Bitcoin Rally, Spotify Layoffs | Bloomberg Technology
ANNOUNCER: THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. ♪ CAROLINE: I'M CAROLINE HYDE. ED: THIS IS BLOOMBERG TECHNOLOGY. CAROLYN: SPOTIFY FLASHES WORKFORCE BY 70% AMID THE COMPANY'S STEEPEST CUTS THIS YEAR. WE BREAK DOWN THE PUSH TO COSTS AND DRIVE PROFITABILITY. ED:
PLUS, BITCOIN TOPPING 42,000 U.S. DOLLARS FOR THE FIRST TIME SINCE APRIL OF 2022. WE WILL DISCUSS WHAT IT MEANS THAT THE DIGITAL CURRENCY ECOSYSTEM IN TODAY'S SPOTLIGHT. CAROLINE: WE SIT DOWN WITH THE OCULUS CREATOR SE UNVEILS A TINY REUSABLE FIGHTER JET TO BLOWUP DRONES. ALL THAT AND SO MUCH MORE AHEAD. WE ARE IN SELLOFF MODE. BASICALLY WE ARE JUST GETTING BACK TO THE LEVELS WE WERE OUT ON THURSDAY. SUCH HAS BEEN THE DRIVE HIGHER
IN RISK ASSETS. JUST REASSESSING HOW MUCH WE HAVE RUN UP ALREADY BUT REALLY THE DIRECTION OF TRAVEL FOR THE FEDERAL RESERVE AND A LOT OF THE JOBS DATA. CLEARLY SEEING A SELLOFF IN BONDS AND STOCKS. BLOOMBERG DOLLAR INDEX ON THE HIGHER SIDE AFTER SEEING SUCH WEAKNESS THIS YEAR. THE STRENGTH IN THE U.S. DOLLAR IS NOT OUT MATCHING THE STRENGTH OF BITCOIN. WE ARE GOING TO DWELL ON THIS A LITTLE BIT LATER IN THE SHOW MUCH MORE OF THE FACT THAT WE ARE NOW PIERCING ABOUT 2000 AND ONE POINT, 41.5, LA SCALA.
WILL THE PROCESS NEXT YEAR DRIVE DEMAND FURTHER? THIS IS ABOUT RISK AS THE DEMAND AS WELL, ISN'T IT? >> IT'S INTERESTING THAT ON DAYS LIKE TODAY WHERE EQUITIES ARE PROBABLY LOWER, TO COIN IS HIGHER, BUT SO ARE CRYPTO-RELATED DOCS. THERE ARE TWO RATIONALES. IT IS A PROXY FOR WALL STREET TO GET SOME EXPOSURE WITHOUT INVESTING IN THEM DIRECTLY BY INVESTING IN STOCKS THAT ARE RELEVANT TO IT, FORGET THE THING THAT IS IMPORTANT TO THESE EQUITIES DOES WELL, THEY DO WELL AS WELL. THESE ARE BIG MOVES ON THE SINGLE NAMES, A DAY WHERE EQUITIES ARE LOWER. CAROLINE: WE'VE GOT A LITTLE BIT USED FOR LACK OF VOLATILITY. WE WERE USED TO THINGS SWINGING ABOUT BY DOUBLE-DIGIT PERCENTAGE POINTS.
WE ARE STILL WAY OFF THE 69 THOUSAND DOLLARS LEVEL IN PREVIOUS HIGHS. WE ARE BACK PRIOR TO THE TARA LUNA DEBACLE. ALL OF THIS SLOWLY REBUILDING CONFIDENCE IN THE ECOSYSTEM.
>> WE'VE HAD GUESTS SAYING $60,000 NEXT YEAR, 00,000 MAYBE NEXT YEAR. SEEING IS BELIEVING WHEN IT COMES TO BITCOIN. THE OTHER TOP STORY IS SPOTIFY REDUCING ITS WORKFORCE BY 17%. THAT'S 1500 JOBS, THE BIGGEST CUTS YET THIS YEAR.
GIVE US THE DETAILS. WHAT DID SPOTIFY SAY ABOUT THE TIMING AND RATIONALE FOR CUTTING 1500 EMPLOYEES? >> TODAY, SPOTIFY CEO PUT OUT A BLOG POST SORT OF EXPLAINING THE CUTS. HE SAID BASICALLY THESE DECISIONS WERE GOING TO HAVE TO BE MADE OVER THE NEXT COUPLE OF YEARS, AND THAT HE DECIDED TO JUST RIP THE BAND-AID OFF AND CUT A BUNCH OF PEOPLE ALL AT ONCE. HE ESSENTIALLY SAID THEY HAVE CUT OPERATING COSTS QUITE A BIT, NOT ENOUGH, AND THAT THEY NEEDED MORE PEOPLE TO GO AND MORE PEOPLE TO FOCUS ON THE CORE MISSION OF THE LINK FOR CREATORS AND CONSUMERS. CAROLINE: REALIGNING THE FACT THAT TOO MANY PEOPLE WERE ULTIMATELY BUILDING THINGS THAT WEREN'T CORE TO THE MISSION OF BUILDING PROFITABILITY, BUILDING MARGIN. IT'S INTERESTING THAT A LOT OF THEM ARE GOING TO BE VOID BY WHAT HAPPENS, SOME REALLY OUTSIZED COMMITMENTS TO THE WORLD OF PODCASTING IN PARTICULAR.
>> THE STORY OF SPOTIFY REALLY IS THAT SINCE 2019 THEY'VE COMMITTED OVER BILLION TO THE PODCAST WORLD. THEY BOUGHT STUDIOS, CREATION TECHNOLOGY, A HOSTING SERVICE, AND REALLY WHAT WE'VE SEEN OVER THE PAST YEAR IS JUST A TOTAL BACKTRACK. I IMAGINE AS WE LEARN MORE ABOUT TODAY'S CUTS WE WILL HEAR HOW THAT IMPACTS THE PODCAST IS AS IT IS. CAROLINE: ED:
LOADS OF TECHNOLOGY COMPANIES HAVE GONE THROUGH THIS. THE OTHER METRIC IS ACTUALLY, SPOTIFY IS ON TRACK FOR AN ASTONISHINGLY GOOD YEAR, 100 MILLION NEW SUBSCRIBERS OR USERS IS GOING TO ADD BASED ON HOW IT HAS DONE SO FAR. ONE OF THE OVERALL HEALTH SCORE FOR SPOTIFY BASED ON YOUR REPORTING? >> THAT WAS VERY PUZZLING HERE, THEY HAD AMAZING GROWTH FROM A MONTHLY AVERAGE USER PERSPECTIVE. THEY DO HAVE MORE FREE USERS THAN SUBSCRIPTION, SO THAT IS AN ISSUE. THEY WANT TO BE ABLE TO
MONETIZE THOSE SUBSCRIPTIONS MORE. BROADLY SPEAKING THEY CONTINUE TO GROW WHICH IS PRETTY INCREDIBLE. THEY JUST HAVE TO FIGURE OUT WHAT IS GOING TO BE THE WAY THAT THEY MAKE MORE MONEY. THEY KEEP HAVING TO PAY THESE MUSIC RIGHTS HOLDERS, BUT THEY ALSO NEED TO FIND OTHER REVENUE OPPORTUNITIES.
