Bloomberg's Caroline Hyde breaks down Adobe's earnings results after the company's shares fall by the most since 2022 on fears of AI competition. Plus, Bitcoin's slide from its record high continues as talks of a bubble escalate.
Bloomberg Audio Studios, podcasts, radio news.
From the heart where Innovation, money and power.
Collie in Silicon Valley, Nbon.
This is Bloomberg Technology with Caroline Hyde and.
Ed Ludlow.
And Caroline Heide at Blomberg's world headquarters in New York.
Ed Ludlow, he's off today. This is Bloomberg Technology coming up. Full earnings coverage.
Ahead. Is Adobe fools by the most of this two thousand and two. That's on phears of AI competition. We'll break down the results.
Plus bitcoins slide from its record high continues.
That's a bubble talk escalate.
We'll discuss whether the bull run can continue, and we'll wrap the week that was for TikTok after the House voted to ban the social app or have it divested.
What can we expect from the Senate.
Adobe the biggest mover on the Nasdaq one hundred today, we're off by almost fourteen percent. As we said, I mean, having its worst way day in several decades. Let's talk about why it's straight to the earnings with Bertie Ford and could you actually dig into the individual numbers. Perhaps it wasn't that big a miss, but the amount.
That the stock ran up last year. People are worried.
You ask investors which software companies will make money from AI. In twenty twenty four, it was two names, Microsoft and Adobe. After last night, investors are saying, maybe it's just Microsoft, right because they expected to see this big surge in new business because of the AI products. Remember, Adobe has spent a lot of time and money putting its model into Photoshop illustrators so you can press that button generate and create a new image.
Right But it appears that right now they are.
Still more focused on new user acquisition and that kind of monetization of this new innovation is not coming.
At least for a couple of quarters.
In the biggest full for Adobe since twenty twenty two, September the fifteenth.
I'm interested as to how.
That is really focusing a light or some of the startups that aren't publicly traded.
We can't see these sorts of moves in.
I mean, Sora must have been the big one that everyone looked at and thought.
Oh boy, he's got to race to catch up here.
It was a funny moment about a year ago Dolly came out and mid Journey came out. That image generation people got real scared for Adobe. They responded with new innovations and photoshop. Investors said, Okay, we'll be fine. Sora came out and it's like Groundhog Day, right, everybody is afraid again.
There's this same energy in the air that hey.
This new piece of technology could make Adobe entirely obsolete, right. I mean, there was an interesting conversation on the earnings last night where an analyst had to Adobe, Hey, folks are getting worried that in the long run this software could be unused. Can you explain to us why that's not the case.
That's not a.
Level of candor and anxiety you tend to hear on these.
Calls CA I mean, this is what investors ultimately want, is transparency, and actually we're kind of hearing that from the CEO.
And a direction of trouble.
What is there anyone that's bullish that's thinking, actually, look, they've just been conservative here. Here we will start to see generator of AI coming to the bottom line, to profitability to sales.
Yeah, there's this argument that right now, the beauty of being a big company is that you can price for customer acquisition, and.
That's what Adobe's doing.
Now, that's done so well over the years that it's going to kind of get all the creatives in the ecosystem using its products and then monetize it.
Right, that's the argument.
Some other folks might see the numbers and say, we want a revenue uplift. Now, I don't know if we're willing to wait that long. When open AI is generating videos with prompts.
Already to that point, I mean videos with prompts, it does feel as though that actually isn't just around the corner.
I mean, what was it that.
I think Nryan was saying that this notion that the next Oppenheim or will be done video prompt is not going to happen for decades.
Yeah, And it's funny because he said this notion that the next op at Haybro we don't have prompts, it's not going to happen.
Then he kind of pauses us at least for a couple decades, right, because there's.
This understanding that AI will fundamentally change the way that applications for image and video happen.
Right for now, you're.
Just going to be able to tweak little things at the margins. A decade or two down the line are you going to have, you know, four hundred million creatives paying for photoshop.
You might not need that many people.
But if the training data is when they say it is, and you've got to put a protection there might be helpful to them in some way, shape or form.
Yeah.
