October 28, 2024 • 42 mins
Bloomberg's Ed Ludlow sits down with OpenAI's Sarah Friar and Anthropic's Daniela Amodei, live at the Money 20/20 conference in Las Vegas. Plus, Caroline Hyde takes a deep dive into how Russia is continuing to access powerful Nvidia chips via a Mumbai pharma company, and Apple rolls out Apple Intelligence and its Mac overhaul.
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Speaker 1 (00:01):
From Mahard where Innovation of Money and Power Collie in
Silicon Valley NBN. This is Bloomberg Technology with Caroline Hyde
and ed Blood Love.
Speaker 2 (00:25):
Now from New York and Las Vegas. This is Bloomberg Technology.
This hour, we sit down with Open Aiyes, Sarah Frier,
and anthropics Daniella Amode Nive and the Money twenty twenty conference.
Speaker 3 (00:35):
In Las Vegas.
Speaker 2 (00:37):
Plus a deep dive into how Russia is continuing to
access powerful in video chips for a Mumbai farmer company,
and Apple is planning a slew of announcements plus its earnings.
This week, we push ahead to the Apple Intelligence rollout
and it's Mac overhaul. But first we check out how
Apple is helping push us higher on the NASDAC.
Speaker 3 (00:55):
We are at or thereabouts.
Speaker 2 (00:57):
Record highs once again for this particular tech heavy benchmark.
All eyes on six tens percent higher. All eyes on
the earnings that come out this week. Let's just dive
into what we're expecting, because they come thick and fast. Friends,
We've got the likes of course Reddit coming as soon
as tomorrow, We're going to have the Juggernauts, that is,
of course Alphabet AMD on the chip side, we push
aboard so many more names than metas, the Microsofts, the Amazons, and.
Speaker 3 (01:19):
Of course the Apples.
Speaker 2 (01:21):
But first and foremost, we've got to be getting out
to Las Vegas, where Ed is sat.
Speaker 3 (01:26):
For a very special guest.
Speaker 4 (01:31):
Welcome to our Bloomberg television and radio audiences around the world.
Speaker 5 (01:35):
We're live in Las Vegas.
Speaker 4 (01:36):
This is Money twenty twenty, and we're joined by open
AI's CFO Sarah Fryer.
Speaker 5 (01:41):
And this is interesting.
Speaker 4 (01:41):
You have some history with Money twenty twenty, history with fintech,
but that's kind of the point. And so much of
the focus to date on open ai has been I guess,
a personal use of chat GPT, But let's start with
the banks and finances. How much of that is made
up in your business?
Speaker 6 (01:58):
Yeah, I'll flank you out. So great to be here,
and you're right, Money twenty twenty. I've seen it progress
through the years. What an incredible event it is today,
and we're here because our customers are here. AI is
happening right now. It's not experimental. It's not something that
people are just playing around with, banks, financial institutions, FinTechs.
People are using it today in their business.
Speaker 4 (02:21):
There's the Morgan Stanley case study. Yeah, you know, this
week alone or past week, Bank of America's talks about
how many patents it's got in machine learning and artificial intelligence.
But do you actually have a tangible sense of what
it is those financial institutions are doing with your large
language models.
Speaker 7 (02:36):
Yes, absolutely so.
Speaker 6 (02:36):
Morgan Stanley is a great example in their wealth management business.
They're using our models both to help wealth advisors be
more productive. They're using it as a way to create
better financial advice and outcomes for customers. We're seeing folks
like Klarna use it in a customer service. CEO of
Clarina has been very loud and proud on this front.
That's another great case study in terms of productivity improvements.
(03:00):
And then we have banks like VBVA that are using
it all across their business. And that's really our message here.
It's just get started. Get enterprise chat, GPT, roll that
to a organization, see what your people do with it.
Help them just get started, whether they're in marketing, in
finance and product everyone can have really interesting even.
Speaker 4 (03:18):
If we are just getting started. Can you help our
audience understand how meaningful contribution the financial services sector fintech
makes to open AIS revenue.
Speaker 6 (03:27):
Yes, so today if you look at our largest verticals
areas like edu, education, healthcare, but financials is probably third.
And again I think that's because they are typically early adopters.
They're often willing to take that risk because they see
the upside in terms of driving more revenue. But they
also are very good at managing their cost and efficiency.
(03:47):
And it's great when you get an early adopter like
Morgan Stanley because it tends to lead the way. I
can think of a wealth management client today that's not
coming to us to say what do we need to do?
Speaker 7 (03:57):
How do we get started?
Speaker 4 (03:59):
Banks in particular can be sensitive to pricing. There's a
lot of curiosity not just in sort of as a
consumer how much I'm paying on a monthly basis for
chat GPT access.
Speaker 5 (04:10):
But at the enterprise level as well.
Speaker 4 (04:11):
Reports are for example, at the corporate pay user level,
you're thinking it about two thousand dollars per head? How
are you managing us give us insight into the pricing strategy?
Speaker 6 (04:21):
Sure, so pricing is super interesting because we're really trying
to think about value and what is this person getting
from this tool? And I don't think I actually don't
think we've done a great job of that yet ourselves.
Despite that, we have two hundred and fifty million weekly
active users and of that a you know, five six
percent actually converted to be plus customers, so they're paying.
(04:42):
But if you look at the value when we were
rolling out oh one, our reasoning model, and this is
a model that stops and thinks for you, it actually
does hard problems. I was watching a lawyer in action
using it to create a brief and at the end
we said to them, what would you have paid for that?
Like if you had a paralegal doing that thing is
like easily one thousand to two thousand dollars per hour.
(05:03):
And this is someone who's using it. If it's an enterprise,
perceeds probably sixty bucks per month. And this is someone
who would have paid one thousand to two thousand dollars
per hour. So I think that there's a lot of
value that is in the product today, but we are
just trying to make sure people can get started, can
actually see the outcomes, and over time we believe that
(05:24):
value to price will come into alignment.
Speaker 4 (05:26):
There's a balance right between what's of value to your customer.
But also you know you have to account for open
AIS spending. So we talked about endlessly, particularly on the
compute side. What is that balance in what works best
for you and your customer base?
Speaker 6 (05:41):
Yeah, so it our first and foremost what's most important
to us is to stay on the frontier, building the
frontier models, making sure that we are bringing ultimately agi
to the benefit of humanity.
Speaker 7 (05:52):
To do that, it's expensive.
Speaker 6 (05:54):
We have to invest in large scale compute and so
to me, there's.
Speaker 7 (05:58):
Really two ways to that.
Speaker 6 (06:00):
It's either through the free cash flows of the business
spoken like a good CFO, or it's through raising equity
and debt financing because investors can see the long term
potential of this business. So on the former, on the
cash flows of the business, we want to make sure
we keep growing that business. I think we have been
wowed at just the pace of growth, particularly on the
consumer side. It's about seventy five percent of our business today.
(06:23):
But even our enterprise businesses, they are young, but they
are already doing an incredible amount of annualized revenue and
we're real excited by the potential there.
Speaker 4 (06:33):
For all Blueberg television and radio audience worldwide. We're in
Las Vegas at Money twenty twenty and we're speaking to
the Open AI CFO Sarah Fryar, and you talk there.
Speaker 5 (06:42):
About the consumer business.
Speaker 4 (06:44):
Something very interesting is the future business model AD supported tiers,
for example, very specifically segmented pricing.
Speaker 5 (06:52):
How do you think about that, Sarah, Yeah, so I.
Speaker 6 (06:54):
Think you always want to stay open to alternate business
models or ways that you can layer a new business
model on top. Now, the key for us is always access.
How do we make sure as many people as possible
get access to this tool? And that's on a global stage,
by the way, And so to do that sometimes you
do pivot away from just pure subscription models to models
(07:14):
like ads. My last company was all ads, so I've
definitely experienced this. I think ads have their place, but
you have to be really mindful of where. I think
in areas like commerce, ads are great. Right if I
do a chat GPT prompt for black high heeled shoes,
something I probably would do, I actually don't want a
history of the black high heeled shoe. I want five
(07:35):
stores I could buy from right now, probably e commerce.
So that's why companies like Shopify are great customers of
ours as well. But there are other places where actually
the AD model doesn't make as much sense. You want
to get the consumer to the answer they need as
fast as possible, and I think that's where chat gipt
is a really very different platform from say something like
Google Search.
Speaker 4 (07:56):
You are still relatively early in this role, but it's
been two years since the original deal with Microsoft was negotiated,
and that compute relationship is critically important. Yes, all those
terms change, are they fluid or are you just sticking
to the contract that was on your desk when you arrived.
Speaker 6 (08:15):
Now and it's actually longer than two years. Microsoft and
open ai have been partners, I think for actually almost
five years, so they really came to us when we
were a research lab and the deal that we've worked
with them is they do provide compute exclusively and we
give them the IP around artificial intelligence.
Speaker 7 (08:33):
So it's incredible.
Speaker 6 (08:33):
The products they're rolling out today are really built a
top of open AI's AI. As we go forward and
as we get bigger, we absolutely see am maturing in
that relationship, and so for consumer benefit, we want to
make sure consumers always get access to what they need.
That will probably mean compute for more parties over time.
We did discuss the Oracle deal or Oracle discussed it
(08:55):
a few quarters back, and I think that's a good
starting point for just how do we maximize compute so
we maximize the impact for consumers.
Speaker 4 (09:03):
The catchphrase or buzz word of this year, I think
has been ship products. You're the CFO, and so there's
a tension between the cost of doing so and the
need to move quickly. I think Sam has denied recently
reports that the next model will be out by year end.
What can you tell us about the path forward their
the cadence of new models to come.
Speaker 6 (09:24):
Yeah, I mean I think you hit the nail on
the head ship product product velocity.
Speaker 5 (09:28):
That is the.
Speaker 6 (09:29):
Mantra internally to open Aye. And it's something I've just
been so wowed by since I started as just how
fast we do ship products right? Even in my short tenure,
I've seen oh one come on our reasoning model. That
huge step forward from kind of what has been more
the chatchipt model series. We've launched things like advanced speech
(09:51):
back to the model itself.
Speaker 7 (09:53):
The O series four.
