likely
(11:23):
to view lending and borrowing money and kind of increasing
the revolver and right like, you have to remember, a
credit card balance is usually five five hundred dollars on average,
with KLON it's one hundred and fifty dollars. So to us,
the ability to always have the option between debiting credit
is fundamental. That's one of the key things that will
provide a healthier, responsible usage of credit. And in addition
(11:45):
to that having zero interest and fixed installments. So those
are the primary concepts, and we can bring them through
a card, we can bring them through offering them directly
on the merchant to website or in the.
Speaker 2 (11:55):
Sort and it's heart you're doing things differently by being
tech driven. A lot of credit card companies are now
pretty tech driven as well. I want to focus in
on the genera of AI side, because you caught a
lot of headlines by the fact that you said, look, now,
general to AI within our customer services is doing the
job of seven hundred people. Is it still seven hundred?
Speaker 3 (12:16):
Is it more than that?
Speaker 7 (12:17):
It's probably slightly more by now. I think the reason
we share we knew that number would kind of catch
the attention. But it's partially because I feel there's a
lot of buzz around AI and there is, you know,
a lot of things demos being announced, and you were
talking about you know, Google today announcing something, but there
are few things that are practically there, and a lot
of business leaders are asking themselves like, where is the
actual implications on my business? And this was the first
(12:39):
time we at least felt like, look, here's a practical
application that isn't like just as small. It's real life
consumers prefer it because it's actually higher customer satisfaction than
the human agent, it's faster to use, its higher quality,
and it's having profound impact. But we also believe that
society and politicians needs to recognize that this is not
something that's going toge in ten years. The implications for
(13:03):
society are going to come in the coming years, and
it's time to think a little bit proactively about what
measures could be taken as a consequence.
Speaker 3 (13:10):
Sebastian.
Speaker 4 (13:10):
Exactly one month ago, we had the European Commissioner for
Financial Services McGuinness visit US here in San Francisco, and
we talked about fintech regulation. Essentially, you operate in both markets,
which do you find to be more friendly of the
regulators between the United States and Europe.
Speaker 7 (13:32):
Well, I think amazingly, the EU introduced some legislation back
in four or five that meant that we, who are
a fully regulated bank in Sweden, can password that license
across all European states, and that is a tremendous advantage,
and to some degree it's actually easier even to operate
than across all of the US states, where there's bigger
(13:52):
differences on consumer credit lending in different US states than
there is among the European nations to some degree. So
it's actually, i would say fairly even a little bit
sometimes at the intanges to be in Europe. But we
definitely think that there is more competition, openness, and willingness
to promote competition in the American society than in the
(14:14):
European Union, and so I think that's very favorable in
American context.
Speaker 4 (14:20):
Especially when you do go public, investors will be very
focused on profit. Could you speak a little bit about
your profit?
Speaker 7 (14:28):
Of course now, I think look from my perspective, I
hope we will be able to deliver some very interesting
perspectives when we are ready for that, because we are
seeing a very strong growth currently within Klana. You know,
we are definitely about two billion dollars of revenue. We're
seeing very high volume growth at the same point of time.
(14:51):
Due to the implications of AI. Since September October, we
have stopped recruitment and in our case, with normal trition
rates that most tech companies have where people stay about
five years, this means that we are actually shrinking in
number of employees by about twenty percent per year.
Speaker 3 (15:10):
So we hope that by the time.
Speaker 7 (15:11):
We kind of get through that perspective, we're going to
be able to present something that looks like revenue growth
wild costs actually diminishing at the same point of time.
Speaker 2 (15:20):
Sebastian, it's been great having some time with you. Thank
you for coming on and like how you've been navigating
some of the timing questions with us. Sebastian Si mccowski.
He's a Klana CEO and what for got coming up
more in AI.
Speaker 3 (15:31):
I think, yeah, more on AI. I really enjoyed that.
Speaker 4 (15:33):
By the way, open ai unveils its updated chat model
as Google kicks off it's AI event today. We've got
really important discussions coming out next stick with us. This
is Bloomberg Technology.
Speaker 2 (15:58):
Open Ai sing faster, cheaper versions of the AI model
that underpins its chatbot chat GPT, and it says the
startup works to hold on to its seeming lead and
then an increasingly crowded market joining us. Now on the
announcements made yesterday, Blue MoG's Rachel Mets and we heard
in particular from the key executives from Marati as well,
really outlining well, me, as an unpaying user, it is
(16:22):
going to get a whole load more for free.
Speaker 9 (16:26):
Yeah, I mean that's a big part of what they
were announcing is that they are giving people a lot
of capabilities that until now had been reserved just for
paying users of GPT for but also overall they're saying
the model is faster and more efficient at this point.
And there are also some additional interesting things that they
rolled out as well, such as some audio capabilities that
(16:50):
are much faster than what we've seen before. They already
had the ability to talk to chat GPT via the app.
I believe that was just for paid users in the past,
but now you can use that in a much more
real time way. And it also it's much more capable
than it appeared to be in the past. That'll be
(17:10):
rolling out the next in the coming weeks.
Speaker 3 (17:12):
I believe Rachel la zero in on the underlying model.
Speaker 4 (17:16):
GPT for oh is that right, GBT for oh, I
got it right?
Speaker 3 (17:20):
Look at this chart.
Speaker 4 (17:22):
Yeah, so this this is the its performance against benchmarks, right,
which everyone does when they release a new model. But
I guess the main thing that open ai I was
talking about is that this is dramatically reduced latency in text,
image and video use cases get nitty gritty and nerdy
for us.
Speaker 9 (17:40):
So I mean, really, this should just make all kinds
of things faster that people want to do with the model.
Make it faster to have it back and forth with it.
It could make it. It could make it feel more
life like if you're talking to it and it's talking
back to you. Analyzing pictures. I mean, what they were
showing this demo that you've got on the screen is
showing an open camera view rather than right now, if
(18:02):
you're using the chat GBT app, you have to like
take a picture. And in the future they said they
will be adding the ability to analyze videos as well,
not just still images. So they're trying to bigger, better,
faster more with this model and some of it. I
guess we're just gonna have to wait and see how
well it works.
Speaker 3 (18:21):
Bloomberg's racial mets terrific reporting. Great to have you on
the program.
Speaker 4 (18:25):
There is one thing that I open Aye did not
do or reveal, which was search. And the Google Io
conference is kicking off in Mountain View. Let's hear about
how Alphabet ceo is to the pitch, I characterized his
competition with the CEO of Microsoft.
Speaker 3 (18:42):
Just listen to this, I think you'd one of the
wa is you can.
Speaker 10 (18:48):
Do the wrong thing is by listening to noiself talent
playing to someone else's dance music.
Speaker 3 (18:54):
I've always been very clear. I think we have a
clear sense of what we need to do.
Speaker 4 (19:00):
That was part of the conversation that he had on
the circuit with Emily Chang.
Speaker 3 (19:03):
He was talking about Microsoft.
Speaker 4 (19:04):
But open Ay has been pretty noisy as well, didn't
reveal its own search. Let's bringing Bloombergs Jackie Deablos zero
in on Google Io and Jackie, what are you looking
out for?
Speaker 8 (19:14):
Well, there's a few things, and as center Bridge I
mentioned the dancing using it's pretty hard to ignore, especially
with an announcement like that coming out of Opening Eye yesterday.
It's really raising the bar for Google. One of the
things that will be keenly focused on is, of course,
it's updates to its current flagship Gemini model. We're expecting
a few more details on just how that model will
(19:36):
be interspersed throat to threat its most ubiquitous products, think
Gmail Maps and especially like you mentioned, ed search. It's
been experimenting with some features, but hasn't rolled anything out
really broadly yet. We'll get some more color there. And
of course, you know this isn't just about software. We're
expecting some updates on it's hardware line, it's tablets, it's smartphones,
(19:57):
and of course any updates to it Android fifteen operating system.
Speaker 2 (20:03):
I mean, the context with all of this is that
they seem to be behind the curve, even though for
many generative AI was only made possible because of the
research them by Google, but then they managed to rush
out send products there was a little of concern around
the image generation in particular with Gemini. How are we
seeing them try to write size the perception?
Speaker 8 (20:25):
Well, if you said it perfectly, Caroline, they were early pioneers.
They have some of the best and brightest talent in
artificial intelligence. But where they really fell behind is really
kind of creating this bigger, generative AI ecosystem that is
embedded across its products. It has an advantage in search,
as we all know, but we've seen Microsoft and Open
(20:47):
Eye really kind of product make it make its way
into products much quicker and really commercialize that technology in
a much more broader way. And so today we're really
going to be looking to learn how exactly is this
flowing through across the business, not just kind of one
off features here and there. It's also unveiling a new
(21:08):
open source it's a smaller model called Gemma, so it's
looking to really kind of catch up and offer a
more kind of broad array of models, just as we've
seen Open Eye.
Speaker 11 (21:20):
Do as well.
Speaker 4 (21:21):
Jackie, really quick, I don't want to put you on
the spot, but of all the announcements, what's the one
piece of AI technology you're actually using right now?