No, absolutely right, And that's the big question around the training data, right is it that Adobe's big pitch as it relates to AI is that we have this safety, we have the copyright credentials. Whereas when it comes to open AI, there's this idea that, hey, where are you scraping it from? I think we all saw this very famous interview with our CTO a couple of days ago. He said, are you scraping from YouTube?
You answer it?
Answer it.
I'm sure she has more answers to that question now, but some plenty of means being made with that particular interview by the Wall Street Journal. Thirty two buys still though on Adobe two sounds brilliant.
To have you on.
Thank you, Jody Forward running us through the latest and the big dive in the Adobe share price as we say, having its worst day since twenty twenty two.
Coming up. Bitcoin it's retreating from.
Its latest record high too, and that's going to take on why we've got citizens JMPS Devin Ryan joining us.
This is Blueberg Technology.
Let's just talk about crypto because there's been a week and Bitcoin there is actually pulling back from its recent record highs that it's recently set, and there's an intensifying debate about whether the ball run that we've seen across the cryptosphere is kind of evidence of just speculative froth that we're seeing across global markets.
Let's break that down with Shannali beassec.
And there's been some wild headlines, wild expectations today, the pullback yesterday, we're hearing of a monster cycle in crypto that was only just starting.
Yeah, it's interesting because you have seen just super inflows into those ETFs, You have the having in front of you, and you have a lot of people saying you have this never before seen dynamic in bitcoin where you're going to have more demand while supply is decreasing, but at the same time there's leverage in these markets, Caroline, so.
Not surprising to see a pullback.
A lot of people have been calling from it, everyone from Glenn Goodman to Mike Novograts have expected there to be a pullback given the leverage that's been seen. At some point, when you're buying things on margin or buying things with money you don't have, there is always that potential for a little bit of a reversal. However, you do only see really us come full circle.
For the week.
We have still been well above sixty seven thousand, but we have seen bitcoin hit those new highs even just this week above seventy two thousand.
Talk about the leverage and where it's coming in from the beause many would associate that with Asian investors, but we'll keep talking about the institutional bar that's just come into the market with these US bitcoins, bail etm.
Just think about how much leverage there is in the system now. It's not the same type of leverage you saw in twenty twenty one with the same types of players. Of course, we saw those leverage intermediaries blow up, but now the type of leverage you're seeing are from things like finance perpetual futures, which are largely outside of the United States. You have them in bitcoin futures as well, which you buy futures on margin, and then you have other forms of leverage. You think micro strategy issuing bonds to buy bitcoin, and other big crypto players also tapping debt markets in order to really capture the part of this boom. So you can make an argument here that the leverage you're seeing is happening through safer entities, more regulated markets. Even in the United States. You think about some of the leverage you also see in leveraged ETFs for people trying to really amplify their exposure to bitcoin at these prices. Now, the big question is is everything we've expected out of the positivity in bitcoin priced in right now or is there another thing that will add some fuel to this cycle after that.
Having we can keep an eye on correlations, correlations within crypto, Bitcoin down, Solana still up, but we also think about the correlations between tech stocks, more badley, the markets, and Cryptotionalibasik always does it all for.
Us, and we thank her so much.
Let's dig in really about some of the outsized returns we've seen of late, whether we can continue what this is in terms of a healthy or not pullback with citizens Damp Director of Financial Technology Research, Devin Ryan, it's great to speak to you again, Devon, and some of your notes have been pretty extraordinary in terms of the sheer scale of money that is entering this space and where you see some of the price points going. Can you just talk us through your main thesis of what the ets could do for bitcoin and the ecosystem more generally.
Yeah, happy too, Caroline, Thanks so much for having me on.
So we put on a note earlier this week, and we are talking about two hundred and twenty billion dollars of net inflows into these ETFs.
Over the next three years.
So for context, there's been about ten billion of net inflows over the first two months of launch, but we see that accelerating quite a bit, and the reason being is that we've essentially opened up a lot of additional capital that historically, up until January this year, was shut out of investing in crypto and bitcoin specifically. The biggest pool that is retail.
Investors advisor led money.
There's about twenty five trillion dollars of assets where advisors really want to custody the money within their own custodian, not move it out to somewhere like coinbase. And so ultimately now these advisors with the ETF approval.
