'Bloomberg Technology' Full Show (04/28/2023)
The heart where innovation, money and power collide. In Silicon Valley, NBA, this is Bloomberg Technology with Caroline Hyde and Ed Ludlow. I'm Caroline Hyde Pretty Maxwell's headquarters in New York and I'm at Ludlow in San Francisco. Big Friday. This is Bloomberg Technology. It is big coming up. Full coverage of all those tech earnings from Snapchat to Amazon to Pinterest. We have got you covered. And sticking with dining is going to
bring you my interview with Intel CEO Pat Helsing. The company projecting a return to free cash flow. Plus, how A.I. is going to impact hiring and managing in the workplace. We'll discuss the CEO of Lettuce, Jack Altman. But first, this privately, V.C. back companies to the public markets where we're a little bit more cautious around some of the big eco data. We've got the drops on the inflation
weeds ahead of the Fed next week. And look, inflation is still brisk here in the United States. It's still brisk over in Europe, but maybe trading down a little bit. We see the NASDAQ still managing to punch up three tenths of a cent, even though Amazon is that drag to yield, though. We're seeing two basis points lower.
In fact, we're seeing a buying into U.S. bonds today amid risk aversion. Perhaps that's around the banking sector. All eyes on federal public. I'm NIKKEI MSCI all country. Well, the next up, about half a percentage point.
Europe managed to just push on through towards the end of trading. That's clicking on a look at what's happening in the great big world. A crypto because we all seeing the dogecoin having a good set of five days.
We're up six percent. We're back at near that 13000 level. Lisbon, a lot of volatility along the way for Bitcoin, but it does feel as though that's still some sort of safe harbor on the day. Yeah, I'm still really focused on earning season. Take a look at Intel. We had to pay some of our earlier games.
A tough first quarter, to be honest. A trough on the top and bottom line. But the outlook for the second half of this year a bit more rosy. And analysts really buying into that. We will hear from the CEO CAC later in the show about what the green shoots saw that are giving the market confidence elsewhere. Social media a really big theme at this earnings season. SNAP usually reports earlier. It's a little bit later this quarter, but basically its first ever revenue decline. And you could see how that's weighing on
the shares biggest drop in around six months. Pinterest, another one where it's kind of failing to gain traction, particularly in the U.S. on the use grace perspective. And in this wall today, I were worried about visibility. How is this relevant anymore? We'll dig into that. And then Amazon down 4 percent. This is all about the cloud.
Sequentially into April from the first quarter, NWS top line growth slowing by around 500 basis points. This has been the cash cow for Amazon, but it hasn't come to the rescue. This quarter actually cost discipline on the top and bottom line beat in the course had gone. The strength of the e-commerce business definitely dead. The cloud a little more worrying. Caroline Connan.
Yeah. And as you say, that has been such an important growth driver. Let's talk about it even more now. We've got Pat Few, president and co-founder of Call, someone who used to work over at Amazon. That's a buttock. You were previously, of course, spending a decade at the company.
You helped launch the CPG, the health beauty retail business. You understand the ad product, but focus on the cloud for a minute. In particular, how worrying is this cash cow is starting to slow out in terms of growth? Yeah, there's well, there's a couple things. First of all, thanks for having me. I'm glad to be back. But, you know, 16 percent growth in AWP
is still not anything to sneeze about. But here's a couple worrying things. I think one is to be ISE has been the leader. They had 40 percent growth a year ago. Now it's slowing. Their competitors are catching up. So Azure and Google Cloud both grew
faster. Another thing that I think there are two other things are a little bit concerning. One is it is impacted by macro economics. Amazon talked about how customers of all sizes are looking to optimize their cost savings. And that is where we're seeing some some
slowing growth. And then lastly is on the EAI front. So one of the things you chat GBP opening I want there, the market leader in Microsoft, Azure, has a direct integration with them. Yeah. So that that's going to be one challenge for them. Amazon did announce bedrock and their solution for Microsoft's co-pilot called CAC Whisper.
So I think the question is going to be how much adoption can they get of their integrations with ADA? Yes. Given the fact that Chuck. Yes, he is leader. You know, they're offering something broad, right, foundational models for those that when to use third party or Titan within bedrock. One thing that really caught my eye, the impact of machine learning on advertising. Take a look at this chart.