Speaker 3 (21:28):
Personally?
Speaker 8 (21:29):
I love how it you know, in Google Docs, it
makes my needing templates. I don't really have to worry
about kind of doing all the drudgery there. I don't
use it quite yet for work, but it's kind of
the you know, if I need to write up a
quick note, half the template is already there. It's predictive,
so it kind of knows what I'm looking to write
(21:51):
and it takes some of that boring aspect out of
my work there.
Speaker 2 (21:54):
I love that Jackie Devlo's ps on agnostic don't use
all of.
Speaker 3 (21:58):
The above and many but others available.
Speaker 2 (22:00):
Yeah, absolutely love how you're giving us the nuance of
how are you using it in real day life? Thank
you very much. Indeed, Jackie Davlosk welcome Actively made Technology.
And Caroline Hyde in New York.
Speaker 4 (22:16):
Elam Ed Ludlow in San Francisco. Let's get a quick
check on the market. So this is kind of where
we stand in the moment. We are basically treading water.
When it comes to the nads that one hundred, there
are as equal number of names in the green as
there are in the red. And then we look at
the Golden Dragon China Index. This is basically the US
listed shares of China's biggest technology companies.
Speaker 3 (22:39):
You have the earning story, which we're about to touch.
Speaker 4 (22:41):
On, and then you have the impact of Biden administration
tariffs on the automotive sector in China. Those are some
usisted names that also are impacted in terms of the specifics.
Spend a lot of the morning looking at Ali Barba
and Tencent. The stories are really clear. Ali Barbara pretty
slug single digit growth on its core e commerce business
(23:02):
and its cloud unit. Cloud adoption slow in China, but
Ai is there. And then ten Cent great strength in
video advertising, great strength in the we chat user base
in terms of the number of hours that are going on.
So one stop going lower in the US and another
stop going higher. Let's wrap it all up and bring
in Bloomberg's Henry Wren and Isabelle.
Speaker 3 (23:21):
Lee and isabel stop with you.
Speaker 4 (23:22):
I think that's the summary right when it comes to
this earnings in what I outlined, but start with Ali
Barbera and what they said.
Speaker 11 (23:30):
So this is really the tale of two cities. We
have ten Cent reporting a better than projected sixty two
percent surgeon earnings, but Ali Baba's profit plunge and the
fact that the two biggest internet bihimots and China reported
on the same day is a rarity and the fact
that they did just really highlighted the tale of two
fortunes for both. And yes, both reported better than expected
single digit revenue growth, but it's the profit performance where
(23:53):
they diverge, and investors are really closely looking at the
bottom line of these two companies because they're both really
seen as a barometer of Chinese health, especially China recovers
from this rocky COVID recovery, and of course we have
also that year's long big tech crackdown and get this,
neither company offered investors strong reassurances of the plight of
Chinese economy moving forward, So that's something investors are hanging on.
Speaker 3 (24:14):
We love how you give.
Speaker 2 (24:15):
Us the macro context. It's about, Henry, let's go micro
with you and let's go optimistic first. Why was Tencent
really managing to pull it out for the investor base today.
Speaker 10 (24:25):
Yeah, Tensen's profitability really shines out today's in today's results.
So basically the video streaming is huge positive, but also
in the meantime, the company is cutting hugely on costs.
Remember the company is booking on revenue growth of six
percent in the quarter, but its cost of revenue is
actually down eight percent from a year ago, and the
(24:47):
key to that is lower countent costs as far as
lower costs associated with crowd projects deployment, but also in
the meantime the company is cutting down other costs, for
example employee benefits based compensation, and that really stands out.
A key worry for Tencent in recent quarters has been
it's domestic gaming business, but it's also showing some signs
(25:10):
of green shoots as well. The companies say two of
its flagship games actually received positive gross received growth in March,
so that's a passive signal taken away from investors too.
Speaker 3 (25:22):
No I was interested now on the gaming sites.
Speaker 4 (25:24):
They were talking about, how like rather than have some
big standalone organic title, they would have the kind of
games coming where you can update them regularly. Both companies
or executives on both sides. Henry also had some basically
fighting talk saying that they were each the best at AI.
Did we learn anything new about either company's AI strategy?
Speaker 3 (25:44):
Yes.
Speaker 10 (25:45):
Indeed, for Ali Baba, for example, it's pretty confident that
AI world drive growth in this cloud business. The company said,
with its AIS models gaining steam in China, it's confident
that it will turbo charge cloud units growth. Remember it's
still pretty tepic growth in this quarter percent of revenue growth,
(26:05):
but it says it's confident that in the second half
of fiscal twenty five it can actually return back to
double digit growth for its cloud unit, which should be
a good news because cloud unit has always been seen
as a growth driver for Ali Baba and the for
the other side of Tensents. It's actually already bearing fruit.
Remember that we mentioned about the strong advertising momentum for
(26:29):
Tensen's video streaming business. Remember that the company is actually
already deploying many of its AI organism in recommending videos
for its users, so it has already been seeing some
of the early signs of benefits.
Speaker 2 (26:46):
It's a well, push us forward a little bit here,
because you're giving us the sort of context of the
consumer as well. We've got JD dot Com coming later.
Speaker 3 (26:55):
In the week.
Speaker 2 (26:56):
I mean, they aren't the only company by do as well.
Are we going to get any kind on just how
resilient a Chinese consumer is right now?
Speaker 11 (27:03):
I think we will, because Chinese consumers still remain really cautious.
I mean they're dealing with a property meltdown, they're dealing
with persistent use employment, and the Chinese economy is still
slipping deeper and deeper into deflation. But to your point,
it is a big month for Chinese company. So we
have Baidujd, dot com CLM, net Ease, and Chinese Tech
Company is actually surprised to be upside for the last
eight quarters. So this is kind of good news. It
(27:25):
means that you know, recovery is there, slowly but surely.
But the money managers have been talking to look at
China two ways. It's either too cheap that's why they
want to go in, or it's either it's too cheap
for a reason. So there are really like diverging views
among them. But I think this is really going to
be a big tell moving forward this month as well.
Speaker 2 (27:45):
Me we brace ourselves, so the feather un needs to come.
Henry Wren, great wrap up on the micro of all
that we've just digested. Meanwhile, let's turn our attention to
Washington and US China relationships from a geopolitical perspective. Now,
President Biden hiking those tariffs as we expected on a
wide range Chinese impults, including semiconductors, batteries, sona cells, critical
minerals from all Let's bring in news Kaye lines in Washington,
(28:07):
a trend started by Trump continued by the current administration.
But there is nuance to how they're doing this, Kailey.
Speaker 12 (28:15):
There is, Caroline. Largely the Trump era tariffs have remained
intact under this administration, and in fact, no tariffs are
actually being reduced today. There are just some new ones
being implemented in others being raised. All said, this will
effect about eighteen billion dollars of Chinese imports into the US.
All of this will take effect between this year and
twenty twenty five. As you say, a number of key
industries are in focus here. Semiconductors will see the tariff
(28:37):
rate go from twenty five percent to fifty percent by
twenty twenty five. That's aimed specifically, it's so called legacy chips.
Speaker 3 (28:44):
You'll also see.
Speaker 12 (28:44):
Critical mineral tariffs a new tariff of twenty five percent
this year. That is one area in which this could
actually be more disruptive than just symbolic, considering the US
is still largely dependent on China for things like critical
minerals than others we saw forecasts and voting solar cells
and batteries, specifically lithium ion batteries. We'll see that tariff
rate go higher. It's going to jump to about twenty
(29:06):
five percent. Cell tariffs will jump from twenty five percent
to fifty percent. And then the big quadrupling is in
Chinese made electric vehicles that goes all the way up
to one hundred and two and a half percent. But
that is one area in which largely it is symbolic
as because of existing tariffs on Chinese evs already, they
weren't really looking at the US consumer market to get
(29:27):
that demand. What this really is about, though, is making
sure that no further supply necessarily could come dumping into
the US. Given the concerns the administration has about Chinese
over capacity, They really with these tariffs are trying to
aim at shoring up US production in these critical areas.
And we'll see what effect this may have in return
(29:47):
on the US if there's any retaliatory moves that could
potentially come to China, which said today it's resolutely opposed
to these new measures.
Speaker 4 (29:55):
We discussed on the show yesterday and I checked there
are just full China made EV you can buy in
this country. So, as you point out, it's like more
of a deterrent for more models to come. There's a
balancing act here so that everyone doesn't get hurt, you know.
Amory Horden Bloomberg's Amory spoke to the Treasury Secretary, and
I think we're getting a sense here that there is
(30:15):
a clear message from the administration, but they're basically saying,
we're just being fair with what China's doing.
Speaker 12 (30:21):
Yeah, Essentially, they want to make sure that the US
is competitive, noting that China has some uncompetitive or unfair practices,
including with things like subsidies. This is something that we
heard the Treasury Secretary talking about. However, when Amory asked
heree yesterday if the US is looking for another outright
trade war with China, the Treasury Secretary didn't seem to
want to confirm that, because they are trying to walk
this very delicate line here where they don't want to
(30:42):
have blowback on US consumers. That is perhaps why, as well,
you are seeing this more calibrated targeting of certain areas
coming from the Biden administration in this section three oh
one review, rather than something like the blanket sixty percent.