Speaker 6 (09:54):
O enough four Mini for example, four O Mini, which
is our distilled model, is one one hundreds the cost
of what the original CHATWPT four model was. That is
incredible for developers, and that's why you see the API
products be so successful. And again it goes back to
how do we get this into the hands of many
developers are a force multiplier and today I'm super proud.
(10:17):
I think every single ai unicorn is built a top
of open AI's API, and that will tell you how
we are the frontier model.
Speaker 4 (10:25):
I think when I started covering open ai there was
around five hundred people at the company.
Speaker 5 (10:29):
It's probably near two thousand now.
Speaker 6 (10:30):
Yeah.
Speaker 4 (10:31):
Part of that is the CFO is to keep talent,
long serving talent happy. My understanding is that tenders will
be a big part of that, giving employees liquidity. What
will be the cadence and sort of increments of that
going forward?
Speaker 6 (10:43):
Sarah, Yeah, So we are a company that has done
tenders to date, and part of that is because we
are in a competitive market, particularly for research talent. When
I think about what keeps you on that front edge
of the best models out there, it is compute, but
more importantly.
Speaker 7 (10:57):
It's people. It's great researchers.
Speaker 6 (11:00):
And so in order to compete with companies that have
liquidity already in their stock public companies, we have taken
this approach to tenders a little bit like others in
the space.
Speaker 5 (11:08):
SpaceX is a great bax one we've covered closer, yes.
Speaker 6 (11:11):
And so we want to be able to keep doing that.
We want to do it thoughtfully and mindfully, knowing that
the other rule one is to keep it on the field,
make sure we have money for compute. So it's always
a balance, but we do think it's important to give
our researchers that access for.
Speaker 4 (11:25):
A Bloomberg television and radio audience all around the globe.
We're in Las Vegas and we're speaking to the open
Ai CFO Sarah Fryar. Open Ai is a software company,
or it was now a lot of the focuses on
Sam and the team's ambitions with safeguarding infrastructure. How involved
are you in that talking about the sort of construction
(11:47):
of five gig data centers and the financing of such things.
Speaker 5 (11:51):
Yeah.
Speaker 4 (11:51):
Was that a surprise to come in and sort of think, Okay,
I need to get a handle on that project.
Speaker 6 (11:56):
Not a surprise, but definitely a stretch.
Speaker 7 (11:59):
It's new Taiar.
Speaker 5 (12:00):
It's very stretch from a capital perspective, stretch.
Speaker 6 (12:02):
From a capital and also just my own learning. Frankly,
I think we're all learning in this space. Infrastructure is destiny.
It's this wonderful phrase that Chris Lane has managed to
get up there in the world, and we do think
that this build is important.
Speaker 7 (12:15):
It's important for.
Speaker 6 (12:16):
US competitiveness, it's important for world productivity. It's important even
with a national security lens. And so you are right.
One of the key jobs I need to do is
to figure out that capital allocation story. It's going to
be both a working with partners, it's going to be
raising financing, but it's always making sure that we are
staying ahead of what will be required. Call it two
(12:39):
three years out, because you can't just turn on compute
today if you need it, you actually have to have
thought about it, probably about three years ahead on that,
if I may.
Speaker 4 (12:49):
One of the things I heard from some of your
investors is you did a very good job early in
explaining the basics of the plan, but the ultimate goal
is AGI.
Speaker 7 (12:57):
That's correct.
Speaker 4 (12:58):
How confident do you feel you have that sort of
into infrastructure in place or a plan to have it
for AGI.
Speaker 6 (13:04):
I think we have the plan in place. I think
if Sam we're sitting on the seat, he would tell
you AGI is closer.
Speaker 5 (13:10):
Than most think, But what would you say?
Speaker 7 (13:14):
I would agree based on what I'm seeing.
Speaker 6 (13:15):
Like one of the best meetings I get to go
to once in a while is the research meeting, And
it would blow your mind to see what's already coming
and what as we have learned how to take reasoning
models like one preview yes on top of GPT models
and the interplay between those, you're now really starting to
(13:36):
see some incredible outcomes. PhD level outcomes where you have
in your pocket human intelligence that is PhD level and
physics and biology and chemistry in English literature, like whatever
the job is you need to do if you're a
healthcare researcher, if you're a banker, if you're an education
the tool that you are now caring the power there
(13:58):
blows my mind.
Speaker 4 (14:00):
You touched on it a moment ago, financing the needs
to raise capital. You've just done a pretty astonishing large round.
But a follow on, I mean you must have a
good sense of the cadence of needing to raid funds
on an annual basis. I don't know how you plan it.
Speaker 7 (14:13):
Yeah, so it goes back.
Speaker 6 (14:14):
To what you said, which is really understanding in your plan,
what are your big expenses compute is the biggest, but
we also need to run a company, so we have
real operating expenses. We're right in the guts right now
of FY twenty five planning. That is usually a three
year outlook in most companies, and for us it needs
to be because we have to make those compute decisions.
And with that comes then, Okay, what is our balance
sheet going to look like? What's our cash burn rate?
(14:37):
At what point can we generate enough free cash flow
to actually fulp the business? Not ready to tell you
that today. That's for the next time we talk. And
then on top of that, how do I help keep
bringing our syndicative investors along?
Speaker 7 (14:49):
I called them with us.
Speaker 4 (14:54):
We are less than a week from the election, and
I think about my own use of four to H
not used it related to the elections searching for information,
But are you preparing for that election and what impact
might it have on open AI?
Speaker 7 (15:07):
Yeah, we absolutely are.
Speaker 6 (15:09):
We have to be very mindful from a safety perspective today.
If you do searching around the election, you'll actually see
that often we will not return a response or will
return with a caveat. That says to be mindful of
your sources. And I think I learned a lot of that. Frankly,
yet nextdoor right, you cannot need to be careful of
not being paternalistic or paternalistic around people. People need to
(15:30):
be able to find information make their own educated decisions.
But at the same time you also need.
Speaker 7 (15:36):
To be very aware.
Speaker 6 (15:37):
When you have a platform that today services two hundred
and fifty million people every single week, we have to
recognize that they're going to want to do things, and
we need to provide avenues but in a safe and
secure way.
Speaker 4 (15:49):
Open AI CFO Sarah Fryar here live in Las Vegas.
Thank you very much. Thanks actually back to you.
Speaker 3 (15:57):
Ed, we thank you.
Speaker 2 (15:59):
Coming up in video, chips are still winding their way
to sanctioned Russia. We discuss the alleged shipments of servers
optimized for artificial intelligence via India. Meanwhile, we want to
bring you some movement in Alphabet's shares, parent company of Google.
Of course, there is a report from the Information saying
that Meta Platforms, of course, owner of Facebook and Instagram,
(16:20):
is trying to keep pace with the likes of open
AI in developing AI. But they're also looking at a
search engine that is going to crawl the web to
provide conversational answers about current events to people using meta AI. Basically,
they want to rely less on being and Google Search.
We're up sixteen percent, but we did fade those rallies earlier.
Speaker 3 (16:39):
On that headline. This will be mad Technology.
Speaker 2 (16:54):
Quick check on Apple shares for you, because we know
that they're showing us the latest max and the price
points we are seeing. Of course, the iMac desktop new
twenty four inch is going to be faster AI focused
M four processor inside it one and ninety nine price
points same as the prior model is faster, and it
has an enhanced neural engine basically to help with his
AI tasks. We're also, of course getting updated to the
(17:16):
finally some access to Apple Intelligence its first iteration. Anyway,
we're currently hired by almost a percentage point. Meanwhile, we
turn our attention to today's big take. It focuses on
some trade tracking data which shows that Indian farmer firm
Shreya Life Sciences is selling top end Dell servers optimized
for artificial intelligence to Russia. Bloomberg's Victoria dendrinum Co wrote
(17:40):
the story, joining us, now, so is this new that
we're starting to see India as a way of accessing
in Nvidio chips for Russia, for example.
Speaker 1 (17:50):
So I think the roll of India has certainly come
into focus for the West, so for Europe and the US.
Over the past couple of years, they've been looking at
various trees in Asia as trendshipment hubs where these goods
can essentially come from subsidiaries, vendors, as tributors. These goods
primarily manufactured by Western companies and primarily US companies actually,
(18:12):
So the role of India is kind of I guess
the magnitude of the role of India as a hub
has certainly become much greater over the last few months.
Speaker 2 (18:21):
And why have they become such prominent actors in what
is basically Russia trying to navigate barriers to accessing US tech.
Speaker 1 (18:30):
So there's a lot of reasons, I mean, partly when
we talk to officials in the US and Europe about it,
one thing they point to is that India has been
buying a lot of Russian oil, and Russia has a
lot of rupees at its disposal, so it's been using
these rapeats to it's been spending them essentially buying these goods.
Speaker 3 (18:46):
Out of India.
Speaker 1 (18:47):
So that's one part, a big part driving this increase
of this trade. Another reason is also that you know
where Western officials in US and Europe have put a
lot of effort into cracking down on other trendshipment hubs.
For example, the earlier part of last year there was
a big focus in the UAE, Turkey, Central Europe, Central Asia,
sorry as areas where these goods were being sent to Russia.
(19:09):
So I think a large part is the rupees that
Russia has to spend. But another one is that they're
cracking down. The West is cracking down on other areas
where these goods were originally shipped from.
Speaker 2 (19:18):
Now these in video ships are in Dell servers known
as power Edge XC nine six eighties, and Dell has said, look,
since ever the sanctions came into place, they stopped shipments
to Russia. But I'm interested in whether ultimately any of
this is actually illegal.
Speaker 1 (19:35):
Well, technically it's not illegal in that India is not
bound by US or European sanctions. And in terms of
the companies, I mean it's true, you know, a chip
produced by a company in the US, I mean it's
it's trade cycle. I guess around the world it's impossibly
difficult to track because you have vendors, distributors, subsidiaries, all
these other kind of companies or you know, people that
(19:59):
take part in the trade route. So in terms of
legal responsibility is it's almost impossible to place that on
someone sortily in the US who would be liable. But
what could happen next post is that which has been happening,
is that the US could, for example, designate a lot
of these companies or a lot of these intermediaries around
the world who do participate in the trade of these goods.
Speaker 2 (20:19):
It's a fascinating deep dive into the role of this
one particular pharmaceutical company in India and the shipments that
it's currently making. Victoria, thank you for bringing it, Victoria Trendino.
Speaker 3 (20:36):
Time now for talking tech.