WE SEE PRICE INCREASES, CUT COSTS. WE'VE SEEN THEM MOVING TO PODCASTING AND THEN MOVING TO AUDIOBOOKS. I DON'T KNOW. CAROLINE: AND ALL OF THIS AT A TIME WHERE WE DO SPEAK ABOUT THE MACRO REALITIES AS WELL. HE TALKED ABOUT THE FACT THAT MONEY IS MORE EXPENSIVE THAN IT USED TO BE. THIS IS PERHAPS JUST INSTEAD OF THESE MICRO-CUTS THAT ARE HAPPENING, HE IS JUST RIPPING THE BAND-AID AND SHOVING HIS INTENT TO STILL HAVE THIS YEAR OF EFFICIENCY, TO COIN A PHRASE. >> I DON'T KNOW IF WE NOTED IT AT THE TOP BUT THIS IS THE THIRD ROUND OF CUTS THIS YEAR.
THEY DID A SIGNIFICANT CHUNK IN JANUARY, ANOTHER IN JUNE WHICH WAS PRIMARILY ON THE PODCAST TEAM. NOW HERE WE ARE WITH THE BIGGEST CUT THAT THEY'VE MADE ALL YEAR. OVERALL, OVER 2000 EMPLOYEES BLOOD LOST THEIR JOBS. >> I AM ON THE PREMIUM FAMILY MONTHLY SUBSCRIPTION WHICH I PAY AND I HAVE SOME OTHER FAMILY MEMBERS WHICH DO NOT PAY, BUT I GUESS IT HAS BECOME A BUSY NIGHT, EARLY MORNING FOR YOU. THERE ARE MORE LAYOFFS AND OTHER STORIES HAPPENING ELSEWHERE. THE THIRD MAJOR HEADCOUNT REDUCTION IN ORDER TO REACH PROFITABLE GROWTH.
THE CUTS MOSTLY AFFECTED SALESPEOPLE FOR THE CONSUMER DATA PLATFORM AND CONTACT CENTER SOFTWARE ACCORDING TO A MEMO FROM THE CEO. THE COMPANY HAS SHED MORE THAN 3000 WORKERS SINCE SEPTEMBER 2022, WHICH IS ABOUT ONE THIRD OF ITS TOTAL WORKFORCE IN THAT TIME. CAROLINE: LET'S TALK ABOUT WHAT WE DISCUSSED. WE ARE TALKING ABOUT THE SILVER
LINING CONTINUES TO BE AI AND A $7 MILLION VALUATION. WE ARE GOING TO BE TALKING ABOUT HOW THEY'VE MANAGED TO BE IN THE RIGHT PLACE AT THE RIGHT TIME WITH THE RIGHT TECH. ♪ CAROLINE: A CLOUD COMPUTING PROVIDER IS ONE OF THE STOP -- HOTTEST STARTUPS IN THE AI RACE. OTHERS INCLUDING JP MORGAN ASSET MANAGEMENT, ALL PARTICIPATING THAT VALUES A COMPANY AT $7 BILLION ACCORDING TO SOURCES. SHE CAN GET A SOURCE VERY CLOSE TO THE DEAL NOW, NONE OTHER THAN THEIR CEO. IT'S AN EXTRAORDINARY STORY OF
CORE WE'VE GOING FROM ITS ORIGINS OF COMMODITIES TREATIES TO THE SPACE FOR CRYPTO. THEN YOU BECOME A SPECIALIZED CLOUD AI PROVIDER. WHAT MAKES YOUR OFFERING DIFFERENT FROM THE MORE GENERAL-PURPOSE LAB PROVIDERS OUT THERE? >> SHARE. FIRST OF ALL, THANK YOU VERY
MUCH, GREAT TO HAVE AN OPPORTUNITY TO SPEAK WITH YOU. IT'S OBVIOUSLY A VERY EXCITING DAY OVER HERE. MY OWN TEAM IS VERY EXCITED ABOUT THESE TRANSACTIONS AS WE GOING TO THE END OF THE YEAR. LOOKING FORWARD TO GETTING OFF THE NEXT YEAR IN THE SAME FOOTING.
TO ANSWER YOUR QUESTION, WHAT WE MEAN BY THAT IS WE NEED EVERY DECISION FROM THE HARDWARE STACK ALL THE WAY THROUGH THE SOFTWARE STACK TO REALLY BUILD THE CLOUD THAT IS SPECIALIZED TO ADDRESS ANY OF THE COMPANIES WITH MASSIVE SCALE. WE ARE REALLY TALKING ABOUT THE THREE INDUSTRIES THAT WE ADDRESS. THE FIRST ONE IS MEDIA AND ENTERTAINMENT. IF YOU GO SEE A MARBLE MOVIE, THERE IS A GOOD CHANCE THAT SEVERAL OF THE STUDIOS WILL HAVE RENDERED THEIR IMAGE. BASIC SCIENCE, SYNTHETIC BIOLOGY.
THINK ABOUT IS DRUG DISCOVERY AND PROTEIN FORM. AND FINALLY AND MOST IMPORTANTLY RIGHT NOW, OBVIOUSLY IS THE BUILDOUT OF INFRASTRUCTURE THAT IS VERY, VERY APPROPRIATE FOR ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING. ED: I KEEP HEARING ABOUT THE SORT OF BOOMING GROWTH THAT YOU'VE EXPERIENCED. I THINK YOU STARTED THE YEAR
DISCLOSING YOU HAD THREE DATA CENTERS ONLINE. NOW I BELIEVE IT OR SOMEWHERE NEAR 14 AND 18. HOW HAVE YOU BEEN ABLE TO MOVE SO QUICKLY ON THE INFRASTRUCTURE SIDE? >> GREAT TEAMS ALL ACROSS THE INFRASTRUCTURE. JUST INCREDIBLE COORDINATION, AUTOMATION TO ALLOW US TO KIND OF BUILD AND SCALE THAT. WE ALSO HAVE GREAT RELATIONSHIPS OF THROUGH THE SUPPLY CHAINS THAT HAVE BEEN SO DIFFICULT FOR EVERYONE TO NAVIGATE. SUPPORT FROM THEIR PARTNERS ALTER THE SUPPLY CHAIN HAVE BEEN INCREDIBLE.
WE'VE MADE A MASSIVE PUSH IN TERMS OF THE NUMBER OF DATA CENTERS THAT WE ARE IN. IT PUTS US IN A POSITION TO BE ABLE TO SERVE THE LARGEST, MOST IMPORTANT ARTIFICIAL INTELLIGENCE MODELS THAT ARE BEING SERVED TO THE PUBLIC RIGHT NOW. IT'S VERY EXCITING. GOT A LOT MORE WORK TO DO, BUT DEFINITELY IMPROVING AND INCREASING OUR FOOTPRINT EVERY DAY. ED: ONE OF THOSE PARTNERS IS NVIDIA. SHOWING SOME OF YOUR KEY
CUSTOMERS ON THE SCREEN. MY UNDERSTANDING IS THAT YOU ARE ACTUALLY HELPING THEM, YOU YOURSELVES TO BUILD THEIR OWN NEXT-GENERATION SUPERCOMPUTER. WHAT DO YOU TELL US ABOUT THAT PROJECT? >> NVIDIA IS A WONDERFUL PARTNER OF OURS.