HERI IFFs that Donald Trump says he would look to
do on all Chinese imports in a second administration should
he win the White House in November, because there is
(31:02):
a concern as well about the inflationary effect that this
could have here at home. Obviously, while you would like
to say that this hurts China, its costs that are
paid by importers that could then get passed on to
the end consumer could result in higher costs for the
American people at a time when this administration is not
only struggling geopolitically to navigate its relationship with China and
make sure it's competitive but still cooperative, but also here
(31:24):
at home as they're seeking reelection, really struggling with an
economy and an inflation outlook that many Americans are unhappy with.
Speaker 3 (31:30):
Investigated lines out of Washington, d C. Thank you very much.
Speaker 4 (31:33):
All right, Coming up on Bloomberg Technology, we're going to
be joined by Craft co founder and partner David.
Speaker 3 (31:39):
Sachs on a brand new AI.
Speaker 4 (31:41):
Communication tool and company that he's leading. That conversation coming
out and stay with us because we'll be right back.
This is Bloomberg Technology, a work chat for the AI era.
(32:06):
It's called Glue, and it's a new AI native communication
platform going public, coming out of Stealth today after six
months of private beta.
Speaker 3 (32:14):
The founders say.
Speaker 4 (32:15):
Glue takes the best of both worlds from Chat, GPT
and Slack, and it was built for the way people
now collaborate, both with colleagues and with their AI assistance.
Speaker 3 (32:24):
Let's bring in Craft partner.
Speaker 4 (32:26):
And Glue co founder and chairman de like to say
that David Sachs is whe us here on Bloomberg Technology. David,
if it's OK, I actually just want to start with
the technology itself. You know, Glue's built to support both
GBT four and Claude three, and I just wondered if
you talk us through the approach you took in building
it right.
Speaker 1 (32:44):
Well, we want to be agnostic.
Speaker 13 (32:46):
We want to work with really all the major models,
and we're starting with Chat GBT and we're starting with Claude.
And by the way, we're using the latest version of
Chat GPT, Chat GBT four Army that they just launched yesterday,
and it is pretty awesome. The performances terrific. But stepping
back a second, what we're trying to do with Glue
AI is create the first AI native chat app, and
(33:09):
what it does is it creates one place where you
can have your chats with AI and your chats with
humans with your team, because we think people, we think
employees want to do that in one place instead of going.
Speaker 1 (33:20):
To two separate apps.
Speaker 13 (33:22):
The problem with chat GPT, as awesome as it is,
is that it's not a multiplayer experience. There's no way
to bring your coworkers into the chat with you. And
the problem with Slack is really that the channels get
in the way, and we hear from lots of teams
that they have channel fatigue and really want this new
threaded conversation model without all the channels.
Speaker 1 (33:45):
So that's what we've done with Glue.
Speaker 4 (33:46):
David, we know you as a bench capus right, a
long time investor in technology companies. What was the need
that you identified or the gap in the marketplace that
you wanted to start and build a company yourself and
the tool rather than them back, I guess, or invest
in another player.
Speaker 13 (34:05):
Well, you know, before becoming an investor and before becoming
a podcaster, I actually was an Internet product eye. I
was a head of product at PayPal, and then I
created a company called yamor back in two thousand and eight,
which was the first or one of the first enterprise
messaging platforms, and back then it was based on the
idea of feeds, which thanks to social networking, were kind
(34:25):
of the conversation paradigm. Then you know, the next decade
we had Slack, which is based on IOC and channels,
and now we have a new conversation paradigm that's based
on AI. It's based on chat GPT. I think every
decade you get a new paradigm like this and you
need a new communication tool, and that's what we've built
with Glue. I just didn't see that tool on the
(34:46):
marketplace that was reacting fast enough to this disruption, and
so I partnered with Evan Owen, who's my co founder
and CEO, in order to create in order to create Clue.
Speaker 2 (34:56):
Now, David, I know that you like to start your
pictures with a demo, So let's demo in a little bit.
I want to look at how it looks, it feels,
and how it's going to interact. And as the founder,
as well as putting the money into this, are you
not worried about, well, the competition that's out there because
everyone's getting into enterprise generator AI.
Speaker 1 (35:15):
For sure.
Speaker 13 (35:15):
I mean right now every enterprise SaaS app is trying
to figure out how to incorporate AI into their product roadmap.
Speaker 1 (35:23):
There's no question about that.
Speaker 13 (35:24):
But I think there's still a pretty big debate about
where AI is going to live in the enterprise. Where
are you going to go to ask those sort of
broad based questions about, for example, who in your enterprise
has the right expertise, who should be talking to Are
those sort of core enterprise collaboration use cases. And our
view on it is that AI should live in the
(35:45):
chat because again, you don't want to have one application
for your AI chats and one application for human chats.
Speaker 1 (35:50):
It all belongs together and the AI.
Speaker 13 (35:53):
What we found is that when you do incorporate the
AI as a full fledged participant into the chat, it's
able to use all of the live chat history as context,
and so your work chat app is able to give
you answers that regular chat GPT could not. We've had
really staggering results at craft Ventures using this product. Internally,
(36:15):
I've asked the AI to write Investment my most for
me summarize the arguments for and against investing in a company.
It's done an unbelievable a job just assembling those arguments
based on the chat history. I've asked it who is
contributing the most to deal flow at craft, and the
AI is able to tell me. It's really amazing the
answers you can get when you give AI access to
your chat history.
Speaker 2 (36:36):
Amazing answers built by in many ways, amazing large language
models that underpin it. I'm interested in you having sold
Yamma to Microsoft previously, having understood the way the M
and A works, and the company that looks for exits
is now seeing all these interesting partnerships, shall we call
them being done, whether it's Aquahy's, whether it is opening
Timmy when Microsoft and throp Aic of course going in
(36:59):
with Amazon and I'm Google at the same time. How
do you judge that as a VC.
Speaker 13 (37:03):
Well, there's innovation happening at every level of the stack.
I mean you're seeing tremendous innovation at the foundation model layer.
You've got open AI, You've got Anthropic like you've mentioned,
you've got x Ai now launching that we just invested in.
Then you've got innovation happening at the application layer of
the stack, where applications are able to take advantage of
(37:25):
all the new capabilities created by these lllms, And if
you're positioned correctly in the application layer, you don't want
to compete against the models.
Speaker 1 (37:33):
You want to harness them.
Speaker 13 (37:35):
So as the models get better and better, your application
gets better and better. And that's what we've seen with
Glue is that with each new release of Chat, GPT
or these other models that we've incorporated, like Flaud, the
Glue Chat tool just gets better and better.
Speaker 1 (37:48):
So we're going to ride that wave.
Speaker 13 (37:50):
As the underlying model innovation continues and the models get
better and better, the features of our application will get
better and better.
Speaker 1 (37:57):
And that's how you want to position yourself.
Speaker 4 (38:00):
Tru David, you had Sam Outman on the All Limpod
last week, and I think on social media there was
some debate which you participated in, about whether he'd said
anything new. But go to yesterday's presentation from open AI.
How much of it then surprised you based on the
conversation you'd had last week.
Speaker 13 (38:17):
Well, in retrospect, he gave us a bunch of hints
last week, so I was I shouldn't have I was
being a little bit uncharitable, but really I wasn't criticizing Sam,
I was just trying to ratio Jason, But yeah, no,
Sam gave us a bunch of hints last week that
now make a lot more sense in the light of
chat gpto yesterday, which really was an impressive demo, and
(38:39):
like I said, we've already incorporated it into Glue, and
I can tell you the performance of it is way
better than GPT four Turbo. So kudos to the open
Ai team. They've really done a great job with that.
Speaker 4 (38:50):
David, quick question, just thinking about Craft's portfolio. Did you
try to get into the Xai round.
Speaker 1 (38:57):
Yeah, we did, We've participated in that.
Speaker 2 (38:59):
And from the follow will you integrate Xai into Glue
and how are you thinking about whether winner takes all
or whether there will be, of course, well a commoditized
version of large language models here.
Speaker 13 (39:10):
Yeah, I mean I expect that we'll integrate with all
the major llms. Our view on it is that we're agnostic.
We want to give our users the choice of which
LM to use, and in fact, we're going to plug
into all the major lms and then we can actually
make the choice for them in terms of which model
to use based on the query that they're trying to ask,
(39:32):
So we actually think that the more models the better.
Speaker 2 (39:35):
Do you think Xai could have got a large evaluation?
Speaker 13 (39:40):
You know, I'm going to let them announce their own round.
I don't want to announce their round for them. But
if the question is whether we participated.
Speaker 1 (39:47):
We did.
Speaker 3 (39:49):
David.
Speaker 4 (39:49):
Look, it's an election year, presidential election year. You talks
about your background in technology and being a tech investor,
and you've been vocal on a political front. Will you
be more active this year in this election cycle?