Can start to look at that. But I think we're in the first inning.
I don't think advisors have really been allocated yet, so we see flows actually accelerating from here.
So there will be volatility.
But you know, in my career covering financials and fintech for twenty years, you know, follow the flows and when there's money coming into a new market and it's substantial, which we think it will be with these ETFs, it's really transformational.
It is amazing that we've been talking some of these cycles.
For years, but only now do we hear the like.
So you Devin talking about two hundred and twenty billion dollars coming in, and we hear Bernstein yesterday out with a note saying.
We are entering this monster cycle for crypto. What changed your tune? Was it the ETF?
Yeah, We've been consistently constructive on the space, and you know, I cover Coinbase, which is in our view, kind of the biggest on ramp in the public markets into the industry. I think you guys touched on it. There's a lot of speculation going on. You have Bitcoin and then you have you know, twenty thousand other cryptocurrencies, and I think that many of those cryptocurrencies are going to be worthless when you.
Look out over the next couple of decades.
That being said, we are in the early innings, and so people are putting their chips on various blockchains that they think will have development on top of them. And just like you would in a technology stock or even a biotech stock that is, you know, in its formation days, you know, it's going to take ten years to get to commercial application, and a lot of these blockchains are in their first inning and people are speculating on which ones will be utilized. And so I'm very bullish on the applications the block technology that's kind of the broader crypto ecosystem that coinbase is benefiting from. And then the ETF for bitcoin is in my opinion, kind of its own animal. But we do see again, you know, we think people are going to increasingly move some money, you know, small amounts, but small amounts now that you've opened the door to, in our opinion, over one hundred trillion dollars of capital in the US that potentially could look at allocating something here, and we're shut out, you know, much of that until January eleventh.
You mentioned coinbase, and just a disclosure that my husband is a director over at coinbase, but I am interested in outside of the space of just Bitcoin.
Bitcoin is sort of hoovered.
Up all the oxygen in terms of being able to shine all out on the price, being able to talk about the ets but there is talk of an e ETF. There is still Solana doing very well, for example, other old coins.
How does that spillover effect continue.
Yeah, it's a great question, Caroline.
So I think there was a lot of discussion in the market leading to the Bitcoin ETF that would be cannibalistic and that everybody would just trade the ETF and then that would hurt Coinbase. We were taking the other side of that argument. But I think the evidence is now clear that in reality what's happened is there's been a significant amount of more money that's moved into the broader space, both Bitcoin, where Coinbase is participating a lot of the trading of the underlying assets in the ETF and then elsewhere. But their volumes are up over one hundred percent trading volumes over the first quarter last year, and a lot of that's happening in all of these other assets, because again, people are more interested in learning about the space and taking views on other blockchain technologies and which ones you could be successful, and so that's really what's happening. I think we're still kind of in the early days of that as well. That's coinbase. But then Coinbase is also, you know, in our opinion, going to have their hand in virtually every aspect of how this industry grows, whether it's tokenization of real world assets, whether it's you know, payments and remittance and development of Web three applications.
You know, they have their own blockchain called Base.
You know, they're very active and staking and there's going to be a lot of innovation in this industry that I don't think has even happened yet.
So coinbas to.
Us is really a play on that growth, even more so than just trading volumes and you know, the exchange activity.
It's interesting that Bernstein called out robin Hood is the key play.
You've got a twenty.
Five dollars price target, I believe in that particular company. Where else could be benefiting in terms of brokerages. Is it all about the institutional play and the retail play Still yeah.
I think you know, Galaxy is a name they're Canadian listed right now, but that's Michael Lenovogratz. As you guys mentioned, They're clearly a public market play here. We know a lot of the private players in this space, and there's a lot of really interesting companies in the private markets. Robin Hood, you know, clearly has an investor base that is I think in the demographic that is active in crypto. It's not as big of a driver for their business model. Coinbase is really a pure play on the crypto ecosystem, both trading but then also development and how was blockchain used over the next five to ten years, and they're going to participate in all that. I think Robinhood has you know, their tenacles into some of that.