This shows ad growth across the advertising based companies and actually Amazon comes top of the pile and it's a real bright spot. What's your read into that? Yeah, definitely. I mean, we. My company PAC, you sits on top of Amazon's API ISE for ads and it's been a great business for us. Advertising's highly profitable, actually. This week we we looked at earnings across Meta Google SNAP and Amazon was way better than, you know, 20 percent growth, whereas the others did not do as well. There is an interesting new partnership
that Amazon announced, which is with Pinterest. Pinterest has been struggling a little bit. They want to monetize their pins. And so this is kind of a win for Amazon. This new partnership that will drive traffic to them. And then one of the other bright spots with Amazon is that they bring lots of it. Right. You know, they continue to add more placements.
They're pushing more towards upper funnel and streaming TV. There's a big opportunity on non endemic. So even, you know, cars that don't sell products on Amazon, you can leverage Amazon's order. Yes.
So there's just there's a lot of opportunity. Amazon has great space to grow on the advertising business. All right. About a pack for you. Thank you so much. The other name we're tracking, of course, Snapchat is set for the worst day in six months after posting its first ever revenue decline. Joining us now is Jasmine and Bag, insider intelligence principle analyst. That was a phrase that jumped out
continued disruption in demand in advertising. What is that? Well, I think overall, looking at snaps, revenue decline, what we see is that it has really deep challenges within its ad business. So, yes, there was a disruption in demand in the sense that it is revamping its ad platform.
It is unifying its ad formats to make them easier for users. It's investing in machine learning. And all of this, of course, is to provide more ROIC for advertisers. And SAP is right. You know, these things take time to ramp up and really impact its bottom line. But for me, you know, this issue really runs deeper.
And that's that snap is a much smaller player than, say, Facebook or Instagram. And we saw Metta come in, you know, with a 3 percent revenue growth in Q1. And, you know, Snapchat also isn't a textbook ad supported platform the way that those two players are. It's been very clear about this itself. It is a messaging app and its users primarily use it for visual messaging. And messaging apps are notoriously difficult to monetize.
Three hundred eighty three million users daily is nothing to be said that though, overall. How do they end up trying to set themselves apart from not being well? An also ran but a different rod offering something different, particularly when it comes to VR. Yeah. And that's something that SNAP has been
trying to do from the very beginning, you know, they position themselves as that as Jonesy as a Jonesy platform, calling it the Snapchat generation. And it's true. It really does have a strong hold on, Jonesy, where it has struggled. Is being able to attract audiences outside of Jonesy, older audiences in particular. And a lot of the things that they're doing, particularly around A are really do appeal to its audience. I would say that, you know, convincing
advertisers that a R in advertising is valuable, especially in this economic environment, has been difficult. But it's also working towards bringing a R off platform. It has a new RSS, which is its augmented reality enterprise service division, where it's incorporating its A.R. technology into brand apps and websites, as well as bringing some of that technology eventually in store. So this, of course, is, you know, part
of it diversifying its revenue streams and being able to monetize a R outside of its core Snapchat platform. What about the monetization, Jasmine? Great to have some time with you, Jasmine and of insider intelligence from SNAP to Pinterest. That's how I would look at how those shares perform, because we know that it's under pressure. We know that it's more perhaps about the lack of cost cutting going on in that particular business right now. Tom Forte, D.A.