Speaker 13 (40:03):
Well, you know, we talk about politics. Is one of
the topics on the All In pod. We discussed current events,
business markets, politics, foreign policy, events all over the world,
and so obviously the election is unavoidable, and it's no
secret that I've been a critic of Biden. So I
may get more involved in the sense of maybe hosting events,
(40:24):
maybe contributing, but it's really it's not It's certainly not
the main thing I do. Let's just put it that way.
It's the way that you get involved in the political
process is that you typically host events and you get
to maybe meet the candidates that way, and that's something
we've tried to do, me and my co host and
the all in pod. We've done that now for Robert F.
(40:46):
Kennedy Junior. We did that for a Vake Gramaswami. We
had them on the pod and that we did events
for them. And we've extended an offer to the other
major candidates and hope that they accept.
Speaker 2 (40:59):
Well, it's not the only thing you do. It's on
top of the pod, it's on top of the investing
and on top of founding new businesses as well. Come back,
tell us how it's going. David Sackscraft partner AT and
Glue chairman. Thank you. Let's get to the return and
the mean stocks. GameStop AMC surging that retail frenzy or
(41:23):
is it a retail frenzy that's actually driving this whatever
it's happened, it was Roaring Kitty that seems to revive
the animal spirits. Whoomberg's belly Lipschaltz joins us for more
a nice sixty six percent higher on the day. I'm
not gonna ask you about fundamentals of the business or
the business model of selling real games and heart and
retail stores, but who is buying? Who is driving this higher?
Speaker 3 (41:43):
It seems like.
Speaker 6 (41:44):
This is fingerprints of Wall Street when We're looking at
some of the flow data across Fidelity, Interactive brokers, and
some of the other ways that we track what retail
is buying in as real time as possible. It doesn't
seem like they're actually buying GameStop. It seems like on
the whole net, sales across Fidelity's platform for GameStop outpacing
those to buy in GameStop, though they do seem to
be buying a bit more AMC relative to those cell orders.
(42:05):
But there's a lot to try to make of some
of the trends that we've been seeing. Again, GameStop has
a shot at getting back to those all time highs.
AMC is still down like ninety seven percent from those records.
Speaker 4 (42:16):
Bailey, do we have any more clarity on that social
media post post by Roaring Kitty?
Speaker 6 (42:21):
Yes or no? Now he's added more to it. He's
posted again today. I have no idea and what the
logic is. I've DMed him, Ryan Kitty, if you're watching this,
please DM me back, but no one knows anything, and
it's there's so much uncertainty around what he's doing and
what it could mean.
Speaker 2 (42:37):
I mean, he's going on because it was initially lifting
one of gamestop's own posts back from back in February.
But now it's just video after video. Go check it
out Bailly Lipschultz, He's across all of it. Meanwhile, that
does it for this edition of Blue Big Technology ED.
It was a busy one.
Speaker 3 (42:51):
Check out our podcast our pod.
Speaker 4 (42:53):
You can find the pod on Apple, Spotify, iHeart, and
the Bluebot platforms.
Speaker 3 (42:58):
We love the pod from San Francisco and New York.
This is Bloombay Technology
Bloomberg Audio Studios, podcasts, radio news from Marhart where Innovation,
money and power Collie in Silicon Valley, NBN. This is
Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2 (00:31):
I'm Caroline Heinde and Bloomberg's world headquarters in New York,
and I met Ludlow in San Francisco.
Speaker 3 (00:36):
This is Bloomberg Technology coming up.
Speaker 2 (00:38):
Amazon Web Services CEO Adam Slipski is stepping down from
the job. Details to come.
Speaker 4 (00:44):
Plus Open Ai unveils its updated AI models as Google
kicks off It's AI event today for coverage ahead, and we.
Speaker 2 (00:52):
Sit down with the CEO of the buy now, pay
later firm Klana as a company eyes that long awaited IPO,
But first set's check in on what's already training on
these public markets, and maybe a little bit of a
reprieve in some animal spirits even though we see that
PPI number that produce a price index coming in hotter
than anticipated, but you get more granular and maybe there's
sign of cooling in some of the key areas that
(01:13):
the FED will be focusing on from inflatory pressures here
in the US and managing to pull up some four
tens percent on the Nasdaq, and notably, even though we
saw an initial knee jerk sell off, we're back to
rallying on the bond market, particularly at the two year yield.
I'm also shining light on what's happening on those highly
shortened names. Basically, what's happening with the likes in gamestoc
AMC Another extraordinary rally, no fundamental reason, but we go
(01:34):
a long they particularly high short interest stocks, those that
are widely beed against by the broader market. We're up
seven percent on that particular index. Move on, have a
look at what's happening on the world a Bitcoin. Actually
no move across or read across from the meme frenzy
to the crypto frenzy. Today Bitcoin just selling off a
little bit.
Speaker 3 (01:51):
In fact, we've.
Speaker 2 (01:52):
Heard from some key players within the cryptosphere and thinking
of Might Novogratz saying, actually, look, we're going to be
ranged brown from fifty five to seventy five thousand. We're
currently at six two thousand. Let's call it today, ed,
what are you watching on the micro.
Speaker 4 (02:03):
There is a lot of technology to fit in today's show.
Let's go to China and the US listed shares of
Ali Barbera and Tencent Ali Barbera. The story is low
single digit growth in e commerce and cloud. There's fighting
talk about AI and fighting talk about the spending power
of the Chinese consumer, but those US listed shares are
lower compare contrast with Tencent. They're seeing a lot of
(02:24):
ad growth, particularly in video, and we Chat is seeing
a really big surge in usage. Hour later in the program,
we'll go to team coverage on those two key China names,
and you mentioned it Google Io. Later today Alphabet will
show its hand, we think on its next offerings in
our official intelligence.
Speaker 3 (02:42):
Let's get to our top story.
Speaker 4 (02:44):
And that is Amazon and Amazon Web Services or AWS,
the cloud unit of Amazon. The company announcing that Adams
Lipski is stepping down as CEO of AWS effective June third.
Matt Garman, who started as an intern and am in
two thousand and five, was one of the early product
leaders in AWS, will take over as the CEO. The
(03:07):
shares are off session lows, but still down around eight
tens of a percent in this Tuesday session, and the
market asking questions, well, is this bad for Amazon's cash cow?
And who on earth is Matt Garman. Let's get out
to Seattle. Bloomberg's Matt Day joins us, and let's start
with the news at hand. Why is Adam Zelyipsky stepping
down as CEO? And should we be worried? I suppose
(03:29):
about the health of AWS.
Speaker 5 (03:31):
I should listened to Amazon CEO Andy Jase tell it, No,
we shouldn't be worried, he said. When he recruited Adam Selipski,
who was his right hand in building the WS business,
back to Amazon in twenty twenty one, they'd had a conversation, said, listen,
give me a few years and get the next generation
of leaders in shape, and then we'll talk later. Andy
Jesse said, Adam Selipsky is considering other challenges. We don't
(03:52):
know what those might be. Nobody detailed that in their
emails to staff today. We just know that he is
out as of next month.
Speaker 2 (03:59):
Some well and rest with family seems to insinuate before
he launches onto his next challenge. Memory was CEO of
Tableau for an interim basis in his long career with Amazon.
I'm interested, therefore, on who Mac Garmon is as we know,
like what an MBA intern turns now one of the
key executives.
Speaker 5 (04:16):
That's right, so Matt Garmon, he's a lifer at Amazon
joined and two thousand and five, is an intern two
thousand and six as a full timer and led some
of their initial services, helped set pricing the first names
for the products AWS put on the market, and since
then he's spent most of his time as an engineering leader.
He was leading one of thems on's most important divisions
of the sort of computing power for rent group, and
(04:38):
then back in twenty twenty he found himself running sales
and marketing, and to a lot of AWS insiders that
really looked like he was getting set up to succeed
Andy Jasse, the division's founding CEO. Turns out Andy brought
back Adam Sleipski instead. But this isn't a surprise anybody
who's been following either Matt Garman's trajectory or or AWSS.
Speaker 3 (04:56):
The market was a bit worried.
Speaker 4 (04:57):
There was a knee jerk reaction if you ca percentage
point decline and knee jet reaction. Matt and I guess
the idea is what happens next for AWS? Because Adams
Lipski left that still accounting for the majority of operating
income for the entirety of Amazon, and the new figure
they're giving us is this run rate of one hundred
(05:18):
billion dollars of revenue sum up where AWS sits today.
Speaker 3 (05:24):
So ABS is the biggest cloud computing company.
Speaker 5 (05:27):
But that said, they've had a bunch of pressure put
on them in the last year coming out of the pandemic.
A lot of their biggest corporate customers were looking to
cut costs. That dropped ABS's growth down to record lows.
They've bumped up beyond that, which the market seems to
like well enough, market likes even more though that they
have said that artificial intelligence.
Speaker 3 (05:44):
Revenue is starting to materialize.