Speaker 2 (20:37):
First up, Hong Kong is outland its first policy guidelines
dedicated to the use of artificial intelligence in finance, and
it's actually floated a tax break for crypto assets too
the Hong Kong University of.
Speaker 3 (20:47):
Science and Technology.
Speaker 2 (20:48):
Meanwhile, it's also going to make a homegrown large language
model available to the local financial services industry.
Speaker 3 (20:55):
Plus Japan's Olympus, which.
Speaker 2 (20:56):
Manufactures and distributes medical precision machines and instruments. Of course,
previously famed for its cameras, It's pushed out at CEO
less than two years into after investigating an allegation he
purchased illegal drugs. The company's shares, as you can see,
was declining some seven percent on Monday, the biggest in
today slide.
Speaker 3 (21:13):
In almost three months.
Speaker 2 (21:15):
And Robin Hood is joining competitors in allowing retail traders
to bet on election outcomes before next week's US.
Speaker 3 (21:21):
Vote for president.
Speaker 2 (21:22):
The company is rolling out contracts pegged to specific events,
including whether a particular candidate will win an election. This
as Elon Musk appeared at a New York Trump rally
yesterday saying he could save the country two trillion dollars.
Speaker 8 (21:35):
Take a listen, how much do you think we can
rip out of this wasted six point five trillion dollar
Paris Biden budget.
Speaker 5 (21:46):
Well, I think we're can do at least two trillion.
Speaker 2 (21:58):
Welcome back to Blue Mega Technology and Karen Hyder, New York.
Speaker 3 (22:01):
Quick check on these markets for you, because we.
Speaker 2 (22:02):
Have been coasting hired to once again near those record
highs for the NASDAG. Now's that one hundred still off
of that high that we met back in July, we're
still up three tens of percent.
Speaker 3 (22:11):
All eyes on the.
Speaker 2 (22:12):
Huge amount of earnings coming out when it comes to
big tech. Of course, tomorrow we anticipate the likes of Alphabet,
of Reddit, of AMD and then of course the metas
the apples throughout the rest of the week. Have a
quick look on what's moving in terms of under the
hood of the Nasdaq one hundred right now, Looking though
at what is a European name also traded in terms
of its ADRs here in the United States. Phillips Electronics
down by some sixteen percent. It finished shop Training down
(22:35):
seventeen percent in Europe. Why key lack of demand coming
from China. It's weighing on ge healthcare technologies today that's
also off by some three percent.
Speaker 3 (22:43):
That company also.
Speaker 2 (22:44):
Caused Medical Equipment had already signaled they were seeing a
lack of demand in the summer coming from China.
Speaker 3 (22:49):
But we look at Alphabet, still up sevent tens percent.
Speaker 2 (22:51):
It took a dip into negative territory earlier as the
Information reported that Meta AI might be trying to reduce
its dependence on Google Search and being and is still
instead build its own method of scraping the internet for
current answers to meta AI prompts. But now we're currently
up to seven tens percent. All lies on their earnings
later in the week. But now let's return to the
(23:12):
juggernaut that is Apple as well helping lead the benchmarks
high today. It's got a week full of announcements as well.
Speaker 3 (23:19):
As its earnings. Let's just go through what we've already
heard today.
Speaker 2 (23:21):
Among the new products we understand, of course, has been
this new iMac starting in two and ninety nine dollars.
It's coming with that M four chip. All about of
course AI. There an upgraded camera, Apple Intelligence as well,
coming online as soon as today. Let's get to it
with Ana rag Rana, and we're all trying to work
out at the moment Anarag, how we're going to be
(23:41):
using Apple Intelligence in our various Apple products. But how
important are these announcements, particularly the MacUpdate.
Speaker 9 (23:49):
Yeah, see when you look at the mackup dates, I
think its announcement is important from a tech point of view,
just to showcase how good Apple is when it comes
to the chip technology, how far it has come in
the last four to five years. I think it's probably
important from that more point of view than financial because
as you can as you know, you know, Mac account
for more less than ten percent of total sales for Apple,
(24:13):
so financially not so much, but it's an important from
a tech point of view.
Speaker 2 (24:17):
What's also been grinding everyone is the hopes that Apple
Intelligence will of course make us all use and depend
on artificial intelligence that much more. But the fact that
it's not coming until December of the operating system update
really to make it useful for us. How much has
that been an issue for you from a perspective on
Apple as a buy.
Speaker 9 (24:35):
Now when you look at it from a you know,
just a product refresh cycle, we think this is a
good catalyst, but for the long run, which means over
the next few years, we will see this basically force
customers or consumers who have Apple products to go out.
Speaker 5 (24:49):
And buy new things.
Speaker 9 (24:50):
I don't think it's going to have people rush out
and get things over the next you know, six months.
And I think that's where our discussion is slightly different
than some of the other analysts are looking for. Is
an iPhone supercycle. We don't think that's going to happen
this year. We think that could be more of a
phenomena with the iPhone seventeen launch.
Speaker 2 (25:08):
Yeah, I love the title of your latest react. You
go to the Boomberg and mattnaged to get it, the
Bloomberg Intelligence, and it says the launch.
Speaker 3 (25:15):
Is a long term driver for products.
Speaker 2 (25:18):
In the short term, there's some interesting news that's been
broken around a key development of Apple being rolled out
or not rolled out, it would seem in certain countries.
Can you talk to us about Malaysia and whether or
not it's important that iPhones won't be accessible there.
Speaker 9 (25:32):
So when you look at it, the launch of Apple
Intelligence features that will be staggered throughout now as far
as some of the emerging markets are concerned. Those are
really important in markets. And I saw the same news
releases you saw, and there was some investment decision that
Apple did not make that mark. But you know, I'm
fairly confident over the next twelve months or so, Apple
will take care of that from its end. But the
(25:54):
biggest market, or the most important thing for us going
into the quarter is what's going really happening in China.
And I think that, you know, people really forget how
important that market is for Apple. And I think that's
where some of the disappointment may be there, so I.
Speaker 3 (26:08):
Mean and I correct myself.
Speaker 2 (26:10):
Indonesia is blocking Apple from selling its later siphones.
Speaker 3 (26:13):
This is more a quarrel.
Speaker 2 (26:15):
About how much investment the company is making within Indonesia,
feeling that not enough has been made. More broadly, how
resolute is the emerging markets? How necessary is it for
new markets to continue.
Speaker 3 (26:27):
To evolve Apple?
Speaker 9 (26:29):
See, it's incredibly important when you look at a market
like the US, Let's say the population size of three
hundred odd million, three hundred fifty million somewhere around that.
Indonesia is the same size. So longer term, as those
countries become more richer or more affluent, they will be
looking at Apple products in order to you know, be
a big part of that ecosystem. So, whether it's China,
(26:51):
whether it's India, whether it's Brazil or Indonesia, all of
these markets are extremely important for Apple.
Speaker 2 (26:57):
Anna Rag, we thank you so much Formegan Intelligence breaking
it down with their latest Apple announcements. We push ahead
to its numbers of course, coming to the market on Thursday.
Speaker 3 (27:06):
Meanwhile, coming up in.
Speaker 2 (27:07):
The here and now, we're going back to Money twenty
twenty to sit down with Anthropic president Danielle am Ode
That conversation up next, but first let's just check in
on a stop that continues to rally hard.
Speaker 3 (27:19):
We are looking at former President.
Speaker 2 (27:21):
Donald Trump's social media startup DJT as it's known or
Trump Media. Five week surge that's pushed the stock up
by some two hundred and seventy percent. It's up nineteen percent,
of course, unprofitable, worth about nine billion dollars. But this
is after Trump held that very high profile event in
Madison Square Garden on Sunday. This is retail investors perhaps
(27:42):
backing ahead of the all important election next week.
Speaker 3 (27:46):
This is Brummet technology.
Speaker 4 (28:01):
This has been most technology, and we're live in Las
Vegas and Money twenty twenty. It's really a fintech focus conference,
but AI is front and center, and we're joined right
now by Amthropic President Daniellamoday. And it's interesting you have
a background in fintech pre AI. Now you're in AI
and you're doing a lot of business with banks financial
(28:22):
services companies. One point of difference with Anthropic maybe is
you really focus on the enterprise customer, and you did
it early. But give me a sense of the split,
you know how much business you're doing with the banks
and other financial services groups.
Speaker 10 (28:36):
Well ed, great to see you again, Thanks so much
for having me on the program. So Andropiic really has
the opportunities to support enterprises really across a wide array
of different industries. So healthcare, legal services, financial services have
really all been early enterprise customers for us, and we
(28:57):
really believe this is in large part because of our
focus on really building for businesses. Financial services has always
been a cornerstone pillar for Anthropic as we have really
built and expanded the cloud.
Speaker 4 (29:09):
Models, how our banks or investment firms using your large
anguage models.
Speaker 10 (29:15):
So so much of what we'd seen, especially over the
course of the past year is really these companies becoming
more sophisticated about how they are integrating a tool like Claud.
In particular, we're seeing many of these financial services and
fintech companies using Quad for things like fraud detection, financial analysis,
(29:37):
really partnering with their analysts on a wide array of
different complex financial tasks. Customer support is also a use
case that is really applicable across a wide array of
financial services companies, as well as administrative support and so
businesses like Jane Street, Bridgewater into it. Stripe and Coinbase
(29:58):
are all customers that make use of quaud for many
of the applications.
Speaker 7 (30:02):
That that I just mentioned.
Speaker 4 (30:03):
Stripe somewhere used to work something I know, not something
known to you. What I understand from speaking to a
lot of those that either working in banking or in
investment or asset management is you have the sort of
data security component and then a regulatory component. Why is
it that they trust you with both of those pieces.
Speaker 10 (30:22):
So Anthropic has always had a very strong stance on trustworthiness, reliability,
privacy and security of the systems that we are developing.
And something we feel very strongly about is that privacy
of data is an incredibly critical component of companies feeling
comfortable using generative AI. So we have never trained on
(30:44):
customer data by default, and we have always worked to
integrate closely with our partners at AWS and GCP on
the security side as well.
Speaker 4 (30:53):
In terms of regulation, there has been used in the
past week, which is the UK's Competition of Markets Authorities
looking at Googles partnership or investment in Anthropic, how are
you working with the CMA to address their concerns.