Davidson, senior research analyst, has a neutral rating on the stock, I understand, and he's sticking with a twenty two dollar price target, even though we're still seeing sort of the pain trade that is the restructuring going on. Sure. So I think I lowered my price target by a dollar to twenty two, and I think the good news is that Pinterest has made strides on engagement. They found an interesting way to solve their monetization in e-commerce by partnering with Amazon. The bad news and what I think is weighing on the shares. In addition, your comments on cost pressure is that their sales expectations for the June quarter suggest they were lower than expected. So the digital ad market, when you look
at Snapchat, when you look at Pinterest, it's still challenging out there. Hey, Tom, when we look at Pinterest, when you think video and the emphasis from its pages, then you think about artificial intelligence. There seems to be a narrative in the market that Pinterest is at risk of being left behind. Do you share that concern? I do not to the extent that if you say the interests functionality is as a visual social network, an excellent place to view, for example, kitchens, if you're thinking about doing a kitchen remodel or a peril, if you're thinking about buying a new clothes, I do think that they leverage artificial intelligence to the extent that they use artificial intelligence to find more things that you might be interested in based on what you've looked at so far. So I'm not overly concerned about it being left. I know what therefore, can Pinterest run home to the investor base right now about how close it is to actual people making investment purchase decisions? How can they continue to ultimately be a need to have many of these companies looking to advertise a little bit closer? So here's where Amazon comes in from an advertising standpoint. So to the extent that they're going to
work with Amazon to improve their advertising in e-commerce, make it easier for consumers to find things on Pinterest, to find ads on Pinterest that click on those ads and buy them with Amazon. I think that's going to help Pinterest over the next 12 to 18 months. And the challenge for everyone not named metal platforms is monetization. Pinterest has a large user base, 493 million monthly active users, but they need to prove their monetization. And I think over time, the ad advertising effort with Amazon can help. Tom Forte.
David, D.A. Davidson, thank you so much, Caroline Proof. Sprint finished the marathon week. Stay with us. We'll be talking to Pinterest CEO Bill already, 4:00 p.m. Eastern, 1:00 p.m. Pacific. You don't want to miss it.
But coming up next, we're also going to continue our conversation around earnings and bringing my interview with Intel CEO Pat CAC. They just keep on coming. This is Bloomberg. Intel shares pushing higher off the chip maker projected a return to free cash flow in the second half of the year, with analysts saying the worst now may be over for the company. Moments ago, I sat down with Intel CEO Pat GAO saying I have listen. The second half in our industry is
typically stronger than the first half, and we expect that to be the case. Second, you know, a lot of inventory adjustments are occurring in the first half of the year and particularly we see those finished in the client, the P.C. industry. But we're also seeing progress through
our networking and data center and cloud business as well. So improving inventory position and that's very typical of the industry. You go through a sharp decline, you have inventory, a lot of fixed costs and then you gradually work through that. So we see that as the second factor. But the third one is an improving product position that improves our market share overall. And that I think in particular your
datacenter business in particular, we've seen Q1 as a turning point where a stronger product line, the market is looking at what we're saying for our process and product and saying, boy, there, that's a little bit better than we were expecting. So seeing some of those positive green shoots and maybe finally, you know, at least parts of the world. China clearly is showing some economic strength as well. So hopefully some economic green shoots in the second half as well.
The turning point idea is really interesting, there's a number of analysts that say Intel has hit its trough essentially when they look at margins and top line growth. Is Intel in its trough coming out of its trough? To your mind? Well, you know, we guided Q2 better than Q1 and we expect second half to be stronger than that. So clearly from a top line growth perspective, but also from a margin perspective, you know, we expect that we're similar margins in Q2, but improving as we go through the years. We get out of the thirties and back into comfortably into the 40s as we go through the year. So an improving position on margins and
an improving position. Then on the bottom line as we go through the year. So clearly, you know, we're seeing that momentum. But I'd also say there's a lot of
turbulence, macroeconomic uncertainty. So it also requires a lot of execution and financial discipline, which we demonstrated in Q1. So overall, I think the company is doing what I've asked them to do to be very thoughtful with how we spend, but execute, execute, execute product process, new areas like foundry, all of those gaining momentum as we go through the year. Intel CEO Pat Gale saying that, Caroline. Really fascinating conversation overall
and the focus on chips, which of course, we know have been a bit of a laggard over the course of the week. We've got to dig in a little bit more about Intel's earnings in the chip sector. More broadly, Michael Bloomberg intelligence is mainly saying what do you make of some studying is the worst behind us. To that extent. I think it was interesting that they