Speaker 5 (05:46):
Last month they said AWS is on pace for it's
a couple billion dollar business over the course of a year,
which's not a particularly detailed number, but for a really,
really hot corner of technology. It's a sign that Amazon
is getting momentum after really getting kind of beaten out
of the gate in terms of generated AAI services in
the last couple of years. So, you know, AWS still
Amazon's cash cow, still accounts for, you know, the vast
(06:06):
majority of their operating profit quarter to quarter, you know,
but that set it's a business. It's been under pressure
for for the last couple of years, certainly.
Speaker 2 (06:12):
And MAP is it fair to characterize is it being
beaten out the gate or is it that it just
didn't use generative AI and it's lexicon quickly enough from
your perspective when we're anticipating what Google's about to unveil
for today, I.
Speaker 3 (06:26):
Think it is certainly a little bit of both.
Speaker 5 (06:27):
I mean, the Amazon's been working on machine learning and
AI services for years and years, as they will tell
you. You know, if you go back a couple of years
to win Open AI releases, you know that the chat
GPT that shocks the world. You know, Amazon wasn't really
even talking in the same lexicon at that point. Jenerative
A I wasn't in the conversation. And then when it
came to embedding, you know, generative AI products into into
services already on the market. Microsoft got there real quick,
(06:49):
Google got there real quick. Amazon, you know, caught up
and is working to catch up further. I guess, but
you know, I think it's pretty safe to say that
at least at the outset, there were a couple of steps.
Speaker 3 (06:57):
Behind that day things.
Speaker 2 (07:00):
Matt Garmon on All Things AWS, we thank you so much.
We've got to talk about Klana, the buy now, pay
later firm that well, as we all know, is eyeing
an IPO and we're wondering at what particular point they're
going to do. That is at the first quarter of
(07:21):
next year. That's according to reports right now, this comes
on the hills. What's been a busy year for IPO
offerings and also a busy year for integrating General to AI,
which this company is doing. I please say that Sebastian
see Murkowski is with us, is a clan a CEO,
and I want to start on what all investors are
so interested in is the fact that you are eyeing
the public markets.
Speaker 6 (07:39):
We're hearing as.
Speaker 2 (07:40):
Soon as Q one how much more Tea's crossing. I's
donning you having to be doing at the moment.
Speaker 7 (07:46):
I've heard that rumor as well, said, well, you know,
it's an interesting rumor. I but I think for US
it's always been like really critical. We wanted to establish
ourselves as a global business. That meant success in the
US meant both in awareness and in profitability. And now
with almost forty million users in the US and it
being a profitable and actually our largest market by revenue,
(08:08):
those kind of criteria has been met, so we're definitely ready.
Speaker 2 (08:10):
You'd been doing interesting partnerships with eber, You've been launching
a wait list for a credit card. We'll get into
those products in a moment. But when you say it's
an interesting rumor, could you go earlier than Q.
Speaker 7 (08:19):
One, Everything's possible, okay, ed.
Speaker 8 (08:25):
It?
Speaker 3 (08:26):
So, actually, good morning to you.
Speaker 4 (08:28):
Let's think about them where you might list in the
context of your business. You've grown thirty two percent in
this country over the last year.
Speaker 3 (08:38):
Why is that? Why are you seeing strength in the
US market?
Speaker 7 (08:42):
Well, I think that what's interesting Actually it comes back
to an interesting McKinsey study from fifteen and it showed
that in this market there is a growing number of
consumers that are very tired of the credit cards and
how credit cards work. There's a great Netflix documentary call
Credit Cards Explain. You will see all the bad practices
that banks have accumulated over the years to push people
into debt, to revolve to build up as big balances
(09:03):
as possible. And these group is self aware. A voiders
people that are looking for simple credit products, zero interest,
fixed installment. They're about twenty percent of the US population
and buy now, pay later speaks directly to this audience,
and I think that is the most important explanation for
the success in the US Sebastia.
Speaker 4 (09:23):
Later in the program, we're going to talk a lot
about Ali Barber's earnings, and I know that that China
is not something that's supper mined for you.
Speaker 3 (09:30):
But bear with me.
Speaker 4 (09:31):
They talked about the consumer in China having a lot
of cash, a lot of savings, but sentimentally they're not
prepared to spend. It's a really psychological market. Now, compare
and contrast that with the United States. A lot of
people I hear from are talking about credit card use
and credit card levels, but psychologically the US consumer seems
(09:53):
prepared to spend. What do you make of all that?
What do you see through your platform?
Speaker 3 (09:59):
Exactly that right.
Speaker 1 (10:00):
I was actually a little bit worried.
Speaker 7 (10:01):
Around Christmas when I saw the Christmas cells. I felt
that Christmas Cells this year was a little bit discount driven,
and I wasn't clear to how much was merchants kind
of trying to offload stock do through discount and how
much was consumer strength, so to speak. But I think
now with a few moments in the bag, you see
that like consumers spending in the US is holding up
quite well, and there is there is that demand. So
(10:22):
we're seeing that across all categories that we cover, and
as much as we're associated with kind of fashions so forth,
like with being live with Uber, with Airbnb, with a
lot of other big American brands, we can see that.
Speaker 1 (10:32):
Across the board.
Speaker 2 (10:33):
What's so interesting is you have been building up a
focus here in the US and you have got this
weight list for a credit card, but you meant to
be the anti credit card company. I thought this whole
idea that the spiraling debt that mounts there, how are
you doing it differently?
Speaker 3 (10:46):
Why do that differently?
Speaker 7 (10:48):
Well, I think that, Like the interesting thing is that
to me, the card is just a delivery mechanism. It
allows the consumers to use Klana everywhere, as opposed to
only the places where merchants have integrated US. And even
if we cover forty of the top one hundred US
retailers online today, we still want to.
Speaker 1 (11:00):
Make it available everywhere.
Speaker 7 (11:01):
Right, But I think the key difference versus the credit
card is how you use it now. When I used
to work at Burkeying back in the days when you
would swipe a card you would press one for debit
and two for credit, because it made a lot of
sense that you didn't use credit for every purchase, but
the banks abandoned that because they wanted you to build
up your monthly statement to be as big as possible,
to put everything on it. So it increases the likely
(11:23):
to view lending and borrowing money and kind of increasing
the revolver and right like, you have to remember, a
credit card balance is usually five five hundred dollars on average,
with KLON it's one hundred and fifty dollars. So to us,
the ability to always have the option between debiting credit
is fundamental. That's one of the key things that will
provide a healthier, responsible usage of credit. And in addition
(11:45):
to that having zero interest and fixed installments. So those
are the primary concepts, and we can bring them through
a card, we can bring them through offering them directly
on the merchant to website or in the.
Speaker 2 (11:55):
Sort and it's heart you're doing things differently by being
tech driven. A lot of credit card companies are now
pretty tech driven as well. I want to focus in
on the genera of AI side, because you caught a
lot of headlines by the fact that you said, look, now,
general to AI within our customer services is doing the
job of seven hundred people. Is it still seven hundred?
Speaker 3 (12:16):
Is it more than that?
Speaker 7 (12:17):
It's probably slightly more by now. I think the reason
we share we knew that number would kind of catch
the attention. But it's partially because I feel there's a
lot of buzz around AI and there is, you know,
a lot of things demos being announced, and you were
talking about you know, Google today announcing something, but there
are few things that are practically there, and a lot
of business leaders are asking themselves like, where is the
actual implications on my business? And this was the first
(12:39):
time we at least felt like, look, here's a practical
application that isn't like just as small. It's real life
consumers prefer it because it's actually higher customer satisfaction than
the human agent, it's faster to use, its higher quality,
and it's having profound impact. But we also believe that
society and politicians needs to recognize that this is not
something that's going toge in ten years. The implications for
(13:03):
society are going to come in the coming years, and
it's time to think a little bit proactively about what
measures could be taken as a consequence.
Speaker 3 (13:10):
Sebastian.
Speaker 4 (13:10):
Exactly one month ago, we had the European Commissioner for
Financial Services McGuinness visit US here in San Francisco, and
we talked about fintech regulation. Essentially, you operate in both markets,
which do you find to be more friendly of the
regulators between the United States and Europe.
Speaker 7 (13:32):
Well, I think amazingly, the EU introduced some legislation back
in four or five that meant that we, who are
a fully regulated bank in Sweden, can password that license
across all European states, and that is a tremendous advantage,
and to some degree it's actually easier even to operate
than across all of the US states, where there's bigger
(13:52):
differences on consumer credit lending in different US states than
there is among the European nations to some degree. So
it's actually, i would say fairly even a little bit
sometimes at the intanges to be in Europe. But we
definitely think that there is more competition, openness, and willingness
to promote competition in the American society than in the
(14:14):
European Union, and so I think that's very favorable in
American context.
Speaker 4 (14:20):
Especially when you do go public, investors will be very
focused on profit. Could you speak a little bit about
your profit?
Speaker 7 (14:28):
Of course now, I think look from my perspective, I
hope we will be able to deliver some very interesting
perspectives when we are ready for that, because we are
seeing a very strong growth currently within Klana. You know,
we are definitely about two billion dollars of revenue. We're
seeing very high volume growth at the same point of time.