THEY INVESTED ALONGSIDE MAGNA TAR AND K2 IN OUR B ROUND WHICH IS WHERE WE RAISED $420 MILLION IN APRIL OF THIS YEAR. IT WAS A MASSIVE STEP FOR US AS WE BEGIN TO ACCELERATE OUR GROWTH THROUGH THE YEAR, AND SO BY HAVING A PARTNER LIKE NVIDIA INVEST IN THE COMPANY, IT MADE VERY CLEAR TO ALL THE PARTNERS ACROSS THE DEBT SPACE, ACROSS THE EQUITY SPACE THAT THEY HAD LOOKED AT OUR INFRASTRUCTURE AND WERE COMFORTABLE WITH THE WAY THAT WE BUILT IT IN ORDER TO DELIVER THE MOST PERFORMING CONFIGURATION OF THE ACCELERATED COMPUTING DEFINED BY THEIR GP. CAROLINE: YOU'VE BEEN RAISING MONEY, WHETHER IT BE EQUITY OR DEBT A QUITE A PACE BECAUSE WHAT YOU'RE DOING NEEDS A LOT OF MONEY. WHEN YOU TAP THE PUBLIC
MARKETS, YOU THINK ABOUT GOING PUBLIC AS SOON AS 2024? >> AS YOU SAID, WE REALLY NEED THREE DIFFERENT TRANSACTIONS THIS YEAR. WE DID AROUND EARLY ON THAT WAS 21 MILLION RAISE. WE CAME BACK AND WE DID A VERY, VERY LARGE DEBT FACILITY THAT WAS $2.3 MILLION THAT WAS REALLY DEDICATED TO PURCHASING THE INFRASTRUCTURE THAT IS REQUIRED. THE SECONDARY TRANSACTION IS THE FINAL TRANSACTION FOR US OF THE YEAR. WE ARE NOT COMMITTED OR HAVE NO REAL COMMENT AROUND THE CONCEPT OF GOING INTO THE PUBLIC MARKETS OTHER THAN TO SAY WE ARE CAPITAL INTENSIVE BUSINESS AND WE ARE GOING TO NEED TO CONTINUE TO ACCESS CAPITAL MARKETS AND THE MOST EFFICIENT WAY POSSIBLE. AS FAR AS THAT GOES, ALL
OPTIONS ARE ABSOLUTELY ON THE TABLE FOR US AS WE LOOK INTO THE FUTURE. ED: QUICKLY, YOU BUILD ON H 100, BUT AMD IS COMING WITH MI 300. HAVE YOU LOOKED AT THAT? >> WE SPEND A LOT OF TIME RESEARCHING ALL THE DIFFERENT LOOK AND ALTERNATIVES IN THE MARKET. RIGHT NOW THE FOCUS IS ON THE H 100. I WOULD ARGUE THAT AS YOU LOOK ACROSS THE AI SPACE AT LARGE, THE FOCUS IS ON THE H 100. IT IS AN AMAZING PIECE OF
SILICON, DOES INCREDIBLE THINGS IN TERMS OF MOVING THE AI SPACE FORWARD. IT HAS REALLY BEEN THE MAJORITY OF OUR EFFORT. WE DO MONITOR ALL OF THE DIFFERENCE LOOK AT ALTERNATIVES THAT ARE OUT THERE. ED: COREWEAVE'S CEO, NICE TO CATCH UP WITH YOU. SELLING MINORITY STAKE AT A BIG VALUATION. COMING UP, LARRY SUMMERS WEIGHS
IN ON WHAT IT MEANS TO BE A MEMBER OF OPENAI'S NEWLY FORMED BOARD. WE ARE GOING TO BRING YOU THOSE DETAILS NEXT. ♪ ED: TIME FOR TALKING TECH, AND FIRST UP, GINA RAIMONDO SAYS IF THE U.S. TRULY WANTS TO STOP CHINA FROM
MAKING CUTTING EDGE SEMICONDUCTORS, THAT HER DEPARTMENT IS GOING TO NEED MORE FUNDING. ON SATURDAY, SHE ALSO URGED AMERICAN CHIP COMPANIES TO PRIORITIZE NATIONAL SECURITY OVER THERE REVENUE. IN ONE OF THE CHIPMAKING INDUSTRY'S MOST VALUABLE SUPPLIERS IS SINKING DEEPER INTO DEBT DESPITE HOLDING MORE THAN 90% SHARE. THE CHEMICAL BASED IN JAPAN HAS NOT LISTED PRICES BECAUSE OF FEARS IT WOULD SCOURGE RELATIONSHIPS WITH -- SEMICONDUCTORS.
PLUS, CALIFORNIA'S PRIVATE THE AGENCY HAS DRAFTED A SET OF RULES THAT AIM TO GIVE RESIDENTS MORE AGENCY OVER HOW THEIR PERSONAL DATA IS USED BY AUTOMATED TOOLS. IF ADOPTED, THE PROPOSAL WOULD AFFECT OUR TECH COMPANIES DEVELOP AI, WHICH RELAYS HEAVILY ON DATA AT THE TRAIN ITSELF. BOARD MEMBERS WILL DISCUSS THE DRAFT ON SATURDAY THOUGH ENFORCEMENT ISN'T LIKELY TO START ANYTIME SOON. CAROLINE: STICK ON AI BECAUSE LARRY SUMMERS IS HOPING TO GET SETTLED INTO HIS NEW ROLE AS A BOARD MEMBER OF THE SO-CALLED INTERIM BOARD OF OPENAI. OF COURSE, THE KEY STARTUP. HE SHARED HIS THOUGHTS ON THE MATTER ON WALL STREET WEEK WITH DAVID WESTIN. TAKE A LISTEN.
>> THIS WAS SOMETHING THAT WAS EXTRAORDINARILY IMPORTANT. NO ONE CAN BE CERTAIN WHETHER THIS WAS ONCE A DECADE, ONCE A HALF-CENTURY, ONCE A CENTURY OR ONCE A MILLENNIUM. NO ONE COULD KNOW THAT FOR SURE. BUT IT SURE LOOKS LIKE IT IS AWFULLY IMPORTANT TO DEVELOP RAPIDLY AND SAFELY AND TO DISSEMINATE EFFECTIVELY AND WELL. SO WHEN I WAS OFFERED THE
OPPORTUNITY TO BE PART OF CONTRIBUTING TO THAT OVERSEEING TO MAKE SURE THAT WAS EFFECTIVELY DONE AND TO DO WOODWORKING WITH SOME VERY GREAT PEOPLE, I THOUGHT IT WAS A REAL OPPORTUNITY AND I WAS GLAD TO DO IT. >> I DON'T WANT TO TAKE ANYTHING AWAY FROM YOUR TECHNOLOGICAL EXPERTISE FOR WHAT YOU JUST SAID SAFELY STRIKES ME AS PART OF WHAT YOU'RE GOING TO BE FOCUSED ON AND THAT GETS TO QUESTIONS OF GOVERNANCE, ABOUT HOW YOU HANDLE THIS TECHNOLOGY. DO YOU HAVE AN OVERALL SENSE OF WHAT YOU NEED TO DO TO GET THAT "SAFELY" PART RIGHT? >> THEY ARE GOING TO SEND ME THE ONBOARDING PACKET FOR THE BOARD ON SUNDAY. SO I SHOULDN'T BE SAYING TOO MUCH AT ALL BECAUSE I DON'T KNOW ENOUGH. HERE'S SOME THINGS I THINK I KNOW. I THINK I KNOW THAT A COMPANY LIKE THIS HAS TO BE PREPARED TO COOPERATE.