said that the P.C. market is stabilizing and they called for two hundred seventy billion units for the year. My sense is, you know, the inventory situation is still not clear in terms of, you know, the channel inventory clearing. They sounded a lot more optimistic. So you have to take the word because
Intel is the largest player in look. On the client side, they have less of competitive issues than on the data center side, where we know that demand is high for high performance computing chips. We have seen expectations for in media. So clearly Intel has more secular, had been a deal bid on the data center side. The client side will be cyclical, whether it comes back in the second half or it takes two or three more quarters, I think we still have to figure that far down. Yeah, I think he said he was confident the inventory would be corrected, it would be completed, though he didn't say when, you know, definitively past trying to sell this story, right. Mandate that Intel com returns being a
technological leader. Do you see evidence that he is managing that process? Well, while also sort of catching up on the day to day of running a chip company. I mean, look, turnaround stories in tech are tough. And look, he has a very tough thing, and this quarter Intel actually had negative nine billion dollars in free cash flow. So that just goes to show what he is
dealing with. In terms of, you know, the five aspect of it catching up to TSMC and really kind of dealing with the data center headwinds that I alluded to before, a lot I think depends on the government and the CHIPS Act because that's where things can be supported, you know, in terms of driving more onshore manufacturing of chips. And that's where the free cash flow headwinds can be eased. And, you know, it can be more kind of dealt with down the line as opposed to, you know, convincing investors that Intel won't keep losing money for the next two 3 years. Caroline, as you can imagine, I couldn't
resist the temptation and I asked. We asked a question about artificial intelligence. Yeah, and it seems as though that's got to be an area they focus on. I mean, Amanda, your point that we're looking at Amazon developing chips to help with that sort of capacity that computer needed with general today? I. Is this something that Intel just has to be a part of and all day a significant part of it? And that's the challenge, right? So the hyper schoolers all want to do their own chips.
I mean, Google is doing their own cheap use Amazon, but grab a tide. And Microsoft has. I think there have been rumors that they are doing their own chips, that that's a challenge for somebody like Intel, which is the leading market share leader when it comes to, you know, the data center chips. And now they are partnering with ARM.
I mean, we know Intel is 86 and so it's not very clear whether they have that, you know, technology parity that TSMC now to really get more enterprises, at least on in terms of joining the ISE side of things. And in video at the same time is running the way that the market is doing well. So clearly a lot of competitive pressure and there aren't enough proof points in terms of, you know, manufacturing coming back. That's where the government's support is key.
And yes, they have to start showing that, in fact, manufacturing. So take us to that. The bait you laid and what did he say to you? ISE so many.
It was really interesting because he was pretty committed to competing with video to those higher, higher, higher end GP use for the deep learning part. But really way Intel's looking, Mandy. His inference, right. They have a range of Su Keenan GP products that they think can compete that just some. What you said about the CHIPS Act, Pat seems confident that those dollars flow through this year. How crucial is it to them to get that public sector money to drive that that vision that has. Yeah, look, I think that is key because the more these fabs are under utilized, it's going to be a drag on the gross margin. And we've seen that 15 percentage points
in gross margin compression in the last two, three quarters. Guess what? The more lower utilization for these fabs, it's going to continue to pressure that. So if he gets that funding and if he gets something tangible from the chips, I think that float certainly is that pressure. And also the insurance market is sort of running away from them because Apple does its own chips for its pieces. And Max DAX, a lot of insurance will
also happen. So Intel really wants to make sure that, you know, the X 86 ecosystem, the Windows ecosystem stays with that on the client side. Always great to have some time, Steve from Mike Intelligence. The one and only Matt Miller saying one
of the busiest people in this building. Meanwhile, coming up, we're going to talk about that bitcoin scam, a moon landing craft. So much more coming up until contact. That's next.
This is Mike. Time to talking tech. A US judge ordered a South African executive to pay more than three point four billion dollars in restitution and fines for a fraud scheme involving Bitcoin, which impacted more than 23000 people in the US. This is the highest ever civil monetary
penalty in any CFTC case. I space's moon lander crash is now wiped out about six hundred million dollars. Almost half of the Tokyo based startups value, with shares slumping for a third straight session and Sony casting doubt on its PlayStation momentum. The company offered a pretty conservative profit outlook after warning about the impact of the global consumer spending slump on its electronics and entertainment business.
And finally, Bain Capital has built a stake in software e.g. raising the prospect of a takeover battle for the German company. That, according to sources, the firm's eyeing a potential merger with its own portfolio firm, Rocket Software. Now, coming up, how A.I. is going to impact hiring and managing in the workplace.
We'll discuss all of that and more with Lattice CEO Jack Altman. That's next. Caroline. Yep. Recognizable surname.