(14:51):
Due to the implications of AI. Since September October, we
have stopped recruitment and in our case, with normal trition
rates that most tech companies have where people stay about
five years, this means that we are actually shrinking in
number of employees by about twenty percent per year.
Speaker 3 (15:10):
So we hope that by the time.
Speaker 7 (15:11):
We kind of get through that perspective, we're going to
be able to present something that looks like revenue growth
wild costs actually diminishing at the same point of time.
Speaker 2 (15:20):
Sebastian, it's been great having some time with you. Thank
you for coming on and like how you've been navigating
some of the timing questions with us. Sebastian Si mccowski.
He's a Klana CEO and what for got coming up
more in AI.
Speaker 3 (15:31):
I think, yeah, more on AI. I really enjoyed that.
Speaker 4 (15:33):
By the way, open ai unveils its updated chat model
as Google kicks off it's AI event today. We've got
really important discussions coming out next stick with us. This
is Bloomberg Technology.
Speaker 2 (15:58):
Open Ai sing faster, cheaper versions of the AI model
that underpins its chatbot chat GPT, and it says the
startup works to hold on to its seeming lead and
then an increasingly crowded market joining us. Now on the
announcements made yesterday, Blue MoG's Rachel Mets and we heard
in particular from the key executives from Marati as well,
really outlining well, me, as an unpaying user, it is
(16:22):
going to get a whole load more for free.
Speaker 9 (16:26):
Yeah, I mean that's a big part of what they
were announcing is that they are giving people a lot
of capabilities that until now had been reserved just for
paying users of GPT for but also overall they're saying
the model is faster and more efficient at this point.
And there are also some additional interesting things that they
rolled out as well, such as some audio capabilities that
(16:50):
are much faster than what we've seen before. They already
had the ability to talk to chat GPT via the app.
I believe that was just for paid users in the past,
but now you can use that in a much more
real time way. And it also it's much more capable
than it appeared to be in the past. That'll be
(17:10):
rolling out the next in the coming weeks.
Speaker 3 (17:12):
I believe Rachel la zero in on the underlying model.
Speaker 4 (17:16):
GPT for oh is that right, GBT for oh, I
got it right?
Speaker 3 (17:20):
Look at this chart.
Speaker 4 (17:22):
Yeah, so this this is the its performance against benchmarks, right,
which everyone does when they release a new model. But
I guess the main thing that open ai I was
talking about is that this is dramatically reduced latency in text,
image and video use cases get nitty gritty and nerdy
for us.
Speaker 9 (17:40):
So I mean, really, this should just make all kinds
of things faster that people want to do with the model.
Make it faster to have it back and forth with it.
It could make it. It could make it feel more
life like if you're talking to it and it's talking
back to you. Analyzing pictures. I mean, what they were
showing this demo that you've got on the screen is
showing an open camera view rather than right now, if
(18:02):
you're using the chat GBT app, you have to like
take a picture. And in the future they said they
will be adding the ability to analyze videos as well,
not just still images. So they're trying to bigger, better,
faster more with this model and some of it. I
guess we're just gonna have to wait and see how
well it works.
Speaker 3 (18:21):
Bloomberg's racial mets terrific reporting. Great to have you on
the program.
Speaker 4 (18:25):
There is one thing that I open Aye did not
do or reveal, which was search. And the Google Io
conference is kicking off in Mountain View. Let's hear about
how Alphabet ceo is to the pitch, I characterized his
competition with the CEO of Microsoft.
Speaker 3 (18:42):
Just listen to this, I think you'd one of the
wa is you can.
Speaker 10 (18:48):
Do the wrong thing is by listening to noiself talent
playing to someone else's dance music.
Speaker 3 (18:54):
I've always been very clear. I think we have a
clear sense of what we need to do.
Speaker 4 (19:00):
That was part of the conversation that he had on
the circuit with Emily Chang.
Speaker 3 (19:03):
He was talking about Microsoft.
Speaker 4 (19:04):
But open Ay has been pretty noisy as well, didn't
reveal its own search. Let's bringing Bloombergs Jackie Deablos zero
in on Google Io and Jackie, what are you looking
out for?
Speaker 8 (19:14):
Well, there's a few things, and as center Bridge I
mentioned the dancing using it's pretty hard to ignore, especially
with an announcement like that coming out of Opening Eye yesterday.
It's really raising the bar for Google. One of the
things that will be keenly focused on is, of course,
it's updates to its current flagship Gemini model. We're expecting
a few more details on just how that model will
(19:36):
be interspersed throat to threat its most ubiquitous products, think
Gmail Maps and especially like you mentioned, ed search. It's
been experimenting with some features, but hasn't rolled anything out
really broadly yet. We'll get some more color there. And
of course, you know this isn't just about software. We're
expecting some updates on it's hardware line, it's tablets, it's smartphones,
(19:57):
and of course any updates to it Android fifteen operating system.
Speaker 2 (20:03):
I mean, the context with all of this is that
they seem to be behind the curve, even though for
many generative AI was only made possible because of the
research them by Google, but then they managed to rush
out send products there was a little of concern around
the image generation in particular with Gemini. How are we
seeing them try to write size the perception?
Speaker 8 (20:25):
Well, if you said it perfectly, Caroline, they were early pioneers.
They have some of the best and brightest talent in
artificial intelligence. But where they really fell behind is really
kind of creating this bigger, generative AI ecosystem that is
embedded across its products. It has an advantage in search,
as we all know, but we've seen Microsoft and Open
(20:47):
Eye really kind of product make it make its way
into products much quicker and really commercialize that technology in
a much more broader way. And so today we're really
going to be looking to learn how exactly is this
flowing through across the business, not just kind of one
off features here and there. It's also unveiling a new
(21:08):
open source it's a smaller model called Gemma, so it's
looking to really kind of catch up and offer a
more kind of broad array of models, just as we've
seen Open Eye.
Speaker 11 (21:20):
Do as well.
Speaker 4 (21:21):
Jackie, really quick, I don't want to put you on
the spot, but of all the announcements, what's the one
piece of AI technology you're actually using right now?
Speaker 3 (21:28):
Personally?
Speaker 8 (21:29):
I love how it you know, in Google Docs, it
makes my needing templates. I don't really have to worry
about kind of doing all the drudgery there. I don't
use it quite yet for work, but it's kind of
the you know, if I need to write up a
quick note, half the template is already there. It's predictive,
so it kind of knows what I'm looking to write
(21:51):
and it takes some of that boring aspect out of
my work there.
Speaker 2 (21:54):
I love that Jackie Devlo's ps on agnostic don't use
all of.
Speaker 3 (21:58):
The above and many but others available.
Speaker 2 (22:00):
Yeah, absolutely love how you're giving us the nuance of
how are you using it in real day life? Thank
you very much. Indeed, Jackie Davlosk welcome Actively made Technology.
And Caroline Hyde in New York.
Speaker 4 (22:16):
Elam Ed Ludlow in San Francisco. Let's get a quick
check on the market. So this is kind of where
we stand in the moment. We are basically treading water.
When it comes to the nads that one hundred, there
are as equal number of names in the green as
there are in the red. And then we look at
the Golden Dragon China Index. This is basically the US
listed shares of China's biggest technology companies.
Speaker 3 (22:39):
You have the earning story, which we're about to touch.
Speaker 4 (22:41):
On, and then you have the impact of Biden administration
tariffs on the automotive sector in China. Those are some
usisted names that also are impacted in terms of the specifics.
Spend a lot of the morning looking at Ali Barba
and Tencent. The stories are really clear. Ali Barbara pretty
slug single digit growth on its core e commerce business
(23:02):
and its cloud unit. Cloud adoption slow in China, but
Ai is there. And then ten Cent great strength in
video advertising, great strength in the we chat user base
in terms of the number of hours that are going on.
So one stop going lower in the US and another
stop going higher. Let's wrap it all up and bring
in Bloomberg's Henry Wren and Isabelle.
Speaker 3 (23:21):
Lee and isabel stop with you.
Speaker 4 (23:22):
I think that's the summary right when it comes to
this earnings in what I outlined, but start with Ali
Barbera and what they said.
Speaker 11 (23:30):
So this is really the tale of two cities. We
have ten Cent reporting a better than projected sixty two
percent surgeon earnings, but Ali Baba's profit plunge and the
fact that the two biggest internet bihimots and China reported
on the same day is a rarity and the fact
that they did just really highlighted the tale of two
fortunes for both. And yes, both reported better than expected
single digit revenue growth, but it's the profit performance where
(23:53):
they diverge, and investors are really closely looking at the
bottom line of these two companies because they're both really
seen as a barometer of Chinese health, especially China recovers
from this rocky COVID recovery, and of course we have
also that year's long big tech crackdown and get this,
neither company offered investors strong reassurances of the plight of
Chinese economy moving forward, So that's something investors are hanging on.
Speaker 3 (24:14):
We love how you give.
Speaker 2 (24:15):
Us the macro context. It's about, Henry, let's go micro
with you and let's go optimistic first. Why was Tencent
really managing to pull it out for the investor base today.