But you know, robin Hoood's a broader brokerage, which is good.
A lot of the other brokerages really, you know, they're barely there yet. And that's also, in our opinion, part of the opportunity the self directed market. I would put in that bucket of retail investors and we estimate that two hundred and twenty billion dollars of net inflows. You one hundred and sixty one hundred and seventy billion of that is still going to come from retail, whether self directed or advisor led. And I've covered the wealth management market for twenty years. These are folks that again they're relatively conservative, but they want to invest where the customers want to invest, and I think the people are going to want some small access to this new asset class.
Sticking with it, citizens, JMP Director of Financial Technology Research Devin Ryan. Great to talk through your note through some of the players within it.
Thank you time now for talking tech. First up, TikTok.
Owner bike Dance is human resources chief taking the helm. The companies sharply reduced gaming division and we'll refocus the business on more personal content in look, an effort to avoid the head on clash with Tencent is a pivot for a unit that once hoped to take on the leading Chinese game distribution leaders like Tencent and of course Nettes. Meanwhile, the Chinese government is quietly encouraging eed makers from BYD to Giely to sharply increase their purchases from local auto chip makers. Is in an effort to reduce reliance on Western imports.
Of course boosts China's own domestics semi conductor industry.
Plus, the US plans to award more than six billion dollars to Samsung to help the chip maker expand beyond its project in Texas, the federal funding for South Korea's leading chip maker we're becoming, alongside significant additional US investment by the firm.
All of that, according to sources.
Now, let's turn our attention to cybersecurity, always top of mind for executives, the board of businesses, and you and me as individuals. Microsoft Corporate Vice President Security, Compliance, Identity and Management, Basu Jaka is here to tell us all about microsf co Pilot for Security. It's a generative AI offering that will be being made widely available at prefers.
What's the aim here for you.
To support security it professionals?
How much easier is their life going to get?
Well?
Caroline, it's so great to be here with you.
Thank you for having me to understand why we did go by it for security. Step back and look at what we're facing against and today the threat landscape is unprecedented. The speed, the scale, the sophistication of attacks is increasing. Just as an example, we're seeing a tanex increase in identity related attacks from three billion to thirty billion over the same time frame year over year.
And this is why we designed GO Pilot for Security.
It's the industry's first generative AI product and the industry's leading generative AI product that's based on open AICHATGBT four models plus a Microsoft Security model. And I do believe that the next eighteen months of AI innovation are going to determine the next eighteen years of cybersecurity. So that's why we did this, because we believe that Go Buy It for Beauty is going to help all defenders defend at machine speed and scale.
I mean, this has been in beta, this has been quietly rolled out and tested.
What does uptake Binlin, what is interest inbound men like?
Yeah, we actually announced co part for security last March, and we went into private preview with tons of customers because we wanted to do co creation. We wanted our customers in the journey with us, and last fall we then expanded that to hundreds of customers as well as one hundred plus partners. What we've seen through that is it's making defenders faster no matter who you are. So if you're early in career, twenty six percent faster, if your seasoned professional twenty two percent faster. We've seen ninety seven percent of people want to use the tool again, so there's a lot of sentiment, of positive sentiment, a sentiment of joy using it, and a lot of organizations are ready to embrace this or really positive feedback.
I'm going to ask a sensitive question here because you are, of course in charge of the security business. More broadly over at Microsoft, we've had some recent disclosures. I think of last summer, the Chinese hackers. I think of just a couple of months ago, the Russian affiliated hack that we understand.
That you know, Senator Ron Wyden was saying, this is as a compromise, is inexcusable? How much questioning if you got on that?
And is it impacting demand for security products coming from Microsoft.
We recently publish an update on what are the Microsoft actions that we are taking to address the cyber attack that you just reference scale line.
It was published and Friday. We continue to do to do all we can.
To protect Microsoft, to protect our customers, and we are using our cybersecurity tools to really integrate the latest knowledge from the threat landscape and then continue to protect comprehensively.
Has it hit sales though, because many would say the compromise from the Russian hackers it was like cybersecurity one I won.
We are continuing to our investigation.
I can't talk more than what we said on Friday, and we continue to see our gusts using more.