Plus, later, shares of First Republic Bank. We've got to talk about it. AD plunging again to a record low, triggering multiple volatility related halts on the day. Is this news? A potential rescue plans are swirling. We're thinking about how the troubled lender might be rescued. FDIC government coming into play. It looks as though the banks have shied
away from this deal. Yeah, I think the question that we have is right now, after several days of drama and reporting, why have we not heard from anyone? There's not a lot coming out of the bank or from the government. I think that's a really big question for investors. You gotta remember, it's pretty silent over at Silicon Valley banks as well. But it is important that this one's not in need, seemingly not nearly as worrying from a systemic perspective here. This seems to be where they went too long into really outsized mortgages to the wealthy, particularly over where you sit. And many of those sort of big
institution names that stepped in and stemmed the gaps. They also worried about what's going on. Luckily, Bloomberg Sonali Basak knows everything that's going on about every bank at every given time. Yeah. John? Well, this is a good piece out for the Bloomberg as well today, saying why it's not going to keep you up this weekend. From New York for San Francisco, bring back.
Welcome back to Bloomberg Technology, I'm Caroline Hyde in New York. And I'm Ed Ludlow in San Francisco. It's the final trading day Caroline Hyde of eight pro sites till I get some scores on the doors in terms of where we're at. NASDAQ One hundred out performance, right? We're up four and a half percent relative to sort of other specific areas in the technology space. The Philadelphia Semiconductor Index being one laggard.
You talked about earlier in the show. It's been a really interesting month because of the banking concerns that we've had. But then a really condensed period of earnings in the final sort of 10 days of April when it comes to the technology sector. And honestly, it's been a real mixed bag. I think you and I can talk about that on our Twitter spaces later on. Maggie CAC, NYSE Plus Index. You also have some of the U.S.
listed shares of Chinese tech companies sprinkled in there. Speaking of which, the NASDAQ Golden Dragon Index is a clear laggard in the month of April. And you and I have been talking about how geopolitical concerns have ramped up in that period between the U.S. and China in the moment during Friday's session. Cloud is a big concern. We've been talking about how Amazon is
down because of that commentary around the sequential decline in growth for AWB to take a look at CloudFlare. That is a big, big drop for that name. All cloud related. There are concerns about growth, concerns about structural issues. One name that we don't often cover, but that is a pretty steep drop. Talking of steep drops, let's get straight to it. We've been talking about the banking
sector because U.S. officials are reportedly in talks with government agencies to throw First Republic Bank a lifeline. Now, the San Francisco based lender has really struggled to navigate through the aftermath of failed Silicon Valley Bank and two other regional lenders in March. For more on this, we turn to Bloomberg News Wall Street reporter Sonali Basak, who has been, I'm sure, aware of all the volatility in the name, the pausing that we're seeing. What's the latest beyond that in the
center of a flurry of telephone calls as well? Remember, as we describe the situation, it is a live situation and can best be described as a frenzied last minute effort to save the bank. Now, whether it falls into FDIC receivership now, there is a sense of the last couple of days that this could continue to limp along as a bank with a clear hole in its balance sheet. However, at this point, remember, we have reported a few times now that some of the banks that were involved in the rescue actually even prefer an FDIC receivership in some manners here.
Now, remember, there's another thing about the FDIC receivership, the FDIC, the deposit fund, it's already taken a massive hit of more than 22 billion dollars here, tied to the rescue of two prior banks to fail banks at a Silicon Valley bank as well as signature bank. So this kind of a hole is a 30 billion dollar hole or. And then some. I mean, the exact amount is not quite understood, but it is a large one. So no matter what happens to this bank, it is a costly situation for the banks that are in and around the situation already. The government itself. And of course, for the shareholders that are remaining for FRC. I think the idea, Sonali, is that
investors is struggling to understand one of the many possible scenarios is most likely to happen this talk in the market that now a US takeover is the most likely outcome. Listen. And that's what I was trying to convey here. This is very much a search for things to come together here. Now, getting a consortium of people together is a difficult thing to do. And remember, we have reported multiple times here at as well that the government would need to be involved in such a manner and pony up a little bit here under the FDIC receivership plan. The issue here is, which is a more costly solution. The FDIC, as we've been saying, would
take another massive hit here if FDIC FRC were supposed to fall under receivership. So, yes, the market is trying to suss out to your point the most likely outcomes here. Again, this is not, as you cannot say, that this bank will necessarily fail. It's not to that point yet, but it is possible that it does get to that point in some scenario if they don't find a solution. All right. Glenn Beck, Sonali Basak and your weekend alongside mandate saying it VIX. You guys go and have some fun.