Speaker 10 (24:25):
Yeah, Tensen's profitability really shines out today's in today's results.
So basically the video streaming is huge positive, but also
in the meantime, the company is cutting hugely on costs.
Remember the company is booking on revenue growth of six
percent in the quarter, but its cost of revenue is
actually down eight percent from a year ago, and the
(24:47):
key to that is lower countent costs as far as
lower costs associated with crowd projects deployment, but also in
the meantime the company is cutting down other costs, for
example employee benefits based compensation, and that really stands out.
A key worry for Tencent in recent quarters has been
it's domestic gaming business, but it's also showing some signs
(25:10):
of green shoots as well. The companies say two of
its flagship games actually received positive gross received growth in March,
so that's a passive signal taken away from investors too.
Speaker 3 (25:22):
No I was interested now on the gaming sites.
Speaker 4 (25:24):
They were talking about, how like rather than have some
big standalone organic title, they would have the kind of
games coming where you can update them regularly. Both companies
or executives on both sides. Henry also had some basically
fighting talk saying that they were each the best at AI.
Did we learn anything new about either company's AI strategy?
Speaker 3 (25:44):
Yes.
Speaker 10 (25:45):
Indeed, for Ali Baba, for example, it's pretty confident that
AI world drive growth in this cloud business. The company said,
with its AIS models gaining steam in China, it's confident
that it will turbo charge cloud units growth. Remember it's
still pretty tepic growth in this quarter percent of revenue growth,
(26:05):
but it says it's confident that in the second half
of fiscal twenty five it can actually return back to
double digit growth for its cloud unit, which should be
a good news because cloud unit has always been seen
as a growth driver for Ali Baba and the for
the other side of Tensents. It's actually already bearing fruit.
Remember that we mentioned about the strong advertising momentum for
(26:29):
Tensen's video streaming business. Remember that the company is actually
already deploying many of its AI organism in recommending videos
for its users, so it has already been seeing some
of the early signs of benefits.
Speaker 2 (26:46):
It's a well, push us forward a little bit here,
because you're giving us the sort of context of the
consumer as well. We've got JD dot Com coming later.
Speaker 3 (26:55):
In the week.
Speaker 2 (26:56):
I mean, they aren't the only company by do as well.
Are we going to get any kind on just how
resilient a Chinese consumer is right now?
Speaker 11 (27:03):
I think we will, because Chinese consumers still remain really cautious.
I mean they're dealing with a property meltdown, they're dealing
with persistent use employment, and the Chinese economy is still
slipping deeper and deeper into deflation. But to your point,
it is a big month for Chinese company. So we
have Baidujd, dot com CLM, net Ease, and Chinese Tech
Company is actually surprised to be upside for the last
eight quarters. So this is kind of good news. It
(27:25):
means that you know, recovery is there, slowly but surely.
But the money managers have been talking to look at
China two ways. It's either too cheap that's why they
want to go in, or it's either it's too cheap
for a reason. So there are really like diverging views
among them. But I think this is really going to
be a big tell moving forward this month as well.
Speaker 2 (27:45):
Me we brace ourselves, so the feather un needs to come.
Henry Wren, great wrap up on the micro of all
that we've just digested. Meanwhile, let's turn our attention to
Washington and US China relationships from a geopolitical perspective. Now,
President Biden hiking those tariffs as we expected on a
wide range Chinese impults, including semiconductors, batteries, sona cells, critical
minerals from all Let's bring in news Kaye lines in Washington,
(28:07):
a trend started by Trump continued by the current administration.
But there is nuance to how they're doing this, Kailey.
Speaker 12 (28:15):
There is, Caroline. Largely the Trump era tariffs have remained
intact under this administration, and in fact, no tariffs are
actually being reduced today. There are just some new ones
being implemented in others being raised. All said, this will
effect about eighteen billion dollars of Chinese imports into the US.
All of this will take effect between this year and
twenty twenty five. As you say, a number of key
industries are in focus here. Semiconductors will see the tariff
(28:37):
rate go from twenty five percent to fifty percent by
twenty twenty five. That's aimed specifically, it's so called legacy chips.
Speaker 3 (28:44):
You'll also see.
Speaker 12 (28:44):
Critical mineral tariffs a new tariff of twenty five percent
this year. That is one area in which this could
actually be more disruptive than just symbolic, considering the US
is still largely dependent on China for things like critical
minerals than others we saw forecasts and voting solar cells
and batteries, specifically lithium ion batteries. We'll see that tariff
rate go higher. It's going to jump to about twenty
(29:06):
five percent. Cell tariffs will jump from twenty five percent
to fifty percent. And then the big quadrupling is in
Chinese made electric vehicles that goes all the way up
to one hundred and two and a half percent. But
that is one area in which largely it is symbolic
as because of existing tariffs on Chinese evs already, they
weren't really looking at the US consumer market to get
(29:27):
that demand. What this really is about, though, is making
sure that no further supply necessarily could come dumping into
the US. Given the concerns the administration has about Chinese
over capacity, They really with these tariffs are trying to
aim at shoring up US production in these critical areas.
And we'll see what effect this may have in return
(29:47):
on the US if there's any retaliatory moves that could
potentially come to China, which said today it's resolutely opposed
to these new measures.
Speaker 4 (29:55):
We discussed on the show yesterday and I checked there
are just full China made EV you can buy in
this country. So, as you point out, it's like more
of a deterrent for more models to come. There's a
balancing act here so that everyone doesn't get hurt, you know.
Amory Horden Bloomberg's Amory spoke to the Treasury Secretary, and
I think we're getting a sense here that there is
(30:15):
a clear message from the administration, but they're basically saying,
we're just being fair with what China's doing.
Speaker 12 (30:21):
Yeah, Essentially, they want to make sure that the US
is competitive, noting that China has some uncompetitive or unfair practices,
including with things like subsidies. This is something that we
heard the Treasury Secretary talking about. However, when Amory asked
heree yesterday if the US is looking for another outright
trade war with China, the Treasury Secretary didn't seem to
want to confirm that, because they are trying to walk
this very delicate line here where they don't want to
(30:42):
have blowback on US consumers. That is perhaps why, as well,
you are seeing this more calibrated targeting of certain areas
coming from the Biden administration in this section three oh
one review, rather than something like the blanket sixty percent.
HERI IFFs that Donald Trump says he would look to
do on all Chinese imports in a second administration should
he win the White House in November, because there is
(31:02):
a concern as well about the inflationary effect that this
could have here at home. Obviously, while you would like
to say that this hurts China, its costs that are
paid by importers that could then get passed on to
the end consumer could result in higher costs for the
American people at a time when this administration is not
only struggling geopolitically to navigate its relationship with China and
make sure it's competitive but still cooperative, but also here
(31:24):
at home as they're seeking reelection, really struggling with an
economy and an inflation outlook that many Americans are unhappy with.
Speaker 3 (31:30):
Investigated lines out of Washington, d C. Thank you very much.
Speaker 4 (31:33):
All right, Coming up on Bloomberg Technology, we're going to
be joined by Craft co founder and partner David.
Speaker 3 (31:39):
Sachs on a brand new AI.
Speaker 4 (31:41):
Communication tool and company that he's leading. That conversation coming
out and stay with us because we'll be right back.
This is Bloomberg Technology, a work chat for the AI era.
(32:06):
It's called Glue, and it's a new AI native communication
platform going public, coming out of Stealth today after six
months of private beta.
Speaker 3 (32:14):
The founders say.
Speaker 4 (32:15):
Glue takes the best of both worlds from Chat, GPT
and Slack, and it was built for the way people
now collaborate, both with colleagues and with their AI assistance.
Speaker 3 (32:24):
Let's bring in Craft partner.
Speaker 4 (32:26):
And Glue co founder and chairman de like to say
that David Sachs is whe us here on Bloomberg Technology. David,
if it's OK, I actually just want to start with
the technology itself. You know, Glue's built to support both
GBT four and Claude three, and I just wondered if
you talk us through the approach you took in building
it right.
Speaker 1 (32:44):
Well, we want to be agnostic.
Speaker 13 (32:46):
We want to work with really all the major models,
and we're starting with Chat GBT and we're starting with Claude.
And by the way, we're using the latest version of
Chat GPT, Chat GBT four Army that they just launched yesterday,
and it is pretty awesome. The performances terrific. But stepping
back a second, what we're trying to do with Glue
AI is create the first AI native chat app, and
(33:09):
what it does is it creates one place where you
can have your chats with AI and your chats with
humans with your team, because we think people, we think
employees want to do that in one place instead of going.
Speaker 1 (33:20):
To two separate apps.
Speaker 13 (33:22):
The problem with chat GPT, as awesome as it is,
is that it's not a multiplayer experience. There's no way
to bring your coworkers into the chat with you. And
the problem with Slack is really that the channels get
in the way, and we hear from lots of teams
that they have channel fatigue and really want this new
threaded conversation model without all the channels.
Speaker 1 (33:45):
So that's what we've done with Glue.