Speaker 10 (31:06):
So we are fully cooperating with the CMA to share
all requested information and fundamentally and dropic is an independent company.
We operate in this new generative AI space and offer
our models non exclusively on our first party via our
consumer app, on Google GCP via Vertex, and also on
(31:28):
Amazon Bedrock denna.
Speaker 4 (31:30):
I would say from a technology perspective, many are obsessed
with agents at the moment. In your agentic tool is
computer use, It's different. Why did you take that approach
to basically having an agent that can look at what's
on your screen, the actual hardware in front of you,
and then engage with it.
Speaker 10 (31:51):
We really feel, first of all, that this technology is
an incredible sort of potential leap forward for what these
models will eventually think be able to do. And we've
been very open that we think this is still in
beta right.
Speaker 7 (32:06):
We've very much sort of shared there's.
Speaker 10 (32:08):
Still limitations of the technology, but we thought it was
really important to release it to our customers today because
there's so much potential for computer use to really transform how.
Speaker 7 (32:20):
People use a tool like claud.
Speaker 10 (32:22):
Right, you can imagine this much more complex assistant that
is able to really partner with you, either by taking
more complex actions on your computer or on the web.
Speaker 7 (32:33):
You can imagine this eventual.
Speaker 10 (32:34):
Virtual coworker really expanding what is humanly possible for people
to achieve.
Speaker 4 (32:39):
There is a great gathering here in Vegas of your customers,
some of them will be in the room later today,
but also investors, people that are users of Clawed in.
Speaker 5 (32:48):
The various products you've shipped.
Speaker 4 (32:50):
How active are you and running the business of anthropic
right now, Daniella? Raising money yourself, managing the compute costs
versus pricing on your enterprise products.
Speaker 10 (33:01):
So anthropic, you know, like every company that is sort
of operating in this space, requires a huge amount of
compute to be able to really do the transformative research
that we do, and so our researchers are constantly working
to help optimize our compute and make sure that we're
using the hardware as efficiently as possible.
Speaker 5 (33:21):
Cost of a new model the cost.
Speaker 7 (33:22):
Of a new model exactly.
Speaker 10 (33:23):
And we're really finding ways, you know, in this sort
of incredible research field to help optimize how we're using
these models, coming up with new research innovations that are
really driving the pace of the generative AI innovation in general.
Speaker 5 (33:37):
Can we anticipate you raising more money as is.
Speaker 10 (33:40):
The case I'm sure you can imagine we are always,
you know, looking to have conversations like that, but not
actively fundraising right now.
Speaker 4 (33:48):
Less talked about is Anthropic also has a unique company structure.
Speaker 5 (33:52):
Are you happy with that structure? Do you envisage it
evolving over time?
Speaker 10 (33:57):
So Anthropic is a public benefit corporate and a little
bit different but pretty close. A public benefit corporation is
actually a pretty well established corporate entity. It's very similar
to sea corporation. It is a form of sea corporation,
but it enables a company like Anthropic to be able
(34:19):
to also prioritize its social impact mission in addition to
all of the normal corporate activities.
Speaker 7 (34:25):
That we engage in.
Speaker 4 (34:27):
We are about a week away from election in this country.
How is Anthropic preparing for that? But also do you
have a sense of how customers, consumer customers or enterprise
customers actually use some of the underlying models or tools
they build on top of it in the context of
the election. Maybe they don't.
Speaker 10 (34:45):
So Anthropic recently released a blog post really detailing all
of the work that we are doing on election integrity.
This is a topic where Anthropic has really been an
industry leader. We have been working on election integrity and
anti misinformation efforts for well over a year, and in
the course of doing that work, we have partnered very
(35:05):
very closely with both other industry actors but also civil
society groups, really experts in this incredibly important area that
we aim again to sort of be an industry leader
in sort of setting the waterline.
Speaker 5 (35:17):
For Anthropic President Daniella m Oday.
Speaker 4 (35:20):
We will talk later today in a longer conversation on stage,
but for now, Caroline, back to you in New York.
Speaker 3 (35:25):
Another brilliant conversation. We thank you.
Speaker 1 (35:28):
Ed.
Speaker 3 (35:36):
An Italian private equity outfit called.
Speaker 2 (35:38):
Bending Spoons already owns popular apps like Everanoe we Transfer,
and they could be coming for your favorite app next.
As Bloomberg's Mark Bergen writes, Bending Spoons has a type
distressed businesses with a steady cash flow that sells subscription software.
Mark berg enjoins us now, and you call it a
new kind of private equity for the app generation.
Speaker 11 (35:59):
What is it that they're doing, mak Their term is
they said if private equity had a baby with Google.
I think the idea here is it's sort of like
this this roll up private equity that we've seen and
we have Constellation Software, which is in Canada. That sort
of rolls up these pretty successful software businesses that they
may not be going gangbusters, don't necessarily an IPO, but
(36:21):
they are kind of printing money. What bending Spoon does
is they kind of then they can them over to
teams of new managers, researcher engineers and coders and data scientists,
and then they allocate resources depending on which one's doing well.
And so you've seen them sort of buying up more
prominent ever Note was the most prominent one we transfer recently.
(36:42):
We reported earlier this year they went after Vimeo, which
is a public company. In our reporting and our story today,
it looks like they're willing to spend upwards of one
to two billion dollars on acquisition. So I think it's
a name that people are going to become more and
more familiar with.
Speaker 2 (36:55):
And Luca Ferrari, the guy in charge of it all,
who's managed to get some celebrities to give him their money.
What's interesting is you spoke with the former founder of
ever Note, Phil Lebbin, who's now not part of the business,
but he thinks some of the energy being put towards
this business is perhaps a good thing, even if it
means some job cuts.
Speaker 5 (37:13):
Yeah, I was actually a bit surprised.
Speaker 11 (37:15):
You know, typically there's obviously this sort of when you
start a company and you leave it and you kind
of feel like this parent, and I mean it was
most striking to me. Started the story, Phil Ribbin, who
ran every note for eight years, had never heard of
Bending Spoons when he was kind of come over and
he was asked as a shareholder to sign away the
company to this Italian app developer. He told me, you know,
(37:35):
two years in, he's been pleasantly surprised by the progress.
Speaker 5 (37:38):
He still uses it every day.
Speaker 11 (37:40):
Anecdotally he sees people using the features more often. On
the flip side, you know, it's pretty easy to find.
There's a lot more competition forever note It was kind
of pretty dominant at one point in that kind of
note taking apps, and there are people that have have
left because of the price increases. But the company makes
the argument that they've actually made it better and that
they're not like private equity where they sort of are
trying to flip these assets, but they claim to buy
(38:03):
these companies and sort of hold on them for life.
Speaker 2 (38:06):
Even referencing Warren Buffett the Oracle of Omaha is perhaps
someone that they see themselves akin to in terms of
a business model. Mark Bergen. It's a brilliant story, we are.
It's all in BusinessWeek. Go see it. We thank you Mark. Meanwhile,
let's just turn our attention to the German juggle all
that is Volkswagen. It's announcing plans to cut expenses in
an effort to become even more competitive. But the automaker
(38:27):
plans to close at least three frack factories in Germany,
cut wages by ten percent, and the plan could also
lead to tens of thousands of job cuts in Europe's
largest economy. Another car company also looking to cut costs
here in the United States, Forward, currently trading up two percent.
They're set to report their third quarter earnings after the bell.
Stefan Nikola is with us at from Berlin to really
(38:48):
hone in on Volkswagen. First and foremost, this is an
ev story, a competition with China story, and an extraordinary
move to be shutting factories.
Speaker 3 (38:59):
Autely.
Speaker 12 (39:00):
This is a big move, and it really suggests that
the golden years are over for this ind industrial juggernaut
in Germany. Sales are slowing in Europe, the main VW
brand that brought us iconic models like the Golf and
the Beadle is struggling. It's struggling at home, but it's
also struggling in China where local manufacturers like BYD are
(39:23):
taking over, and that is really a big problem and
management knows they need to make cuts.
Speaker 2 (39:29):
What's also, of course a weak point is not only
their ability to penetrate China, but also a lack of
demand at home in Europe.
Speaker 12 (39:38):
Yeah, absolutely absolutely, and the German economy, as we know,
is stagnating, but car sales are down in Europe as
a whole. The European car market is still a fifth
below pre pandemic levels, so it has never caught back
up with the time before the pandemic, and that really
(39:59):
means there's overc opacity. And you know, at least three
factories to be closed in Germany, while there's negotiations about
that is still ongoing. Of course, that is a big
number and it's yeah, it's leading to big headlines in
Germany here.
Speaker 2 (40:15):
What then, of other automakers, we think of Mercedes Benz
for example, really the refined side of automaking German based
as well. How have they managed to navigate China or
not release the competition in evs too.
Speaker 12 (40:31):
Yeah, they're all struggling in China. All the Western carmakers
are struggling. Maybe Tesla is a small exception, but BMW, Porsche, Mercedes,
they're all struggling because the market there is shifting rapidly
to evs and the local customer seems to favor Chinese
evs at the moment. And we also have the problem
(40:56):
that there is a luxury slow down in China. We
have the real estate crime is still so people are
holding off purchases. So that is just bad news in
general for all these Western luxury carmakers.
Speaker 2 (41:07):
Look, there's a lot of pre announcements to digest from Volkswagen,
but we also are anticipating their numbers, their earnings, which
aren't going to be pretty. We also sit here in
the US eyeing what Ford is going to be telling us,
and we're anticipating actually some decent growth in from an
earnings per share basis, But if I look at the
whare the revenue is expected going to be flat. Stefan,
can you give us a taste of what to expect
in some of these earnings?
Speaker 12 (41:30):
Yeah, I mean We've had several profit warnings over the
past weeks and months from basically every major European car maker,
and you know the fave earnings, the Volkswagen earnings on
Wednesday are not going to be good.
Speaker 5 (41:44):
We know that they're.
Speaker 12 (41:46):
Going to be reporting declining sales and profitability. That's already expected.
The question is what will they say about twenty twenty five.
Is there a light at the end of the horizon,
will things improve? That's what in West we'll want to hear.
Speaker 2 (42:01):
And indeed, German employees to Stefan Nikola, we thank you
so much, coming live from Berlin. Meanwhile, that does it
for this edition of Bloomberg Technology. You don't want to
forget to check out our podcast, all those incredible conversations
from Open Ai of course, from the likes of Daniella
Mode as well and Anthropic.