THAT DOESN'T MEAN ALWAYS AGREEING WITH, BUT COOPERATING WITH KEY GOVERNMENT OFFICIALS ON REGULATORY ISSUES, ON NATIONAL SECURITY ISSUES, ON DEVELOPMENT OF TECHNOLOGY ISSUES. I THINK I KNOW ALSO, AND THIS IS INTEGRAL TO THE STRUCTURE OF OPENAI, THE ENTITY ITSELF IS A CREATURE OF A NOT-FOR-PROFIT ENTITY THAT THIS NEEDS TO BE A CORPORATION WITH A CONSCIENCE. AND THAT WE NEED TO BE ALWAYS THINKING ABOUT THE MULTIPLE STAKEHOLDERS IN THE DEVELOPMENT OF THIS TECHNOLOGY AND AS A BOARD MEMBER, THAT WILL BE PART OF MY RESPONSIBILITY WORKING WITH OTHER BOARD MEMBERS TO MAKE THAT CERTAIN. MY COLLEAGUE AT HARVARD, LATE COLLEAGUE SAID CONSCIENCE IS THE KNOWLEDGE THAT SOMEONE IS WATCHING. AND I THINK IT IS THE RESPONSIBILITY FOR EVERYBODY INVOLVED IN THIS TO BE THINKING VERY CAREFULLY ALWAYS ABOUT BOTH OPPORTUNITIES AND UNCERTAINTIES, AND TO MAKE SURE THAT THOSE ARE BALANCED IN THE BEST WAY THAT IS POSSIBLE. ED:
THAT WAS FORMER U.S. TREASURY SECRETARY LARRY SUMMERS SITTING DOWN WITH DAVID WESTIN. WE SHOULD ALSO KNOW THAT LARRY SUMMERS A HARVARD UNIVERSITY PROFESSOR AND A PAID CONTRIBUTOR TO BLOOMBERG TV AND WALL STREET WEEK. NOW, AS WE KEEP AN EYE ON THE SITUATION WITH THE ISRAEL-HAMAS WAR, THE SITUATION IS ALSO ONE THAT HAS BEEN HARD TO MANAGE ONLINE. TIKTOK IS HAVING A HARD TIME MODERATING DEEPFAKE VIDEOS OF HAMAS VICTIMS AND OTHER PRIVATE CITIZENS.
EVEN THOUGH THESE VIDEOS VIOLATE THEIR CONTENT MODERATION POLICIES WHICH BAN AI-GENERATED VIDEOS, AND YET THESE VIDEOS ARE RACKING UP THOUSANDS TO MILLIONS OF VIEWS. I WANT TO BRING IN ALEX WHO HAS BEEN WRITING ABOUT THIS THIS MORNING ON BLOOMBERG. THAT IS THE STRUGGLE. THEY ARE IN CONTRAVENTION OF THE POLICY BEING SEEN BY MILLIONS. >> IN THE DAYS AFTER THE OCTOBER 7 ATTACK IN ISRAEL ON THAT MUSIC FESTIVAL, I WAS LOOKING ON THE AVENUE FOR SOME OF THE NAMES OF SOME OF THE BELIEVED VICTIMS AND SOME OF THE TOP VIDEOS WERE AI- GENERATED VIDEOS THAT PURPORTED TO AND SHOWED FOLKS LIKE THE 22-YEAR-OLD NOW KNOWN TO BE DEAD GERMAN-ISRAELI WOMAN WHO YOU SAW HER FACE, YOU SAW AN IMAGE LIKE HER STANDING IN FRONT OF FOLKS IN MILITARY GARB HOLDING GUNS TALKING ABOUT HER THOUGHTS ON THE ATTACK, TALKING ABOUT HER MOTHER, BUT THIS WAS NOT, IN FACT, HER. THIS WAS A DIGITAL RESURRECTION AS EXPERTS CALL IT, WHERE SOMEBODY WENT ONLINE, USED ONE OF THESE INCREASINGLY INEXPENSIVE TOOLS TO TAKE SOME PHOTOS OF HER FROM THE INTERNET AND TURN IT INTO AN AI-GENERATED VIDEO.
NOW, THESE VIDEOS ARE AGAINST THE CONTENT GUIDELINES TIKTOK. PRIVATE CITIZENS AND MINORS ARE NOT ALLOWED TO BE PORTRAYED IN WHAT TIKTOK BECAUSE SYNTHETIC MEDIA WHICH INCLUDES AI-VIDEOS, BUT THAT VIDEO RACKED UP 7 MILLION VIEWS ALONE BEFORE I SEND IT TO TIKTOK AND THEY TOOK IT DOWN. THERE ARE DOZENS OF ADDITIONAL VIDEOS LIKE THIS PORTRAYING BOTH VICTIMS OF HAMAS, TH REE-YOUR-OLD MURDER VICTIMS OF A CHILD'S VOICE TALKING ABOUT HOW THEY DIED AND THE INJURIES SUSTAINED AND THESE VIDEOS ARE LIVE AND AGAIN, RACKING UP THOUSANDS TO MILLIONS OF VIEWS AND SOMETIMES GOING VIRAL.
THIS IS JUST AN INDICATOR TO ME AT THIS EARLY WAVE OF WHERE AI IS SITTING REAL PEOPLE AND IN PARTICULAR, PEOPLE WHO CANNOT ACTUALLY DEFEND THEMSELVES WHEN THEY SEE THEIR LIKENESS OUT THERE ON SOCIAL MEDIA. CAROLINE: SO DEEPLY EMOTIVE. JUST TO SAY WHAT TIKTOK HAS COME BACK WITH, THEY CONTINUE TO INVEST IN DETECTION AND TRANSPARENCY TO ADDRESS THIS RAPIDLY EVOLVING TECHNOLOGY, BUT THEREIN LIES THE ISSUE. IT IS A RAPIDLY EVOLVING TECHNOLOGY. DO YOU THINK MORE COULD BE DONE INTERNALLY BY TIKTOK AND INDEED, THE OTHER KEY SOCIAL MEDIA PLAYERS OUT HERE? >> THEY'VE ALREADY ROLLED OUT TOOLS TO ASK USERS TO OPT INTO LABEL AI ON VIDEOS THAT USE AI, BUT MOST OF THESE VIDEOS THAT I CAME ACROSS DIDN'T HAVE THAT LABEL. IT'S CLEAR THEY NEED TO BE DOING MORE BEHIND THE SCENES WITH THEIR INCREDIBLY POWERFUL ALGORITHMS, WITH HUMAN MODERATORS TO BE PICKING UP ON THE STUFF. BUT EXPERTS ARE ALREADY RAISING A FLAG NOT JUST IN THESE RESURRECTIONS, BUT ALSO LOOKING FORWARD TO THINGS LIKE THE ELECTION. RIGHT NOW A LOT OF THESE VIDEOS
HAVE THIS UNCANNY VALLEY FEELING. THEY ARE GOING TO GET MORE REALISTIC AND THE APPS ARE GOING TO NEED TO DO MORE TO DETECT THEM. ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." CAROLINE:
AFTER HAVING THE BIGGEST SELLOFF IN MORE THAN A MONTH NOW, WE’RE OFF BY MORE THAN A PERCENTAGE POINT. IS IT PROFIT TAKING AFTER THE RUNUP THAT WE’VE HAD THROUGHOUT THE MONTH OF NOVEMBER? IS IT A LITTLE BIT OF CAUTION THAT’S PERHAPS WE’RE BAKING IN TOO MUCH? THE SELLOFF OF STOCKS AND THE SELLOFF OF BONDS AS WELL, THE TWO-YEAR YIELD SPIKING AS WELL. I’M LOOKING AT IN SPITE OF THE SELLOFF IN RISK ASSETS, ONE STANDS OUT. BITCOIN POWERING UP, UP $42,000 AND WE’RE STILL ON THE HIGH SIDE. YOU KNOW THE DRIVING FORCES.
WE’RE STILL TALKING ABOUT E.T.F., WILL WE GET, WHAT WE KNOW IS GOING TO COME NEXT YEAR, BUT WHAT WILL MACRO POLICY MEAN FOR BITCOIN INTO 2024? STILL ON THE HIGH SIDE. LET’S LOOK AT SOME OF THE INDIVIDUAL MOVERS TODAY. UBER, THAT’S WHAT’S DRIVING IT HIGHER, UP 5% ON THE DIE.