Speaker 4 (33:46):
David, we know you as a bench capus right, a
long time investor in technology companies. What was the need
that you identified or the gap in the marketplace that
you wanted to start and build a company yourself and
the tool rather than them back, I guess, or invest
in another player.
Speaker 13 (34:05):
Well, you know, before becoming an investor and before becoming
a podcaster, I actually was an Internet product eye. I
was a head of product at PayPal, and then I
created a company called yamor back in two thousand and eight,
which was the first or one of the first enterprise
messaging platforms, and back then it was based on the
idea of feeds, which thanks to social networking, were kind
(34:25):
of the conversation paradigm. Then you know, the next decade
we had Slack, which is based on IOC and channels,
and now we have a new conversation paradigm that's based
on AI. It's based on chat GPT. I think every
decade you get a new paradigm like this and you
need a new communication tool, and that's what we've built
with Glue. I just didn't see that tool on the
(34:46):
marketplace that was reacting fast enough to this disruption, and
so I partnered with Evan Owen, who's my co founder
and CEO, in order to create in order to create Clue.
Speaker 2 (34:56):
Now, David, I know that you like to start your
pictures with a demo, So let's demo in a little bit.
I want to look at how it looks, it feels,
and how it's going to interact. And as the founder,
as well as putting the money into this, are you
not worried about, well, the competition that's out there because
everyone's getting into enterprise generator AI.
Speaker 1 (35:15):
For sure.
Speaker 13 (35:15):
I mean right now every enterprise SaaS app is trying
to figure out how to incorporate AI into their product roadmap.
Speaker 1 (35:23):
There's no question about that.
Speaker 13 (35:24):
But I think there's still a pretty big debate about
where AI is going to live in the enterprise. Where
are you going to go to ask those sort of
broad based questions about, for example, who in your enterprise
has the right expertise, who should be talking to Are
those sort of core enterprise collaboration use cases. And our
view on it is that AI should live in the
(35:45):
chat because again, you don't want to have one application
for your AI chats and one application for human chats.
Speaker 1 (35:50):
It all belongs together and the AI.
Speaker 13 (35:53):
What we found is that when you do incorporate the
AI as a full fledged participant into the chat, it's
able to use all of the live chat history as context,
and so your work chat app is able to give
you answers that regular chat GPT could not. We've had
really staggering results at craft Ventures using this product. Internally,
(36:15):
I've asked the AI to write Investment my most for
me summarize the arguments for and against investing in a company.
It's done an unbelievable a job just assembling those arguments
based on the chat history. I've asked it who is
contributing the most to deal flow at craft, and the
AI is able to tell me. It's really amazing the
answers you can get when you give AI access to
your chat history.
Speaker 2 (36:36):
Amazing answers built by in many ways, amazing large language
models that underpin it. I'm interested in you having sold
Yamma to Microsoft previously, having understood the way the M
and A works, and the company that looks for exits
is now seeing all these interesting partnerships, shall we call
them being done, whether it's Aquahy's, whether it is opening
Timmy when Microsoft and throp Aic of course going in
(36:59):
with Amazon and I'm Google at the same time. How
do you judge that as a VC.
Speaker 13 (37:03):
Well, there's innovation happening at every level of the stack.
I mean you're seeing tremendous innovation at the foundation model layer.
You've got open AI, You've got Anthropic like you've mentioned,
you've got x Ai now launching that we just invested in.
Then you've got innovation happening at the application layer of
the stack, where applications are able to take advantage of
(37:25):
all the new capabilities created by these lllms, And if
you're positioned correctly in the application layer, you don't want
to compete against the models.
Speaker 1 (37:33):
You want to harness them.
Speaker 13 (37:35):
So as the models get better and better, your application
gets better and better. And that's what we've seen with
Glue is that with each new release of Chat, GPT
or these other models that we've incorporated, like Flaud, the
Glue Chat tool just gets better and better.
Speaker 1 (37:48):
So we're going to ride that wave.
Speaker 13 (37:50):
As the underlying model innovation continues and the models get
better and better, the features of our application will get
better and better.
Speaker 1 (37:57):
And that's how you want to position yourself.
Speaker 4 (38:00):
Tru David, you had Sam Outman on the All Limpod
last week, and I think on social media there was
some debate which you participated in, about whether he'd said
anything new. But go to yesterday's presentation from open AI.
How much of it then surprised you based on the
conversation you'd had last week.
Speaker 13 (38:17):
Well, in retrospect, he gave us a bunch of hints
last week, so I was I shouldn't have I was
being a little bit uncharitable, but really I wasn't criticizing Sam,
I was just trying to ratio Jason, But yeah, no,
Sam gave us a bunch of hints last week that
now make a lot more sense in the light of
chat gpto yesterday, which really was an impressive demo, and
(38:39):
like I said, we've already incorporated it into Glue, and
I can tell you the performance of it is way
better than GPT four Turbo. So kudos to the open
Ai team. They've really done a great job with that.
Speaker 4 (38:50):
David, quick question, just thinking about Craft's portfolio. Did you
try to get into the Xai round.
Speaker 1 (38:57):
Yeah, we did, We've participated in that.
Speaker 2 (38:59):
And from the follow will you integrate Xai into Glue
and how are you thinking about whether winner takes all
or whether there will be, of course, well a commoditized
version of large language models here.
Speaker 13 (39:10):
Yeah, I mean I expect that we'll integrate with all
the major llms. Our view on it is that we're agnostic.
We want to give our users the choice of which
LM to use, and in fact, we're going to plug
into all the major lms and then we can actually
make the choice for them in terms of which model
to use based on the query that they're trying to ask,
(39:32):
So we actually think that the more models the better.
Speaker 2 (39:35):
Do you think Xai could have got a large evaluation?
Speaker 13 (39:40):
You know, I'm going to let them announce their own round.
I don't want to announce their round for them. But
if the question is whether we participated.
Speaker 1 (39:47):
We did.
Speaker 3 (39:49):
David.
Speaker 4 (39:49):
Look, it's an election year, presidential election year. You talks
about your background in technology and being a tech investor,
and you've been vocal on a political front. Will you
be more active this year in this election cycle?
Speaker 13 (40:03):
Well, you know, we talk about politics. Is one of
the topics on the All In pod. We discussed current events,
business markets, politics, foreign policy, events all over the world,
and so obviously the election is unavoidable, and it's no
secret that I've been a critic of Biden. So I
may get more involved in the sense of maybe hosting events,
(40:24):
maybe contributing, but it's really it's not It's certainly not
the main thing I do. Let's just put it that way.
It's the way that you get involved in the political
process is that you typically host events and you get
to maybe meet the candidates that way, and that's something
we've tried to do, me and my co host and
the all in pod. We've done that now for Robert F.
(40:46):
Kennedy Junior. We did that for a Vake Gramaswami. We
had them on the pod and that we did events
for them. And we've extended an offer to the other
major candidates and hope that they accept.
Speaker 2 (40:59):
Well, it's not the only thing you do. It's on
top of the pod, it's on top of the investing
and on top of founding new businesses as well. Come back,
tell us how it's going. David Sackscraft partner AT and
Glue chairman. Thank you. Let's get to the return and
the mean stocks. GameStop AMC surging that retail frenzy or
(41:23):
is it a retail frenzy that's actually driving this whatever
it's happened, it was Roaring Kitty that seems to revive
the animal spirits. Whoomberg's belly Lipschaltz joins us for more
a nice sixty six percent higher on the day. I'm
not gonna ask you about fundamentals of the business or
the business model of selling real games and heart and
retail stores, but who is buying? Who is driving this higher?
Speaker 3 (41:43):
It seems like.
Speaker 6 (41:44):
This is fingerprints of Wall Street when We're looking at
some of the flow data across Fidelity, Interactive brokers, and
some of the other ways that we track what retail
is buying in as real time as possible. It doesn't
seem like they're actually buying GameStop. It seems like on
the whole net, sales across Fidelity's platform for GameStop outpacing
those to buy in GameStop, though they do seem to
be buying a bit more AMC relative to those cell orders.
(42:05):
But there's a lot to try to make of some
of the trends that we've been seeing. Again, GameStop has
a shot at getting back to those all time highs.
AMC is still down like ninety seven percent from those records.
Speaker 4 (42:16):
Bailey, do we have any more clarity on that social
media post post by Roaring Kitty?
Speaker 6 (42:21):
Yes or no? Now he's added more to it. He's
posted again today. I have no idea and what the
logic is. I've DMed him, Ryan Kitty, if you're watching this,
please DM me back, but no one knows anything, and
it's there's so much uncertainty around what he's doing and
what it could mean.
Speaker 2 (42:37):
I mean, he's going on because it was initially lifting
one of gamestop's own posts back from back in February.
But now it's just video after video. Go check it
out Bailly Lipschultz, He's across all of it. Meanwhile, that
does it for this edition of Blue Big Technology ED.
It was a busy one.
Speaker 3 (42:51):
Check out our podcast our pod.
Speaker 4 (42:53):
You can find the pod on Apple, Spotify, iHeart, and
the Bluebot platforms.
Speaker 3 (42:58):
We love the pod from San Francisco and New York.
This is Bloombay Technology
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