Let's pivot a little bit. Can a guy replace our jobs? That is a question Caroline and I've been asking quite a lot recently. The rise of Germany today, I may not expect to impact all jobs in the same way uniformly, but there's going to be an impact on hiring and managing in the workplace at large. That's according to the CEO of People
Management Software Lattice. Jack Altman is here with me now. How many times a day internally do you say the words artificial intelligence or are you already sick of it? Because actually, you've been doing it for a while. No. First of all, thanks for having me. I don't get sick of it.
I think it is like the most important topic in tech right now. I think there is still a lot to be understood, but I think we're already seeing a lot of ways in which A.I. is starting to impact companies, individuals, productivity. So I think finally, after many, many
years of people anticipating this with bated breath, we're we're here and we're seeing a lot of the impacts. So it's super exciting, not sick of it. This is really interesting example, Jack. You know, you had a billion dollar valuation, 20 21 raise new funds the beginning of the year, three billion dollar valuation.
But you're kind of a key example of where a tools can be applied in Enterprise and SAS. Why is that such a good marriage? So the way I've been thinking about large language models, which is sort of the thrust of what's been happening in the last couple of quarters, and I is kind of like what calculators did for math, I believe large language models are going to do in many ways for things like reading and writing. So they're going to make people much more readily able to digest and comprehend text and information. We're going to be able to help people
draft concepts like, for example, in the latest world where people are doing lots of writing around performance reviews or goals or feedback. There's a lot of ways in which I can help people get two good answers more quickly and get to good content more quickly. But I see this as boosters for people in the way that calculators did for math. I see that happening for reading and writing and so for companies like Lattice, but for tons of enterprise software, I think this is going to be one of the ways in which we see I really help people.
Jack Nicholas, your entire business is H.R. Tools, is efficiency is culture in many ways. And I know you personally had to navigate that in January.
Having to let go of people within your team and trying to think about how you can support them. Is ultimately this generative? I am I going to mean more people get let go because they can be replaced in some way. Sort of like you mentioned at the beginning, we're definitely going to see different industries and roles be impacted in different ways. But in my view, it's most likely that a ISE not going to reduce the demand for labor. I think it's going to increase demand. The demand for labor generally what we see when any asset in the economy becomes more productive is there is more demand for it. So if a software engineer becomes three
times more productive as a result all today ISE supporting them, more companies are going to want to hire that person because they're going to be able to produce so much more. So in my view, the let the lens should be that we're going to become so much more productive and therefore there's gonna be much more demand for labor from companies thinking about lenses and a ISE something that you'll doing. A lot of your brother is doing a lot of, of course, in many ways, some out men who I know you feel businesses with, live with. Privacy is is he's at the cutting edge
of where we think ethically generative A.I. can be built. Do you. Are you on the optimistic side? You. Are you thinking in general that we can harness the productivity? We're not going to have some of the worries about regulating this or that. It's developing just too swiftly for humans.
I am optimistic about it. I do tend to believe that it is going to be wildly exciting and positive for humanity. I think it is something that is extremely potent. And so I think it is really smart to be paying a lot of attention. I do think it's something that is that requires quite a bit of care and attention. But that's why I think having companies
with thoughtful leaders who want to really invest into a ISE safety and making sure that we're testing things before we release them to the world and that we're working hard on alignment, I think those things are critical. But the way I see it, this is got the potential to be one of the most amazing things for humanity. And so I think investing in it hopefully optimistically with a lot of conviction and desire to build that kind of world as it is the right mindset. But of course, being careful because this is such a potent technology. I think that really matters. Jack founders all across the country are considering how they can become relevant or not miss the opportunity to buy presents, and that's just one fact. I know you've been tweeting about things that founders have been getting wrong.
How hot is out there right now is really the question. You know, you raised more money at the start of the year at a significantly higher valuation at a time where others were doing the opposite down rounds. Yeah, I think it is a it is a challenging time for founders in some sense relative to the last couple of years. You know, separate from this whole I acceleration, which is incredibly exciting on a completely unrelated path. We've had this real economically challenging time for tech in specific. We've seen this happen.