ACTUALLY YOU WANT ONLY FIELDS OF GREEN. LET’S GO TO SOME OF THE LOSERS. SOME INSIDE SELLING HAPPENING. IN NVIDIA, 370,000 SHARES WERE EITHER SOLD OR FILED TO BE SOLD BY INTERNAL CANDIDATES, OF COURSE, EXECUTIVES AT THEIR COMPANY. SO IT’S OFF BY 2.4% AFTER CAUSING A MASSIVE RUN FOR 2023. META, MARK ZUCKERBERG, FIRST TIME IN YEARS HE’S SELLING HIS OWN SHARES. BUT WE’VE GOT TO SOMETHING ELSE TO TALK ABOUT NEXT. ED:
AND WE’RE GOING PRIVATE THIS TIME. A NEW AUTONOMOUS AIR VEHICLE, ROAD RUNNER, IS AKIN TO A MINI REUSABLE FIGHTER JET THAT BLOWS UP DRONES, AND THE STARTUPLESS THE U.S. WILL DEPLOY IN THE FIELD NEXT YEAR. WE JUST SHOWED IMAGES OF IT. FROM A TECHNOLOGY PERSPECTIVE, YOU’VE BEEN WORKING ON THIS IN SECRET FOR A COUPLE OF YEARS.
WHAT IS NEW HERE? WHAT IS THE TECHNOLOGY AT PLAY? >> ROAD RUNNER IS AN A.I. PILOTED AUTONOMOUS VEHICLE. IT’S POWERED BY TWO TWIN TURBO THRUST ENGINES, VERY, VERY FAST. CARRIES A SIGNIFICANT PAY LOAD. IT’S VERY MANEUVERABILITY. BUT THE REALLY COOL THING ABOUT IT IS THAT IT CAN BE REUSED. IT’S A VERTICAL TAKEOFF AND LANDING VEHICLE.
THAT MEANS WITH CERTAIN PAY LOADS, YOU CAN GO OUT THERE, PERFORM THE MISSION, COME BACK, RELAND, AND THEN REFUEL, REARM, AND USE IT AGAIN. WITH OTHER PAY LOADS, LET’S SAY A ONE-WAY WAR HEAD TO GO UP AGAINST A LARGE AIRCRAFT, I CAN SEND A WHOLE SWARM OF ROAD RUNNERS OUT THERE, AND ONLY THE ONES THAT ACTUALLY ENGAGE THE TARGET ARE CONSUMED. EVERYONE ELSE CAN COME HOME. THAT ALLOWS YOU TO HAVE MUCH GREATER EFFECTIVE MAGAZINE DEPTH AND TO USE THESE THINGS IN A WAY THAT YOU CAN’T USE TRADITIONAL ONE-WAY MISSILES.
ONCE YOU LAUNCH IT, IT’S GONE. WHETHER YOU LAUNCH A BUNCH OF THEM OR ONE OF THEM. ED: WE SHARE WITH OUR AUDIENCE A STORY THAT THE U.S. PLANS TO PUT THIS TO DEPLOYMENT
NEXT YEAR. SO MUCH OF THE NEWS FLOW AROUND DRONES HAS BEEN IN THE CONTEXT OF THE WAR IN UKRAINE. DRONES ARE A KEY STRATEGY FOR BOTH SIDES IT SEEMS. DO YOU SEE ROAD RUNNER BEING DEPLOYED IN UKRAINE IN THE NEAR TERM? WHAT KIND OF TALKS HAVE YOU HAD AROUND THAT? >> I SEE IT IN MY MIND’S EYE. BUT WHETHER IT GOES THERE ISN’T
UP TO MITCHELL IT’S UP TO A BUNCH OF PEOPLE IN THE U.S. GOVERNMENT. THE PROCESS IS GOVERNMENT-DRIVEN RATHER THAN COMPANY-DRIVEN, THE VAST MAJORITY OF THE TIME. WE’VE BEEN IN UKRAINE SINCE THE SECOND WORK OF THE WAR, NOT JUST WITH OUR PRODUCTS, BUT SENDING PEOPLE OVER THERE. I WAS IN KYIV TO MEET WITH ZELENSKYY FOR THE SECOND TIME. I MET WITH HIM AHEAD OF THE WAR BECAUSE HE WAS INTERESTED IN PURCHASING SOME OF OUR SECURITY. UNFORTUNATELY THAT WASN’T
SOMETHING WE WERE ABLE TO MAKE HAPPEN BECAUSE OF THE RESTRICTIONS I MENTIONED EARLIER. IT’S CERTAINLY SOMETHING THAT I WOULD LOVE TO SEE PERSONALLY. CAROLINE: WHAT ABOUT DEMAND FROM EUROPE? >> I MEAN, WE HAVE A LOT OF EUROPEAN CUSTOMERS.
WE DO A LOT OF WORK IN PARTICULAR WITH THE UNITED KINGDOM AND U.K. ROYAL MARINES ESPECIALLY. BUT THERE’S A LITTLE BIT OF A TRICKY DYNAMIC WITH SOME EUROPEAN COUNTRIES. SOME EUROPEAN COUNTRIES REALLY SEE THEIR DEFENSE APPARATUS AS A WAY TO RUN A JOBS PROGRAM, AND THEY ARE FORCING US, COMPANIES LIKE ANDURIL, TO COMPETE WITH THEIR OWN DOMESTIC CAPABILITIES. IT MIGHT BE YEARS HINTED OR MORE EXPENSIVE, BUT IT’S HARD FOR THEM TO GET OVER THE FACT THAT THEY WOULD BE DROPPING THAT INTERNAL PROGRAM TO BUY SOMETHING FROM AN AMERICAN COMPANY. IT’S A DIFFICULT PILL TO
SWALLOW FOR SOME OF THE COUNTRIES, ESPECIALLY ONES THAT DO HAVE WHAT ANYONE WOULD CONSIDER A PRETTY STRONG DEFENSE INDUSTRY OF THEIR OWN. CAROLINE: ONE COUNTRY THAT HAS A STRONG DEFENSE INDUSTRY OF THEIR OWN IS CHINA. YOU’VE BEEN OUTSPOKEN ON THIS. WE’VE HEARD NOT ONLY ABOUT CHINA’S STRENGTH IN DEFENSE, BUT ALSO THEIR STRENGTH IN A.I. I’M INTERESTED AS TO HOW MUCH
THOSE CONVERSATIONS SURROUNDING TAIWAN, THE CONCERNS THERE, ARE BUILDING AND WHETHER OR NOT IT’S ACTUALLY SOMETHING THAT YOU ARE HAVING CONVERSATIONS WITH THE D.O.D. ABOUT. >> IT’S ALL ABOUT THAT. EVERYONE IS TALKING ABOUT MAKING SURE THAT THE CAPABILITIES THAT WE’RE BUILDING TODAY ARE READY TO GO FOR A FIGHT IN THE PACIFIC IN 2027 OR EARLIER. BECAUSE THAT IS THE LATEST THAT WE SEE CHINA TRYING TO LAUNCH AN OFFENSIVE, FOR A VARIETY OF REASONS, THAT’S THE TIMING FOR SOME KIND OF ACTION AGAINST TAIWAN, WHICH IS CRITICAL TO OUR ECONOMY. THERE’S A LOT OF PLACES AROUND THE WORLD WE CALL PARTNERS. THERE’S A LOT OF PLACES WE SAY ARE IMPORTANT TO OUR INTERESTS.
TAIWAN AND THEIR SEMICONDUCTOR INDUSTRY IS AS IMPORTANT AS IT GETS, ESPECIALLY FOR SUCH A SMALL COUNTRY, SO CLOSE TO CHINA. THE GOOD NEWS IS PEOPLE ARE RECOGNIZING THIS THREAT. BIG TECH COMPANIES YEARS AGO THOUGHT THAT CHINA WAS SOMEONE THAT WAS GOING TO BE A HUGE GROWTH MARKET FOR THEM. THEY THOUGHT THEY WERE GOING TO GET IN AND SELL THEM SOCIAL MEDIA, SELL THEM SERVICES.