Speaker 3 (42:18):
Don't miss it. This is Blomberg Technology.
From Mahard where Innovation of Money and Power Collie in
Silicon Valley NBN. This is Bloomberg Technology with Caroline Hyde
and ed Blood Love.
Speaker 2 (00:25):
Now from New York and Las Vegas. This is Bloomberg Technology.
This hour, we sit down with Open Aiyes, Sarah Frier,
and anthropics Daniella Amode Nive and the Money twenty twenty conference.
Speaker 3 (00:35):
In Las Vegas.
Speaker 2 (00:37):
Plus a deep dive into how Russia is continuing to
access powerful in video chips for a Mumbai farmer company,
and Apple is planning a slew of announcements plus its earnings.
This week, we push ahead to the Apple Intelligence rollout
and it's Mac overhaul. But first we check out how
Apple is helping push us higher on the NASDAC.
Speaker 3 (00:55):
We are at or thereabouts.
Speaker 2 (00:57):
Record highs once again for this particular tech heavy benchmark.
All eyes on six tens percent higher. All eyes on
the earnings that come out this week. Let's just dive
into what we're expecting, because they come thick and fast. Friends,
We've got the likes of course Reddit coming as soon
as tomorrow, We're going to have the Juggernauts, that is,
of course Alphabet AMD on the chip side, we push
aboard so many more names than metas, the Microsofts, the Amazons, and.
Speaker 3 (01:19):
Of course the Apples.
Speaker 2 (01:21):
But first and foremost, we've got to be getting out
to Las Vegas, where Ed is sat.
Speaker 3 (01:26):
For a very special guest.
Speaker 4 (01:31):
Welcome to our Bloomberg television and radio audiences around the world.
Speaker 5 (01:35):
We're live in Las Vegas.
Speaker 4 (01:36):
This is Money twenty twenty, and we're joined by open
AI's CFO Sarah Fryer.
Speaker 5 (01:41):
And this is interesting.
Speaker 4 (01:41):
You have some history with Money twenty twenty, history with fintech,
but that's kind of the point. And so much of
the focus to date on open ai has been I guess,
a personal use of chat GPT, But let's start with
the banks and finances. How much of that is made
up in your business?
Speaker 6 (01:58):
Yeah, I'll flank you out. So great to be here,
and you're right, Money twenty twenty. I've seen it progress
through the years. What an incredible event it is today,
and we're here because our customers are here. AI is
happening right now. It's not experimental. It's not something that
people are just playing around with, banks, financial institutions, FinTechs.
People are using it today in their business.
Speaker 4 (02:21):
There's the Morgan Stanley case study. Yeah, you know, this
week alone or past week, Bank of America's talks about
how many patents it's got in machine learning and artificial intelligence.
But do you actually have a tangible sense of what
it is those financial institutions are doing with your large
language models.
Speaker 7 (02:36):
Yes, absolutely so.
Speaker 6 (02:36):
Morgan Stanley is a great example in their wealth management business.
They're using our models both to help wealth advisors be
more productive. They're using it as a way to create
better financial advice and outcomes for customers. We're seeing folks
like Klarna use it in a customer service. CEO of
Clarina has been very loud and proud on this front.
That's another great case study in terms of productivity improvements.
(03:00):
And then we have banks like VBVA that are using
it all across their business. And that's really our message here.
It's just get started. Get enterprise chat, GPT, roll that
to a organization, see what your people do with it.
Help them just get started, whether they're in marketing, in
finance and product everyone can have really interesting even.
Speaker 4 (03:18):
If we are just getting started. Can you help our
audience understand how meaningful contribution the financial services sector fintech
makes to open AIS revenue.
Speaker 6 (03:27):
Yes, so today if you look at our largest verticals
areas like edu, education, healthcare, but financials is probably third.
And again I think that's because they are typically early adopters.
They're often willing to take that risk because they see
the upside in terms of driving more revenue. But they
also are very good at managing their cost and efficiency.
(03:47):
And it's great when you get an early adopter like
Morgan Stanley because it tends to lead the way. I
can think of a wealth management client today that's not
coming to us to say what do we need to do?
Speaker 7 (03:57):
How do we get started?
Speaker 4 (03:59):
Banks in particular can be sensitive to pricing. There's a
lot of curiosity not just in sort of as a
consumer how much I'm paying on a monthly basis for
chat GPT access.
Speaker 5 (04:10):
But at the enterprise level as well.
Speaker 4 (04:11):
Reports are for example, at the corporate pay user level,
you're thinking it about two thousand dollars per head? How
are you managing us give us insight into the pricing strategy?
Speaker 6 (04:21):
Sure, so pricing is super interesting because we're really trying
to think about value and what is this person getting
from this tool? And I don't think I actually don't
think we've done a great job of that yet ourselves.
Despite that, we have two hundred and fifty million weekly
active users and of that a you know, five six
percent actually converted to be plus customers, so they're paying.
(04:42):
But if you look at the value when we were
rolling out oh one, our reasoning model, and this is
a model that stops and thinks for you, it actually
does hard problems. I was watching a lawyer in action
using it to create a brief and at the end
we said to them, what would you have paid for that?
Like if you had a paralegal doing that thing is
like easily one thousand to two thousand dollars per hour.
(05:03):
And this is someone who's using it. If it's an enterprise,
perceeds probably sixty bucks per month. And this is someone
who would have paid one thousand to two thousand dollars
per hour. So I think that there's a lot of
value that is in the product today, but we are
just trying to make sure people can get started, can
actually see the outcomes, and over time we believe that
(05:24):
value to price will come into alignment.
Speaker 4 (05:26):
There's a balance right between what's of value to your customer.
But also you know you have to account for open
AIS spending. So we talked about endlessly, particularly on the
compute side. What is that balance in what works best
for you and your customer base?
Speaker 6 (05:41):
Yeah, so it our first and foremost what's most important
to us is to stay on the frontier, building the
frontier models, making sure that we are bringing ultimately agi
to the benefit of humanity.
Speaker 7 (05:52):
To do that, it's expensive.
Speaker 6 (05:54):
We have to invest in large scale compute and so
to me, there's.
Speaker 7 (05:58):
Really two ways to that.
Speaker 6 (06:00):
It's either through the free cash flows of the business
spoken like a good CFO, or it's through raising equity
and debt financing because investors can see the long term
potential of this business. So on the former, on the
cash flows of the business, we want to make sure
we keep growing that business. I think we have been
wowed at just the pace of growth, particularly on the
consumer side. It's about seventy five percent of our business today.
(06:23):
But even our enterprise businesses, they are young, but they
are already doing an incredible amount of annualized revenue and
we're real excited by the potential there.
Speaker 4 (06:33):
For all Blueberg television and radio audience worldwide. We're in
Las Vegas at Money twenty twenty and we're speaking to
the Open AI CFO Sarah Fryar, and you talk there.
Speaker 5 (06:42):
About the consumer business.
Speaker 4 (06:44):
Something very interesting is the future business model AD supported tiers,
for example, very specifically segmented pricing.
Speaker 5 (06:52):
How do you think about that, Sarah, Yeah, so I.
Speaker 6 (06:54):
Think you always want to stay open to alternate business
models or ways that you can layer a new business
model on top. Now, the key for us is always access.
How do we make sure as many people as possible
get access to this tool? And that's on a global stage,
by the way, And so to do that sometimes you
do pivot away from just pure subscription models to models
(07:14):
like ads. My last company was all ads, so I've
definitely experienced this. I think ads have their place, but
you have to be really mindful of where. I think
in areas like commerce, ads are great. Right if I
do a chat GPT prompt for black high heeled shoes,
something I probably would do, I actually don't want a
history of the black high heeled shoe. I want five
(07:35):
stores I could buy from right now, probably e commerce.
So that's why companies like Shopify are great customers of
ours as well. But there are other places where actually
the AD model doesn't make as much sense. You want
to get the consumer to the answer they need as
fast as possible, and I think that's where chat gipt
is a really very different platform from say something like
Google Search.
Speaker 4 (07:56):
You are still relatively early in this role, but it's
been two years since the original deal with Microsoft was negotiated,
and that compute relationship is critically important. Yes, all those
terms change, are they fluid or are you just sticking
to the contract that was on your desk when you arrived.
Speaker 6 (08:15):
Now and it's actually longer than two years. Microsoft and
open ai have been partners, I think for actually almost
five years, so they really came to us when we
were a research lab and the deal that we've worked
with them is they do provide compute exclusively and we
give them the IP around artificial intelligence.
Speaker 7 (08:33):
So it's incredible.
Speaker 6 (08:33):
The products they're rolling out today are really built a
top of open AI's AI. As we go forward and
as we get bigger, we absolutely see am maturing in
that relationship, and so for consumer benefit, we want to
make sure consumers always get access to what they need.
That will probably mean compute for more parties over time.
We did discuss the Oracle deal or Oracle discussed it
(08:55):
a few quarters back, and I think that's a good
starting point for just how do we maximize compute so
we maximize the impact for consumers.
Speaker 4 (09:03):
The catchphrase or buzz word of this year, I think
has been ship products. You're the CFO, and so there's
a tension between the cost of doing so and the
need to move quickly. I think Sam has denied recently
reports that the next model will be out by year end.
What can you tell us about the path forward their
the cadence of new models to come.
Speaker 6 (09:24):
Yeah, I mean I think you hit the nail on
the head ship product product velocity.
Speaker 5 (09:28):
That is the.
Speaker 6 (09:29):
Mantra internally to open Aye. And it's something I've just
been so wowed by since I started as just how
fast we do ship products right? Even in my short tenure,
I've seen oh one come on our reasoning model. That
huge step forward from kind of what has been more
the chatchipt model series. We've launched things like advanced speech
(09:51):
back to the model itself.
Speaker 7 (09:53):
The O series four.
Speaker 6 (09:54):
O enough four Mini for example, four O Mini, which
is our distilled model, is one one hundreds the cost
of what the original CHATWPT four model was. That is
incredible for developers, and that's why you see the API
products be so successful. And again it goes back to
how do we get this into the hands of many
developers are a force multiplier and today I'm super proud.