As you know, you've covered extremely well. Tech stocks in the public markets have really suffered for a lot of reasons, and that's led to hard times for startups. And so you have two things going on here simultaneously, which is that the the world of investing and raising capital for startups has really changed. But we have this really exciting platform shift in new technology being developed around A.I. and we're seeing more and more startups be built with these concepts in mind. I don't think, you know, most startups should say A.I. is an entire concept for building a new
company. But any idea that you had two years ago, I think can now you can you can re ask the question in what ways is A.I. help us solve this problem for customers.
It's a it's sort of a misunderstanding of the moment to say, hey, I'm going to build A.I. and we'll see what happens. I think you still need to build companies rooted in solving real problems, real people. But A.I. is this technology that can really help in a lot of a surprisingly large number of cases. And let's talk about the problems that Lattice is solving. And it's trying to make people more efficient, particularly in working smoothly, that being more productive and ensuring that your workflow becomes one, that you get feedback more efficiently about people wanting that in the moment. You had five thousand customers. Is that still building in this environment? Yeah, I mean, I think what people want. There are things that individuals want
and that companies want. And I think there is a deep alignment when management has done really well. And so I think what individuals want is they want a sense of impact. They want to understand that their company and their manager cares about them.
They want to be part of a team doing something important and they want to know how they're going to be able to grow. What companies want is to build strong cultures of people who are going to be well-equipped to do great things and drive the business forward. And so I think what Lattice strives to be is this intersection of those where you find that individual and company alignment to such a degree where those things are incredibly in harmony. And so I think whether we are in these sort of boom times of 2021 or the new sort of paradigm of 2023, I think those principles hold no matter what. And so I think, you know, for four ladies, just finding the ways to do that for customers is is still the North Star. See, I've noticed. We thank him, Jack Altman. Appreciate the time.
E-mail coming out right now. We've got to talk more about A.I. and all sorts of matters. Wing venture capital is actually just been backing a new A.I. startup, putting such a New York based value to 750 million dollar s on that next. Does that mean that? We're just talking about generative A.I. and its impacts in the workplace, we've
been talking about generally they are in the arms race going on in tech week because at the core of earnings was artificial intelligence. Speaking of some of the big players, the reported numbers, we also audience Carreau, who's one for you. Who, to your mind, is made the most convincing case that they're leading in A.I.. Those answers speak for themselves. They do. Clearly, Microsoft with that tie up being integrating openly ISE Petey for the fact that they're managing to brag ad about a quadrupling an app downloads they've had. Clearly Satya Nadella has stolen the
march on this one. I mean, what was it? The overall, though, more than 200 times A.I. was mentioned in these earnings calls this week alone. So they're all trying to stay really still a little bit the limelight.
Metro, I think, did a pretty good job on it, too. Yeah, it did. And I did account on the blogs of how many times a I was mentioned in each earnings press release because that's the kind of guy an Amazon is going to feel aggrieved by these results. They will come back to that. So speaking of Bay I Pine Cone, a
startup whose platform supports a ISE software, just raised one hundred million dollars in a funding round that values the company at around 750 million dollars. The round led by Andreessen Horowitz with participation from existing investors Menlo Ventures and Wynn Venture Capital Sites, bring him wing venture partner Jake Flemming back for more. The round, the timing, the valuation, explain, you know, your rationale behind getting involved.
SHAW Well, thank you for having me on the show. We've been involved with this company for a long time, certainly before the rapid adoption we've seen as of late, and it fundamentally has to do with the types of things that you need for machine learning. Most relational database is most data warehouses.