I THINK PEOPLE ARE STARTING TO REALIZE THAT’S NOT WHAT’S HAPPENING. THEY’RE COMING HERE AND EATING OUR LUNCH. THAT IS, I THINK, POSITIVE FOR TECH COMPANIES’ DECISIONS TO START WORKING WITH THE D.O.D. AGAIN. ED: THERE’S AN INTENSE INTEREST IN ANDURIL.
PEOPLE DON’T KNOW THAT MUCH ABOUT THE COMPANY F. WE TAKE THE KIND OF TAIWAN CASE STUDY, ROAD RUNNER ASIDE, WHAT ARE THE PRODUCTS AND TECHNOLOGIES THAT YOU CAN OFFER THAT YOU WOULD DEPLOY IN A HYPOTHETICAL SCENARIO LIKE THAT? >> OUR CORE PRODUCT IS SOMETHING CALLED LATTICE A.I. IT POWERS ALL OF OUR PRODUCTS. WE HAVE MORE PEOPLE WORKING ON SOFTWARE THAN HARDWARE, EVEN THOUGH WE HAVE OVER A DOZEN HARDWARE PRODUCTS. THAT’S BECAUSE LATTICE IS
SOMETHING, OUR SOFTWARE INVESTMENT IS SOMETHING WE CAN REACH ACROSS ALL THESE SYSTEMS. LATTICE A.I. IS INTEGRATED WITH MORE THIRD-PARTY PRODUCTS THAN ANDURIL-MADE PRODUCTS. WE MAKE UNDERWATER VEHICLES LIKE THE DIVE SUBMARINE.
WE MAKE ELECTRONIC WARFARE SYSTEMS, SURVEILLANCE SYSTEMS, TACTICAL SYSTEMS LIKE THE GHOST HELICOPTER DRONE. WE’VE GOT A LOT OF THINGS THAT COULD MAKE A REALLY BIG DIFFERENCE. AGAIN, EVERYTHING THAT WE’RE DOING, AND MOST OF WHAT THE D.O.D. IS DOING IS PREPARING FOR A CONFLICT WITH A GREAT POWER LIKE CHINA IN THE PACIFIC ON A NEAR-TERM TIME FRAME.
ANYTHING THAT WE MAKE TALLAHASSEE NOT GOING TO BE READY TO GO INTO THAT TYPE OF FIGHT, WHETHER LITTLE A BLOCKADE OR A REAL INVASION IS NOT SOMETHING THAT I THINK IS PARTICULARLY RELEVANT OR WORTH HEAVY INVESTMENT. ED: WHEN I POSTED ON SOCIAL MEDIA YOU WERE COMING ON THE SHOW, THE MOST COMMON QUESTION WAS ABOUT MANUFACTURING. IF YOU TAKE ROAD RUNNER AS AN EXAMPLE, THEY KNOW IT’S A CUTTING-EDGE TECHNOLOGY. BUT THEY WANT TO KNOW HOW YOU SCALE THE OUTPUT THAT HAVE PRODUCT.
>> THERE’S A FEW THINGS THAT GO INTO THAT. ANDURIL IS A DEFENSE PRODUCT COMPANY. WE USE OUR OWN MONEY TO DECIDE WHAT TO BUILD, HOW TO BUILD IT, AND THEN WE BUILD IT AND SELL IT WHEN IT’S DONE.
THAT’S DIFFERENT THAN COMPANIES THAT GET PAID MORE WHEN THEY HAVE, LET’S SAY, AN INEFFICIENT MANUFACTURING PROCESS OR LONGER MANUFACTURING PROCESS. BECAUSE THEY’RE ON A COST PLUS CONTRACT. AND OUR HEAD OF MANUFACTURING COMES FROM TESLA, WHERE HE SCALED SEVERAL LINES TO VERY, VERY LARGE NUMBERS OF VEHICLES. WE HAVE A LOT OF OTHER PEOPLE
WHO HAVE EXPERIENCE MAKING CONSUMER ELECTRONICS ON A VERY TIGHT SCHEDULE. WE’VE DONE FIVE NEW REVISIONS OF CENTURY TOWER, FOUR NEW REVISIONS OF OUR GHOST DRONE IN JUST FIVE OR SIX YEARS. SO WE’RE ON MORE OF A CONSUMER ELECTRONICS MANUFACTURING AND ITERATION CYCLE THAN ANY COMPANY WOULD BE. MY PREVIOUS COMPANY WAS OCULUS V.R. I STARTED THAT WHEN I WAS 19 YEARS OLD, SOLD IT TO FOOTBALL FOR A FEW BILLION DOLLARS. WAS THERE FOR A FEW YEARS BEFORE GETTING FIRED.
WHILE I WAS THERE, WE MADE MILLION OF VIRTUALLY REALITY HEAD SETS IN CHINA. I KNOW HOW CHINA DOES THINGS. I KNOW HOW THESE THINGS CAN BE DONE. I’M TRYING TO BRING A LITTLE BIT OF THAT CHINESE ENERGY HERE TO U.S. MANUFACTURING, ABSENT ALL THE STUFF THAT I HATE ABOUT CHINA. CAROLINE: JUST TO PUT PERSPECTIVE ON WHAT YOU CAN LEARN, PERHAPS YOU DISLIKE PARTS OF WHAT’S EVIDENT. TO THAT POINT, EVERYONE IS CURRENTLY HAND WRINGING ABOUT ARTIFICIAL INTELLIGENCE, U.S.
VERSUS CHINA, CHINA VERSUS EVERYONE. YOU WERE JUST IN THE U.K. SAYING YOU’VE BEEN BUILDING RELATIONSHIP THERE. WE THINK ABOUT THE U.K. A.I. SUMMIT. 31 COUNTRIES SIGNED UP TO SOME SORT OF GUARD RAILS WHEN IT COMES TO THE ACCELERATION OF DEPLOYMENT OF A.I. IN THE MILITARY.
WHAT DO YOU MAKE OF THESE MOVES TO PUTTING GUARD RAILS IN ARTIFICIAL INTELLIGENCE IF USED WITHIN MILITARY? >> A LOT OF THESE ARE DECADES BEHIND. THE U.S. GOVERNMENT HAS BEEN THINKING ABOUT THIS FOR DECADES. IT BOTHERS ME WHEN PEOPLE SAY WE NEED TO COME ONE RULES THAT TELL THE D.O.D. WHAT TO DO. THEY HAVEN’T BEEN THINKING ABOUT THESE THINGS. THEY DON’T UNDERSTAND HOW IMPORTANT AUTONOMOUS WEAPONS ARE. WHAT ARE YOU TALKING ABOUT?
THE U.S. GOVERNMENT HAS BEEN DEPLOYING AUTONOMOUS WEAPONS LIKE RADAR-SEEKING MISSILES FOR DECADES NOW. LOOK AT SOMETHING LIKE A C-RAM, THE AUTOMATED GUNS PROTECTING OUR BASES AND SHIPS FROM INCOMING MORTAR FIRE, INCOMING MISSILE AND ROCKET FIRE.
THOSE ARE AUTONOMOUS WEAPONS. THEY’RE MAKING DECISIONS ABOUT WHAT TO SHOOT DOWN AND WHAT TO NOT WITHOUT A PERSON MANUALLY DECIDING WHAT TO DO BEYOND DECIDING TO TURN ON THE SYSTEM AND ALOCAL LOU IT TO ENGAGE TARGETS PERIOD. THE U.S. GOVERNMENT HAS VERY STRONG DOCTRINE AROUND THIS THAT REALLY BOILS DOWN TO MAKING SURE A HUMAN IS ALWAYS RESPONSIBLE FOR ANY DECISION. THAT DOESN’T MEAN THAT THE PERSON IS RESPONSIBLE FOR PULLING THE TRIGGER.