(10:17):
I think every single ai unicorn is built a top
of open AI's API, and that will tell you how
we are the frontier model.
Speaker 4 (10:25):
I think when I started covering open ai there was
around five hundred people at the company.
Speaker 5 (10:29):
It's probably near two thousand now.
Speaker 6 (10:30):
Yeah.
Speaker 4 (10:31):
Part of that is the CFO is to keep talent,
long serving talent happy. My understanding is that tenders will
be a big part of that, giving employees liquidity. What
will be the cadence and sort of increments of that
going forward?
Speaker 6 (10:43):
Sarah, Yeah, So we are a company that has done
tenders to date, and part of that is because we
are in a competitive market, particularly for research talent. When
I think about what keeps you on that front edge
of the best models out there, it is compute, but
more importantly.
Speaker 7 (10:57):
It's people. It's great researchers.
Speaker 6 (11:00):
And so in order to compete with companies that have
liquidity already in their stock public companies, we have taken
this approach to tenders a little bit like others in
the space.
Speaker 5 (11:08):
SpaceX is a great bax one we've covered closer, yes.
Speaker 6 (11:11):
And so we want to be able to keep doing that.
We want to do it thoughtfully and mindfully, knowing that
the other rule one is to keep it on the field,
make sure we have money for compute. So it's always
a balance, but we do think it's important to give
our researchers that access for.
Speaker 4 (11:25):
A Bloomberg television and radio audience all around the globe.
We're in Las Vegas and we're speaking to the open
Ai CFO Sarah Fryar. Open Ai is a software company,
or it was now a lot of the focuses on
Sam and the team's ambitions with safeguarding infrastructure. How involved
are you in that talking about the sort of construction
(11:47):
of five gig data centers and the financing of such things.
Speaker 5 (11:51):
Yeah.
Speaker 4 (11:51):
Was that a surprise to come in and sort of think, Okay,
I need to get a handle on that project.
Speaker 6 (11:56):
Not a surprise, but definitely a stretch.
Speaker 7 (11:59):
It's new Taiar.
Speaker 5 (12:00):
It's very stretch from a capital perspective, stretch.
Speaker 6 (12:02):
From a capital and also just my own learning. Frankly,
I think we're all learning in this space. Infrastructure is destiny.
It's this wonderful phrase that Chris Lane has managed to
get up there in the world, and we do think
that this build is important.
Speaker 7 (12:15):
It's important for.
Speaker 6 (12:16):
US competitiveness, it's important for world productivity. It's important even
with a national security lens. And so you are right.
One of the key jobs I need to do is
to figure out that capital allocation story. It's going to
be both a working with partners, it's going to be
raising financing, but it's always making sure that we are
staying ahead of what will be required. Call it two
(12:39):
three years out, because you can't just turn on compute
today if you need it, you actually have to have
thought about it, probably about three years ahead on that,
if I may.
Speaker 4 (12:49):
One of the things I heard from some of your
investors is you did a very good job early in
explaining the basics of the plan, but the ultimate goal
is AGI.
Speaker 7 (12:57):
That's correct.
Speaker 4 (12:58):
How confident do you feel you have that sort of
into infrastructure in place or a plan to have it
for AGI.
Speaker 6 (13:04):
I think we have the plan in place. I think
if Sam we're sitting on the seat, he would tell
you AGI is closer.
Speaker 5 (13:10):
Than most think, But what would you say?
Speaker 7 (13:14):
I would agree based on what I'm seeing.
Speaker 6 (13:15):
Like one of the best meetings I get to go
to once in a while is the research meeting, And
it would blow your mind to see what's already coming
and what as we have learned how to take reasoning
models like one preview yes on top of GPT models
and the interplay between those, you're now really starting to
(13:36):
see some incredible outcomes. PhD level outcomes where you have
in your pocket human intelligence that is PhD level and
physics and biology and chemistry in English literature, like whatever
the job is you need to do if you're a
healthcare researcher, if you're a banker, if you're an education
the tool that you are now caring the power there
(13:58):
blows my mind.
Speaker 4 (14:00):
You touched on it a moment ago, financing the needs
to raise capital. You've just done a pretty astonishing large round.
But a follow on, I mean you must have a
good sense of the cadence of needing to raid funds
on an annual basis. I don't know how you plan it.
Speaker 7 (14:13):
Yeah, so it goes back.
Speaker 6 (14:14):
To what you said, which is really understanding in your plan,
what are your big expenses compute is the biggest, but
we also need to run a company, so we have
real operating expenses. We're right in the guts right now
of FY twenty five planning. That is usually a three
year outlook in most companies, and for us it needs
to be because we have to make those compute decisions.
And with that comes then, Okay, what is our balance
sheet going to look like? What's our cash burn rate?
(14:37):
At what point can we generate enough free cash flow
to actually fulp the business? Not ready to tell you
that today. That's for the next time we talk. And
then on top of that, how do I help keep
bringing our syndicative investors along?
Speaker 7 (14:49):
I called them with us.
Speaker 4 (14:54):
We are less than a week from the election, and
I think about my own use of four to H
not used it related to the elections searching for information,
But are you preparing for that election and what impact
might it have on open AI?
Speaker 7 (15:07):
Yeah, we absolutely are.
Speaker 6 (15:09):
We have to be very mindful from a safety perspective today.
If you do searching around the election, you'll actually see
that often we will not return a response or will
return with a caveat. That says to be mindful of
your sources. And I think I learned a lot of that. Frankly,
yet nextdoor right, you cannot need to be careful of
not being paternalistic or paternalistic around people. People need to
(15:30):
be able to find information make their own educated decisions.
But at the same time you also need.
Speaker 7 (15:36):
To be very aware.
Speaker 6 (15:37):
When you have a platform that today services two hundred
and fifty million people every single week, we have to
recognize that they're going to want to do things, and
we need to provide avenues but in a safe and
secure way.
Speaker 4 (15:49):
Open AI CFO Sarah Fryar here live in Las Vegas.
Thank you very much. Thanks actually back to you.
Speaker 3 (15:57):
Ed, we thank you.
Speaker 2 (15:59):
Coming up in video, chips are still winding their way
to sanctioned Russia. We discuss the alleged shipments of servers
optimized for artificial intelligence via India. Meanwhile, we want to
bring you some movement in Alphabet's shares, parent company of Google.
Of course, there is a report from the Information saying
that Meta Platforms, of course, owner of Facebook and Instagram,
(16:20):
is trying to keep pace with the likes of open
AI in developing AI. But they're also looking at a
search engine that is going to crawl the web to
provide conversational answers about current events to people using meta AI. Basically,
they want to rely less on being and Google Search.
We're up sixteen percent, but we did fade those rallies earlier.
Speaker 3 (16:39):
On that headline. This will be mad Technology.
Speaker 2 (16:54):
Quick check on Apple shares for you, because we know
that they're showing us the latest max and the price
points we are seeing. Of course, the iMac desktop new
twenty four inch is going to be faster AI focused
M four processor inside it one and ninety nine price
points same as the prior model is faster, and it
has an enhanced neural engine basically to help with his
AI tasks. We're also, of course getting updated to the
(17:16):
finally some access to Apple Intelligence its first iteration. Anyway,
we're currently hired by almost a percentage point. Meanwhile, we
turn our attention to today's big take. It focuses on
some trade tracking data which shows that Indian farmer firm
Shreya Life Sciences is selling top end Dell servers optimized
for artificial intelligence to Russia. Bloomberg's Victoria dendrinum Co wrote
(17:40):
the story, joining us, now, so is this new that
we're starting to see India as a way of accessing
in Nvidio chips for Russia, for example.
Speaker 1 (17:50):
So I think the roll of India has certainly come
into focus for the West, so for Europe and the US.
Over the past couple of years, they've been looking at
various trees in Asia as trendshipment hubs where these goods
can essentially come from subsidiaries, vendors, as tributors. These goods
primarily manufactured by Western companies and primarily US companies actually,
(18:12):
So the role of India is kind of I guess
the magnitude of the role of India as a hub
has certainly become much greater over the last few months.
Speaker 2 (18:21):
And why have they become such prominent actors in what
is basically Russia trying to navigate barriers to accessing US tech.
Speaker 1 (18:30):
So there's a lot of reasons, I mean, partly when
we talk to officials in the US and Europe about it,
one thing they point to is that India has been
buying a lot of Russian oil, and Russia has a
lot of rupees at its disposal, so it's been using
these rapeats to it's been spending them essentially buying these goods.
Speaker 3 (18:46):
Out of India.
Speaker 1 (18:47):
So that's one part, a big part driving this increase
of this trade. Another reason is also that you know
where Western officials in US and Europe have put a
lot of effort into cracking down on other trendshipment hubs.
For example, the earlier part of last year there was
a big focus in the UAE, Turkey, Central Europe, Central Asia,
sorry as areas where these goods were being sent to Russia.
(19:09):
So I think a large part is the rupees that
Russia has to spend. But another one is that they're
cracking down. The West is cracking down on other areas
where these goods were originally shipped from.
Speaker 2 (19:18):
Now these in video ships are in Dell servers known
as power Edge XC nine six eighties, and Dell has said, look,
since ever the sanctions came into place, they stopped shipments
to Russia. But I'm interested in whether ultimately any of
this is actually illegal.
Speaker 1 (19:35):
Well, technically it's not illegal in that India is not
bound by US or European sanctions. And in terms of
the companies, I mean it's true, you know, a chip
produced by a company in the US, I mean it's
it's trade cycle. I guess around the world it's impossibly
difficult to track because you have vendors, distributors, subsidiaries, all
these other kind of companies or you know, people that
(19:59):
take part in the trade route. So in terms of
legal responsibility is it's almost impossible to place that on
someone sortily in the US who would be liable. But
what could happen next post is that which has been happening,
is that the US could, for example, designate a lot
of these companies or a lot of these intermediaries around
the world who do participate in the trade of these goods.
Speaker 2 (20:19):
It's a fascinating deep dive into the role of this
one particular pharmaceutical company in India and the shipments that
it's currently making. Victoria, thank you for bringing it, Victoria Trendino.
Speaker 3 (20:36):
Time now for talking tech.
Speaker 2 (20:37):
First up, Hong Kong is outland its first policy guidelines
dedicated to the use of artificial intelligence in finance, and
it's actually floated a tax break for crypto assets too
the Hong Kong University of.