They need just data that most people understand numbers, text, things like this. Machine learning algorithms operate on vectors, embedding ISE. This is a different type of data that needs a different type of database. And so if you're building a generative
A.I. startup or a generator, the AI application and you want to marry that with your own company's data, or if you want to remember things from one, one question to the next. You need a vector database like income. And so with the rise of all these
generative A.I. applications, we're seeing more and more people adopt income. Franklin is still a really early company. No public market metric is going to say,
you know, justify this valuation. This is a valuation that's based off of the potential if this is the database for a AI. That's a tremendous opportunity going forward. New York based company, Jake, what's really interesting about your background and the fact that you've been investing these sorts of companies for a while now, including Pine Cone, is you're gonna have an expertise about how you operationalize A.I. And this is kind of at the core of all of our conversations. I was trying to work out where of the stock is the most value to be had you about infrastructure, you about big companies applying I. Why do you lie in terms of where the
most disruption will be? Yeah. I mean, what we invest in early stage companies and so we're certainly believers that they're going to have an outsized portion of the returns. But we invest up and down the stack. We've made investments in semiconductor companies and certainly the first group of companies are the core infrastructure. Then you see the cloud vendors that are making money hosting some of these foundation in large language models and the limit. A lot of these things are going to be
new pieces of infrastructure. And just the way we turn to the cloud vendors you mentioned, we're going to turn to these A.I. Foundation model vendors for some of that technology and some of them are partnering up. But we're most excited about the applications on top because they'll be a few winners in each of those lower levels, but they'll be hundreds, if not thousands of opportunities to build interesting applications powered by. Jake, I'm hearing a lot of companies a similar size to Pine Cone trying to get rounds done, you know, early through growth stage. How wary are you all of open night?
Because Open A.I. also has a small fund that it's it's investing across startups in A.I. and those that is deploying its own technology. Yeah, well, I would say we're not worried at all about open A.I. as a source of venture capital. There's there's lots and lots of dollars and certainly open A.I.
has a bunch of things that it can bring to bear. But we work with companies that the really early stages on that journey from zero to product market fit, which is a really hands on endeavor that takes a lot of time and energy. And I think there's a role for people that have been doing that for a long time in terms of opening I as a competitor. Absolutely. You know, as a competitor, it's something to watch. But it's just like the cloud vendor landscape.
We don't think it's gonna be a winner take all. We do think it's going to settle into a small number of larger foundation moderate players and we're going to use them as infrastructure. So there are building blocks. They're an enabler. Yes. Someone who's had leadership roles at Splunk Cloud RSA got a lot of experience and some software to the journey.
We thank you so much. Venture capital partner Jake Fleming. Great to have you from New York for San Francisco. Mike.
From CAC live stream to having influences belt out the hottest viral song on a short YouTube, it seems to always be looking for new and innovative ways to bring music to the masses. Despite some pretty tough competition competition in the digital space. Neil Cohen, YouTube's global head of music, said to us that if we're a global platform and we're focused on our mission is give everybody a voice and show them the world. And boy of we've done that. We have gone from three stages where we livestream to six stages. We've introduced shorts is a really fun way for the kids to suggest the their favorite artist to.
Do some of their songs that they want, and so they're influencing the set. They are able to be and create lightweight short form video to explain to the rest of the world that they were there. They were enjoying the experience, whether they were at Coachella or experiencing from their living room. We introduced
for this. It's actually the second tier where shopping has been an integral part of the experience, where kids are able to buy merchandise and, you know, rock their T-shirts, that they were there, that they experienced it. And of course, the production has gotten so much better. And we introduced live chats. And and so there's a lot of work that goes into it, but it's been incredibly fun and enjoyable. Tell us about the international central space was interesting about the lineup of Coachella.
The CIA was. Yes. Whether the big a math analysis. But I'm also thinking back pain from thinking by Bonnie. These are truly international stars. So how much was the viewership coming international? Over 65 percent of viewership came from outside of America.
And when the fans are able to experience Nigerian burner boy curry in black pink and I don't know if you saw, but Rosalia shut the place down. She's from Spain and was one of the most moving performances. And we had the first Punjabi artist perform. And they're celebrating in India the fact that they have an Indian Punjabi artist on Coachella and they're just fabulous to see. Leo Cohen, the global head of music at YouTube now, Ed, but he's sort of like the man almost that helped drive the birth of hip hop.
He was that right? An unsigned Run DMC. He can see round corners. What's interesting, he's pretty optimistic about a ISE impact on music. Yeah.
You and I grew up in the MTV era, right? Video and music. How do you push it forward? It's so fascinating. Yeah. His artists there seem to be worried
about artificial intelligence eating their lunch for now. That does it for this edition of Bloomberg Technology at such a huge week. So much recaps. Don't forget the podcast. Apple, Spotify. I ha back. Join us on Twitter spaces right now on
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