I HATE THIS IDEA, PEOPLE SAY CAN’T AGREE THAT AN A.I. SHOULD NEVER BE ABLE TO DECIDE WHEN TO PULL THE TRIGGER. I DON’T AGREE WITH THAT, BECAUSE I DON’T THINK THERE’S ANY MORAL HIGH GROUND IN MAKING A LANDMINE THAT CAN’T TELL THE DIFFERENCE BETWEEN A SCHOOL BUS FULL OF CHILDREN AND A RUSSIAN TANK COLUMN. I THINK IT IS GOOD FOR IT TO BE
ABLE TO DECIDE WHEN TO PULL THE TRIGGER, AS LONG AS A PERSON IS TAKING RESPONSIBILITY FOR THAT DEPLOYMENT AND WHATEVER GOES WRONG IN THE END. I’D SAY A LOT IS PERFORM AACTIVE. THERE ARE PEOPLE THAT NEVER THOUGHT ABOUT A.I. OR WEAPONS UNTIL VERY RECENTLY. THEY’RE NOW DECLARING THEMSELVES TO BE A.I. SAFETY EXPERTS. THEY ARE DECADES BEHIND THE PEOPLE WHO HAVE ACTUALLY BEEN WORKING ON AUTONOMOUS POLICY AND WEAPONS AND GUIDELINES. I THINK THE UNITED STATES IS
CLEARLY FAR AND AWAY THE LEADER IN THIS SPACE. ED: I JUST WANTED TO POINT OUT, WHEN I PUT ON SOCIAL MEDIA YOU WERE COMING ON THE SHOW, THERE WERE PEOPLE OUT THERE THAT DON’T AGREE WITH THE USE OF ANY TECHNOLOGY IN THE CONTEXT OF WAR. BECAUSE THEY DON’T WANT ANY CONSIDERATION OF WAR. THEY BELIEVE IN PEACE, FRANKLY. IT WOULD BE REMISS OF ME NOT TO ASK YOU AS WELL ABOUT OCULUS. YOU MENTIONED IT.
I THINK WE’RE ALMOST AT THE 10-YEAR ANNIVERSARY OF THEN FACEBOOK ACQUIRING YOUR COMPANY, OCULUS. OVER THE LAST 10 YEARS, WHERE HAVE WE LANDED IN V.R. AND A.R.? THIS YEAR WE HAD MET AQUEST AND VISION FROM APPLE. GIVE ME YOUR ASSESSMENT OF THE TECHNOLOGY FIELD FOR HEAD SETS. >> THE PEOPLE WHO THINK THAT WE SHOULDN’T BE USING TECH IN ANY OF THE STUFF, I’D SAY LET’S ARM NATO WITH STICKS AND STONES AND SEE HOW IT GOES. V.R., I’M REALLY EXCITED WITH HOW IT’S GOING. I AM HAPPY TO SEE A LOT OF MY
DEEPLY HELD TECHNICAL BELIEFS PLAYING OUT IN THE MARKET. ONE EXAMPLE IS THE APPLE VISION PRO BEING KIND OF AN AUGMENT THE REALITY, MIXED REALITY COMBO HEAD SET THAT IS DOING A FULL PROJECTION OF THE WORLD. IT IS USING ALL NEW PPHOTONS TO PROJECT IN YOUR EYES. I’VE ALWAYS BEEN ON THE HARD A.R. FULL SIDE.
HAPPY TO SEE THAT KIND OF PANNING OUT WITH APPLE. I’VE USE WANTED THE NEW APPLE HEAD SET. IT’S AMAZING. PROBABLY THE BEST ACCOMPLISHMENT THAT I’VE DONE ON THE V.R. SIDE WAS MAKING SURE THAT V.R. CAME BACK FROM THE DEAD AND IS NOW SOMETHING THAT OTHER PEOPLE ARE WORKING ON. FOR THE REST OF MY LIFE, I’M GOING BUY REALLY NICE HEAD SETS WITHOUT HAVING TO DO IT MYSELF, WHICH IS WHAT I WAS DOING WHEN I WAS 15 AND 16 STARTING OCULUS.
ED: GOOD TO CATCH YOU. GOOD TO HAVE YOU WITH US HERE ON BLOOMBERG TECHNOLOGY. THANK YOU FOR YOUR TIME. COMING UP ON THE SHOW, THE CRYPTO RALLY GATHERED STEAM AS BITCOIN TOPS $42,000 U.S. WE’RE GOING TO KEEP THE CONVERSATION GOING AND DISCUSS INVESTING IN THE DIGITAL CURRENCY ECOSYSTEM MORE BROADLY. THAT’S THE SPOTLIGHT NEXT.
CAROLINE: BITCOIN, IF YOU HADN’T NOTICED, HAS SURGED PAST $42,000 AGAIN, EXTENDING THE RALLY TO MORE THAN 150% SO FAR THIS YEAR. FAR OUTPACING STOCKS AND OTHER RISK ASSETS. WE’RE GOING TO BE INVESTING AND LOOKING AT THE RETURN OF DIGITAL CURRENCY ECOSYSTEM AND THE STARTUPS WITHIN IT. MORGAN IS WITH US. YOU INVEST IN A WHOLE BROAD REMITT OF COMPANIES. WHAT WE LOVE IS YOUR BACKGROUND AND THE FACT YOU WERE THERE BUILDING ONE OF THE FIRST STABLE COINS.
YOU INVEST IN COMPANIES SUCH AS RAMP, WHICH IS ABOUT FEAR AND CRYPTO. THIS EXUBERANCE SEEMS TO BE ABOUT INSTITUTIONAL ACCESS, WHETHER OR NOT WE GET A BITCOIN E.T.F. WHERE DO YOU THINK THAT REALLY WORKS FOR THE ECOSYSTEM AT LARGE? >> THANK YOU AGAIN FOR HAVING ME.
SEEING THIS TURN IS EXCITING, ALTHOUGH I’M CAUTIOUSLY OPTIMISTIC. I THINK THAT THERE HAVE BEEN SEVERAL, LIKE SCHROEDER’S CATS, IS IT DEAD, IS IT ALIVE? AND I THINK WE’RE TURNING A CORNER, KNOCK ON ALL THE WOOD THAT IT MIGHT FINALLY ACTUALLY BE HAPPENING, WHICH WOULD BE HUGE, IF NOT THE LARGEST IMPACT THAT COULD BE HAD ON INSTITUTIONAL ADOPTION. AND THE SECOND CAT WAS FINANCE. PEOPLE WERE WORRIED ABOUT BINANCE, WHAT WAS AND WASN’T GOING TO HAPPEN. WHAT I THINK WE SAW HAPPEN A FEW WEEKS AGO WAS MINIMAL IMPACT ON THE SPACE.