Speaker 3 (20:47):
Science and Technology.
Speaker 2 (20:48):
Meanwhile, it's also going to make a homegrown large language
model available to the local financial services industry.
Speaker 3 (20:55):
Plus Japan's Olympus, which.
Speaker 2 (20:56):
Manufactures and distributes medical precision machines and instruments. Of course,
previously famed for its cameras, It's pushed out at CEO
less than two years into after investigating an allegation he
purchased illegal drugs. The company's shares, as you can see,
was declining some seven percent on Monday, the biggest in
today slide.
Speaker 3 (21:13):
In almost three months.
Speaker 2 (21:15):
And Robin Hood is joining competitors in allowing retail traders
to bet on election outcomes before next week's US.
Speaker 3 (21:21):
Vote for president.
Speaker 2 (21:22):
The company is rolling out contracts pegged to specific events,
including whether a particular candidate will win an election. This
as Elon Musk appeared at a New York Trump rally
yesterday saying he could save the country two trillion dollars.
Speaker 8 (21:35):
Take a listen, how much do you think we can
rip out of this wasted six point five trillion dollar
Paris Biden budget.
Speaker 5 (21:46):
Well, I think we're can do at least two trillion.
Speaker 2 (21:58):
Welcome back to Blue Mega Technology and Karen Hyder, New York.
Speaker 3 (22:01):
Quick check on these markets for you, because we.
Speaker 2 (22:02):
Have been coasting hired to once again near those record
highs for the NASDAG. Now's that one hundred still off
of that high that we met back in July, we're
still up three tens of percent.
Speaker 3 (22:11):
All eyes on the.
Speaker 2 (22:12):
Huge amount of earnings coming out when it comes to
big tech. Of course, tomorrow we anticipate the likes of Alphabet,
of Reddit, of AMD and then of course the metas
the apples throughout the rest of the week. Have a
quick look on what's moving in terms of under the
hood of the Nasdaq one hundred right now, Looking though
at what is a European name also traded in terms
of its ADRs here in the United States. Phillips Electronics
down by some sixteen percent. It finished shop Training down
(22:35):
seventeen percent in Europe. Why key lack of demand coming
from China. It's weighing on ge healthcare technologies today that's
also off by some three percent.
Speaker 3 (22:43):
That company also.
Speaker 2 (22:44):
Caused Medical Equipment had already signaled they were seeing a
lack of demand in the summer coming from China.
Speaker 3 (22:49):
But we look at Alphabet, still up sevent tens percent.
Speaker 2 (22:51):
It took a dip into negative territory earlier as the
Information reported that Meta AI might be trying to reduce
its dependence on Google Search and being and is still
instead build its own method of scraping the internet for
current answers to meta AI prompts. But now we're currently
up to seven tens percent. All lies on their earnings
later in the week. But now let's return to the
(23:12):
juggernaut that is Apple as well helping lead the benchmarks
high today. It's got a week full of announcements as well.
Speaker 3 (23:19):
As its earnings. Let's just go through what we've already
heard today.
Speaker 2 (23:21):
Among the new products we understand, of course, has been
this new iMac starting in two and ninety nine dollars.
It's coming with that M four chip. All about of
course AI. There an upgraded camera, Apple Intelligence as well,
coming online as soon as today. Let's get to it
with Ana rag Rana, and we're all trying to work
out at the moment Anarag, how we're going to be
(23:41):
using Apple Intelligence in our various Apple products. But how
important are these announcements, particularly the MacUpdate.
Speaker 9 (23:49):
Yeah, see when you look at the mackup dates, I
think its announcement is important from a tech point of view,
just to showcase how good Apple is when it comes
to the chip technology, how far it has come in
the last four to five years. I think it's probably
important from that more point of view than financial because
as you can as you know, you know, Mac account
for more less than ten percent of total sales for Apple,
(24:13):
so financially not so much, but it's an important from
a tech point of view.
Speaker 2 (24:17):
What's also been grinding everyone is the hopes that Apple
Intelligence will of course make us all use and depend
on artificial intelligence that much more. But the fact that
it's not coming until December of the operating system update
really to make it useful for us. How much has
that been an issue for you from a perspective on
Apple as a buy.
Speaker 9 (24:35):
Now when you look at it from a you know,
just a product refresh cycle, we think this is a
good catalyst, but for the long run, which means over
the next few years, we will see this basically force
customers or consumers who have Apple products to go out.
Speaker 5 (24:49):
And buy new things.
Speaker 9 (24:50):
I don't think it's going to have people rush out
and get things over the next you know, six months.
And I think that's where our discussion is slightly different
than some of the other analysts are looking for. Is
an iPhone supercycle. We don't think that's going to happen
this year. We think that could be more of a
phenomena with the iPhone seventeen launch.
Speaker 2 (25:08):
Yeah, I love the title of your latest react. You
go to the Boomberg and mattnaged to get it, the
Bloomberg Intelligence, and it says the launch.
Speaker 3 (25:15):
Is a long term driver for products.
Speaker 2 (25:18):
In the short term, there's some interesting news that's been
broken around a key development of Apple being rolled out
or not rolled out, it would seem in certain countries.
Can you talk to us about Malaysia and whether or
not it's important that iPhones won't be accessible there.
Speaker 9 (25:32):
So when you look at it, the launch of Apple
Intelligence features that will be staggered throughout now as far
as some of the emerging markets are concerned. Those are
really important in markets. And I saw the same news
releases you saw, and there was some investment decision that
Apple did not make that mark. But you know, I'm
fairly confident over the next twelve months or so, Apple
will take care of that from its end. But the
(25:54):
biggest market, or the most important thing for us going
into the quarter is what's going really happening in China.
And I think that, you know, people really forget how
important that market is for Apple. And I think that's
where some of the disappointment may be there, so I.
Speaker 3 (26:08):
Mean and I correct myself.
Speaker 2 (26:10):
Indonesia is blocking Apple from selling its later siphones.
Speaker 3 (26:13):
This is more a quarrel.
Speaker 2 (26:15):
About how much investment the company is making within Indonesia,
feeling that not enough has been made. More broadly, how
resolute is the emerging markets? How necessary is it for
new markets to continue.
Speaker 3 (26:27):
To evolve Apple?
Speaker 9 (26:29):
See, it's incredibly important when you look at a market
like the US, Let's say the population size of three
hundred odd million, three hundred fifty million somewhere around that.
Indonesia is the same size. So longer term, as those
countries become more richer or more affluent, they will be
looking at Apple products in order to you know, be
a big part of that ecosystem. So, whether it's China,
(26:51):
whether it's India, whether it's Brazil or Indonesia, all of
these markets are extremely important for Apple.
Speaker 2 (26:57):
Anna Rag, we thank you so much Formegan Intelligence breaking
it down with their latest Apple announcements. We push ahead
to its numbers of course, coming to the market on Thursday.
Speaker 3 (27:06):
Meanwhile, coming up in.
Speaker 2 (27:07):
The here and now, we're going back to Money twenty
twenty to sit down with Anthropic president Danielle am Ode
That conversation up next, but first let's just check in
on a stop that continues to rally hard.
Speaker 3 (27:19):
We are looking at former President.
Speaker 2 (27:21):
Donald Trump's social media startup DJT as it's known or
Trump Media. Five week surge that's pushed the stock up
by some two hundred and seventy percent. It's up nineteen percent,
of course, unprofitable, worth about nine billion dollars. But this
is after Trump held that very high profile event in
Madison Square Garden on Sunday. This is retail investors perhaps
(27:42):
backing ahead of the all important election next week.
Speaker 3 (27:46):
This is Brummet technology.
Speaker 4 (28:01):
This has been most technology, and we're live in Las
Vegas and Money twenty twenty. It's really a fintech focus conference,
but AI is front and center, and we're joined right
now by Amthropic President Daniellamoday. And it's interesting you have
a background in fintech pre AI. Now you're in AI
and you're doing a lot of business with banks financial
(28:22):
services companies. One point of difference with Anthropic maybe is
you really focus on the enterprise customer, and you did
it early. But give me a sense of the split,
you know how much business you're doing with the banks
and other financial services groups.
Speaker 10 (28:36):
Well ed, great to see you again, Thanks so much
for having me on the program. So Andropiic really has
the opportunities to support enterprises really across a wide array
of different industries. So healthcare, legal services, financial services have
really all been early enterprise customers for us, and we
(28:57):
really believe this is in large part because of our
focus on really building for businesses. Financial services has always
been a cornerstone pillar for Anthropic as we have really
built and expanded the cloud.
Speaker 4 (29:09):
Models, how our banks or investment firms using your large
anguage models.
Speaker 10 (29:15):
So so much of what we'd seen, especially over the
course of the past year is really these companies becoming
more sophisticated about how they are integrating a tool like Claud.
In particular, we're seeing many of these financial services and
fintech companies using Quad for things like fraud detection, financial analysis,
(29:37):
really partnering with their analysts on a wide array of
different complex financial tasks. Customer support is also a use
case that is really applicable across a wide array of
financial services companies, as well as administrative support and so
businesses like Jane Street, Bridgewater into it. Stripe and Coinbase
(29:58):
are all customers that make use of quaud for many
of the applications.
Speaker 7 (30:02):
That that I just mentioned.
Speaker 4 (30:03):
Stripe somewhere used to work something I know, not something
known to you. What I understand from speaking to a
lot of those that either working in banking or in
investment or asset management is you have the sort of
data security component and then a regulatory component. Why is
it that they trust you with both of those pieces.
Speaker 10 (30:22):
So Anthropic has always had a very strong stance on trustworthiness, reliability,
privacy and security of the systems that we are developing.
And something we feel very strongly about is that privacy
of data is an incredibly critical component of companies feeling
comfortable using generative AI. So we have never trained on
(30:44):
customer data by default, and we have always worked to
integrate closely with our partners at AWS and GCP on
the security side as well.
Speaker 4 (30:53):
In terms of regulation, there has been used in the
past week, which is the UK's Competition of Markets Authorities
looking at Googles partnership or investment in Anthropic, how are
you working with the CMA to address their concerns.
Speaker 10 (31:06):
So we are fully cooperating with the CMA to share
all requested information and fundamentally and dropic is an independent company.
We operate in this new generative AI space and offer
our models non exclusively on our first party via our
consumer app, on Google GCP via Vertex, and also on
(31:28):
Amazon Bedrock denna.