I THINK THOSE ARE TWO HUGE UNKNOWNS THAT I THINK ARE NOW BECOMING KNOWN IN A POSITIVE WAY. SO THAT’S EXCITING FOR THE SPACE. ED: CAROLINE AND I WERE TALKING ABOUT HOW WHEN BITCOIN GOES UP, PUBLICLY TRADELY, CRYPTO-RELATED STOCKS ALSO GO UP, EITHER BECAUSE IT’S A PROXY FOR EXPOSURE IF YOU’RE NOT INVESTED IN A DIGITAL CURRENCY. OR IT’S A LOGIC IF BITCOIN IS DOING WELL, THAT’S THE THING THAT UNDERPINS ALL OF THOSE COMPANIES SO THEY DO WELL AS WELL. SPIN THAT FORWARD TO THE V.C. CONTEXT. IS BITCOIN BEING UP GOOD FOR
YOU WHEN YOU DECIDE TO INVEST HERE, HERE OR THERE? >> I LIKE THAT I STAY SOBER ENOUGH THAT IT DOESN’T MATTER, BUT IN REALITY IT PROBABLY DOES AFFECT MINE AND OTHERS’ PSYCHES. I THINK I’VE SAID IT BEFORE, BUT FOR ME THERE’S ALWAYS THREE QUESTIONS, WHICH IS ONE, IS IT COMPANY SOLVING A PROBLEM FOR ANYONE? TWO, IS ANYONE USING THIS THING? AND THREE, IS THIS PRODUCT OR COMPANY MAKING MONEY OR HAS ANY POTENTIAL TO MAKE MONEY? AND WHEN YOU LOOK AT THE HISTORY OF CRYPTO AND CRYPTO STARTUPS, THERE’S VERY FEW THAT ACTUALLY CHECK ALL THREE OF THOSE BOXES, LET ALONE ONE OR TWO. AND BITCOIN IS ONE OF THE FEW CASES THAT CHECKS ALL THE BOXES AND IS REAL. IT’S DEFINITELY A CASE STUDY FOR POTENTIALLY OTHER INVESTMENTS. BUT AT THE OTHER STAGE, I TRY TO NOT LOOK AT THE PRICE OF BITCOIN. CAROLINE: WHAT YOU LOOK AT IS PROBABLY THE GENERAL ENERGY OF BUILDING IN THE SEED STAGE RIGHT NOW. TO THAT END, AMID WHAT HAS BEEN
TERMED YET ANOTHER CRYPTO WINTER, HAS THE BUILDING STILL BEEN GOING? ARE THERE PROBLEMS BEING SOLVED WHEN WE CAN TALK ABOUT PRICES AND ACTUALLY LOOK AT WHAT FUNDAMENTALLY IS BEING BUILT? >> BUILDING IS STILL GOING. WHEN THE MARKET WAS NUTS, YOU HAD WHAT MY PARTNER JAMES CALLED THE FRUIT FLIES COMING IN, SO THE FOUNDERS WHO THOUGHT IT WAS JUST LIKE THE SEXIEST ACCESSORY TO HAVE A CRYPTO COMPANY AND THOUGHT OVERNIGHT THEY WOULD BE WORTH A LOT ON PAPER. AND WHAT THE MARKET COOLING DOWN, IS FILTERED THE FOUNDERS OUT. NOW YOU ONLY HAVE FOUNDERS COMING IN WHO ACTUALLY HAVE A
PROBLEM TO SOLVE. IN A WEIRD WAY, THE BEAR MARKET IS VERY NICE, BECAUSE IT AUTOMATICALLY APPLIES A FILTER, AT LEAST TO THE TOP OF THE FUNNEL STARTUPS. THAT ISN’T NECESSARILY THERE IN A BULL MARKET. ED: MORGAN, BIGGER PICTURE, WE’VE HAD A LOT OF GUESTS ON THE SHOW THAT CRITICIZE THE U.S. AS A REGULATORY ENVIRONMENT, OR A MARKET ENVIRONMENT TO FOSTER THE UNDERLYING TECHNOLOGY, LET’S SAY BLOCK CHAIN IN THIS INSTANCE. YOUR VIEW ON THAT?
>> I AM PROUD TO BE AN AMERICAN. HOWEVER, I DO WISH THAT CRYPTO REGULATION WAS A BIT MORE FOUNDER-FRIENDLY THAN IT CURRENTLY IS. TO BRING BACK ANY SLOWED SHROEDINGER’S CAT THEORY, THERE’S A LOT OF WAYS VARIOUS BODIES CAN GO ON VARIOUS TOPICS.
IN CRYPTO, IT’S SCARING FOUNDERS AWAY FROM STARTING COMPANIES IN THE U.S. IF THERE WAS MORE CLARITY IN ONE DIRECTION OR ANOTHER, THAT WOULD LIMIT OF AMOUNT OF GUESSING OR FEAR THAT WAS REQUIRED TO START A COMPANY, I THINK THAT WOULD BE A LOT MORE CONDUCIVE TO FOUNDERS, SPECIFICALLY STARTING COMPANIES IN THIS SPACE IN THE UNITED STATES. ED: MORGAN BELLER, WE ALWAYS ENJOY HAVING YOU ON THE CAT. THE CAT ANALOGY, LET’S SEE IF IT GETS TRACTION, WE’LL SEE. >> I’M A DOG PERSON, BY THE WAY. ED: AS YOU KNOW, I MET YOUR DOG,
WHICH IS ALWAYS AT YOUR SIDE. BUT WE’RE OUT OF TIME TODAY. THANK YOU FOR JOINING US. COMING UP, APPLE PREPARES TO CUT TIES WITH GOLDMAN SACHS, AND WHO WILL REPLACE THE BANK TO PARTNER WITH APPLE ON THE CARD? WE’RE GOING TO DISCUSS THAT NEXT. ED: APPLE’S LONG-ANTICIPATED BREAKUP WITH ITS MAIN FINANCIAL SERVICES PARTNER, GOLDMAN SACHS, IS UNDERWAY WITH THE IPHONE MAKER OFFERING THE BANK AN OUT. WHO MIGHT REPLACE GOLDMAN IS THE FOCUS OF THIS YEAR’S POWER CALL, AND YOU HAVE A THESIS, CHASE.
>> YEAH, FIRST OF ALL, THANK YOU FOR HAVING ME. WE HEARD ABOUT CITI BANK, WE HEARD ABOUT AMERICAN EXPRESS. BUT I THINK CHASE IS ABSOLUTELY THE MOST LIKELY COMPANY TO TAKE OVER FOR GOLDMAN SACHS IN TERMS OF THE APPLE CARD PARTNERSHIP. CHASE HAS A LOT GOING FOR IT. IT MAKES A TON OF MONEY T. HAS THE CASH BALANCE. IT HAS THE MANAGEMENT. IT HAS THE RESERVES TO TAKE ON A PARTNERSHIP THAT MAY NOT BE ENTIRELY LUCRATIVE AT THE GET-GO.
IT DOES HAVE TIME TO SORT OF BAKE INTO ITS FINANCIALS THAT THIS IS GOING TO BE A LONG-TERM STRATEGY AND PARTNERSHIP. GOLDMAN LOST A COUPLE OF BILLION DOLLARS, MAYBE MORE ON THIS. THEY COULDN’T SUSTAIN IT. CHASE PROBABLY COULD. APPLE AND CHASE, MOST PEOPLE DON’T KNOW, HAVE A LONG-TERM RELATIONSHIP. CHASE IS ONE OF THE BIGGEST PARTNERS FOR CREDIT CARD TRANSACTIONS IN THE APP STORE. APPLE ONLINE SERVICES, APPLE’S RETAIL STORES, ONLINE STORES.
APPLE PROBABLY GETS A BETTER RATE BECAUSE OF THE DEAL WITH CHASE AND HOW MUCH CREDIT CARD USAGE THERE IS. AND THERE’S ALL SORTS OF STUFF BEHIND THE SCENES, STORING THEIR CASH BALANCE. THAT LONG-TERM RELATIONSHIP BETWEEN THEY’RE PRIMED FOR A BIGGER EXPANSION. CAROLINE: GREAT WRITE-UP. I URGE PEOPLE TO GO. ALSO LEARNED THAT THESE STORIES ARE PLAYING GOLF SOMETIMES. MARK ALWAYS WITH THE FACTS, THANK YOU.
MEANWHILE, THAT DOES IT FOR
2023-12-07 11:08