Speaker 4 (31:30):
I would say from a technology perspective, many are obsessed
with agents at the moment. In your agentic tool is
computer use, It's different. Why did you take that approach
to basically having an agent that can look at what's
on your screen, the actual hardware in front of you,
and then engage with it.
Speaker 10 (31:51):
We really feel, first of all, that this technology is
an incredible sort of potential leap forward for what these
models will eventually think be able to do. And we've
been very open that we think this is still in
beta right.
Speaker 7 (32:06):
We've very much sort of shared there's.
Speaker 10 (32:08):
Still limitations of the technology, but we thought it was
really important to release it to our customers today because
there's so much potential for computer use to really transform how.
Speaker 7 (32:20):
People use a tool like claud.
Speaker 10 (32:22):
Right, you can imagine this much more complex assistant that
is able to really partner with you, either by taking
more complex actions on your computer or on the web.
Speaker 7 (32:33):
You can imagine this eventual.
Speaker 10 (32:34):
Virtual coworker really expanding what is humanly possible for people
to achieve.
Speaker 4 (32:39):
There is a great gathering here in Vegas of your customers,
some of them will be in the room later today,
but also investors, people that are users of Clawed in.
Speaker 5 (32:48):
The various products you've shipped.
Speaker 4 (32:50):
How active are you and running the business of anthropic
right now, Daniella? Raising money yourself, managing the compute costs
versus pricing on your enterprise products.
Speaker 10 (33:01):
So anthropic, you know, like every company that is sort
of operating in this space, requires a huge amount of
compute to be able to really do the transformative research
that we do, and so our researchers are constantly working
to help optimize our compute and make sure that we're
using the hardware as efficiently as possible.
Speaker 5 (33:21):
Cost of a new model the cost.
Speaker 7 (33:22):
Of a new model exactly.
Speaker 10 (33:23):
And we're really finding ways, you know, in this sort
of incredible research field to help optimize how we're using
these models, coming up with new research innovations that are
really driving the pace of the generative AI innovation in general.
Speaker 5 (33:37):
Can we anticipate you raising more money as is.
Speaker 10 (33:40):
The case I'm sure you can imagine we are always,
you know, looking to have conversations like that, but not
actively fundraising right now.
Speaker 4 (33:48):
Less talked about is Anthropic also has a unique company structure.
Speaker 5 (33:52):
Are you happy with that structure? Do you envisage it
evolving over time?
Speaker 10 (33:57):
So Anthropic is a public benefit corporate and a little
bit different but pretty close. A public benefit corporation is
actually a pretty well established corporate entity. It's very similar
to sea corporation. It is a form of sea corporation,
but it enables a company like Anthropic to be able
(34:19):
to also prioritize its social impact mission in addition to
all of the normal corporate activities.
Speaker 7 (34:25):
That we engage in.
Speaker 4 (34:27):
We are about a week away from election in this country.
How is Anthropic preparing for that? But also do you
have a sense of how customers, consumer customers or enterprise
customers actually use some of the underlying models or tools
they build on top of it in the context of
the election. Maybe they don't.
Speaker 10 (34:45):
So Anthropic recently released a blog post really detailing all
of the work that we are doing on election integrity.
This is a topic where Anthropic has really been an
industry leader. We have been working on election integrity and
anti misinformation efforts for well over a year, and in
the course of doing that work, we have partnered very
(35:05):
very closely with both other industry actors but also civil
society groups, really experts in this incredibly important area that
we aim again to sort of be an industry leader
in sort of setting the waterline.
Speaker 5 (35:17):
For Anthropic President Daniella m Oday.
Speaker 4 (35:20):
We will talk later today in a longer conversation on stage,
but for now, Caroline, back to you in New York.
Speaker 3 (35:25):
Another brilliant conversation. We thank you.
Speaker 1 (35:28):
Ed.
Speaker 3 (35:36):
An Italian private equity outfit called.
Speaker 2 (35:38):
Bending Spoons already owns popular apps like Everanoe we Transfer,
and they could be coming for your favorite app next.
As Bloomberg's Mark Bergen writes, Bending Spoons has a type
distressed businesses with a steady cash flow that sells subscription software.
Mark berg enjoins us now, and you call it a
new kind of private equity for the app generation.
Speaker 11 (35:59):
What is it that they're doing, mak Their term is
they said if private equity had a baby with Google.
I think the idea here is it's sort of like
this this roll up private equity that we've seen and
we have Constellation Software, which is in Canada. That sort
of rolls up these pretty successful software businesses that they
may not be going gangbusters, don't necessarily an IPO, but
(36:21):
they are kind of printing money. What bending Spoon does
is they kind of then they can them over to
teams of new managers, researcher engineers and coders and data scientists,
and then they allocate resources depending on which one's doing well.
And so you've seen them sort of buying up more
prominent ever Note was the most prominent one we transfer recently.
(36:42):
We reported earlier this year they went after Vimeo, which
is a public company. In our reporting and our story today,
it looks like they're willing to spend upwards of one
to two billion dollars on acquisition. So I think it's
a name that people are going to become more and
more familiar with.
Speaker 2 (36:55):
And Luca Ferrari, the guy in charge of it all,
who's managed to get some celebrities to give him their money.
What's interesting is you spoke with the former founder of
ever Note, Phil Lebbin, who's now not part of the business,
but he thinks some of the energy being put towards
this business is perhaps a good thing, even if it
means some job cuts.
Speaker 5 (37:13):
Yeah, I was actually a bit surprised.
Speaker 11 (37:15):
You know, typically there's obviously this sort of when you
start a company and you leave it and you kind
of feel like this parent, and I mean it was
most striking to me. Started the story, Phil Ribbin, who
ran every note for eight years, had never heard of
Bending Spoons when he was kind of come over and
he was asked as a shareholder to sign away the
company to this Italian app developer. He told me, you know,
(37:35):
two years in, he's been pleasantly surprised by the progress.
Speaker 5 (37:38):
He still uses it every day.
Speaker 11 (37:40):
Anecdotally he sees people using the features more often. On
the flip side, you know, it's pretty easy to find.
There's a lot more competition forever note It was kind
of pretty dominant at one point in that kind of
note taking apps, and there are people that have have
left because of the price increases. But the company makes
the argument that they've actually made it better and that
they're not like private equity where they sort of are
trying to flip these assets, but they claim to buy
(38:03):
these companies and sort of hold on them for life.
Speaker 2 (38:06):
Even referencing Warren Buffett the Oracle of Omaha is perhaps
someone that they see themselves akin to in terms of
a business model. Mark Bergen. It's a brilliant story, we are.
It's all in BusinessWeek. Go see it. We thank you Mark. Meanwhile,
let's just turn our attention to the German juggle all
that is Volkswagen. It's announcing plans to cut expenses in
an effort to become even more competitive. But the automaker
(38:27):
plans to close at least three frack factories in Germany,
cut wages by ten percent, and the plan could also
lead to tens of thousands of job cuts in Europe's
largest economy. Another car company also looking to cut costs
here in the United States, Forward, currently trading up two percent.
They're set to report their third quarter earnings after the bell.
Stefan Nikola is with us at from Berlin to really
(38:48):
hone in on Volkswagen. First and foremost, this is an
ev story, a competition with China story, and an extraordinary
move to be shutting factories.
Speaker 3 (38:59):
Autely.
Speaker 12 (39:00):
This is a big move, and it really suggests that
the golden years are over for this ind industrial juggernaut
in Germany. Sales are slowing in Europe, the main VW
brand that brought us iconic models like the Golf and
the Beadle is struggling. It's struggling at home, but it's
also struggling in China where local manufacturers like BYD are
(39:23):
taking over, and that is really a big problem and
management knows they need to make cuts.
Speaker 2 (39:29):
What's also, of course a weak point is not only
their ability to penetrate China, but also a lack of
demand at home in Europe.
Speaker 12 (39:38):
Yeah, absolutely absolutely, and the German economy, as we know,
is stagnating, but car sales are down in Europe as
a whole. The European car market is still a fifth
below pre pandemic levels, so it has never caught back
up with the time before the pandemic, and that really
(39:59):
means there's overc opacity. And you know, at least three
factories to be closed in Germany, while there's negotiations about
that is still ongoing. Of course, that is a big
number and it's yeah, it's leading to big headlines in
Germany here.
Speaker 2 (40:15):
What then, of other automakers, we think of Mercedes Benz
for example, really the refined side of automaking German based
as well. How have they managed to navigate China or
not release the competition in evs too.
Speaker 12 (40:31):
Yeah, they're all struggling in China. All the Western carmakers
are struggling. Maybe Tesla is a small exception, but BMW, Porsche, Mercedes,
they're all struggling because the market there is shifting rapidly
to evs and the local customer seems to favor Chinese
evs at the moment. And we also have the problem
(40:56):
that there is a luxury slow down in China. We
have the real estate crime is still so people are
holding off purchases. So that is just bad news in
general for all these Western luxury carmakers.
Speaker 2 (41:07):
Look, there's a lot of pre announcements to digest from Volkswagen,
but we also are anticipating their numbers, their earnings, which
aren't going to be pretty. We also sit here in
the US eyeing what Ford is going to be telling us,
and we're anticipating actually some decent growth in from an
earnings per share basis, But if I look at the
whare the revenue is expected going to be flat. Stefan,
can you give us a taste of what to expect
in some of these earnings?
Speaker 12 (41:30):
Yeah, I mean We've had several profit warnings over the
past weeks and months from basically every major European car maker,
and you know the fave earnings, the Volkswagen earnings on
Wednesday are not going to be good.
Speaker 5 (41:44):
We know that they're.
Speaker 12 (41:46):
Going to be reporting declining sales and profitability. That's already expected.
The question is what will they say about twenty twenty five.
Is there a light at the end of the horizon,
will things improve? That's what in West we'll want to hear.
Speaker 2 (42:01):
And indeed, German employees to Stefan Nikola, we thank you
so much, coming live from Berlin. Meanwhile, that does it
for this edition of Bloomberg Technology. You don't want to
forget to check out our podcast, all those incredible conversations
from Open Ai of course, from the likes of Daniella
Mode as well and Anthropic.
Speaker 3 (42:18):
Don't miss it. This is Blomberg Technology.
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