Of our cybersecurity tools.
Today, we have more than a million customers who use Microsoft security products, and as we talked about for our co Pilate for Security, we are seeing great interest.
How is that interest coming globally at the moment? Where are you seeing the demand come from? What kind of clients? Are they predominantly US Western Mas?
Do you seeing it elsewhere?
We're seeing actually global demand for this, and we're making it available globally as well. Our general availability starting April first is global. We started in English, but we're rolling out eight new languages Japanese and Portuguese, Spanish, et cetera, and we expect to continue to roll this out globally across the year. The interest in customers is also worldwide. There is no specific region. And then again, the way we've designed Copilate for Security is for all, so we wanted all kinds of defenders to use it, all organizations, public sector, private sectors, small and medium businesses, large enterprise, So we are seeing that as well.
What's interesting is because I think being is present in China, for example, how much do you have inbound interest for your products from a security basis coming from China.
We have interest across the world for our security products, and we have it available.
We have different products today.
We integrate fifty plus categories and bring you to life in six product families which form our Microsoft Security Cloud. And depending on where customers are in the journey, they are using different parts of our products. Some use the full stacks, some use just one or two products, and we have seven hundred thousand plus customers who are using four or more of our products.
Now, have you had any a pressure to be pulling back? You're offering that.
We haven't seen any pressure to pull back our product.
We want to thank you for your transparency today to talk through the product to the uptake already and the.
Demand that you're continuing to see.
We thank you so much of the time today, Microsoft Corporate Vice President's Security, Compliance, Identity and Management Aspassion, we thank her. Welcome back to Bloue Meg Technology. I'm Caroin Hid in New York. Let's just talk more, borady about what we've had across this week.
When it comes to TikTok and.
China, We've heard from the chairman of the Senate Intelligence Committee potentially about.
That ban or divestment. Take listen.
They're collecting enormous amount of personal data about Americans. The genius of TikTok it kind of knows what you like even before you may know. And that kind of personal data of the one hundred and seventy million Americans who are on ninety minutes a day. If you don't think that as a security risker, potentially you could be blackmailed at some future time by Asians of the Chinese government, then I think you don't understand the unfortunate real world that we live in.
So there's a senator who potentially wants to see an expedited bill pass through his part of the US government. But let's get to Alex Barinka for the latest on tikto, because it was such a rapid week in terms of it getting through the House with real momentum, the idea of a ban or be bought by someone else.
But the Senate seems to be slowing down.
I think for those of us who've watched this process are taking a deep breath on this Friday, because it does seem like it's slowing down. In the Senate, and that's for a few reasons. We've heard from senators on both sides of the aisle who are basically in support of some kind of regulation either of TikTok or of data privacy on social media more broadly, but are saying that maybe not so fast, we need to take a look at this bill.
One example on the.
Democrat side is Senator Richard Blumenthal, who said that he's in support of separating TikTok from byte Dance, it's parent company, it's Chinese parent company, but warned that the deadline in the bill about one hundred and sixty five days was too short. So that's one kind of knock against this moving forward. Another very interesting name, Caroline was Republican Senator Ted Cruz, who has consistently been a voice again TikTok and sits on the Commerce Committee, which has jurisdiction.
Over this bill.
He also said that this bill should be referred to the Senate panel for more work, that this bill would go through the full amendment process and that would slow it down. I will point out we are now also just months out from the November US election.
Does anyone want to be.
Kind of going back and forth on this bill right now, or do they want to be out on the road campaigning. I think that's a very valid question to ask as the Senate Chamber considers the timing on whether or not they move this one forward.
And ultimately whether the US population thinks this is a priority or indeed to the opposite side.
Hates it.
And just tell us about how we've seen immobilized gen z. Have they been doing what TikTok costs and calling their representatives because suddenly maybe Trump, who originally floated the idea of a TikTok ban, seems to be going against it, in large part because he was of a backlash.
They have been.
Lawmakers phones have been flooded at different times this week with calls from their constituents who are saying, don't vote this bill through.
There are one hundred and.
Seventy million Americans who use this app on a monthly basis. The average age of those users is over thirty, So absolutely the voting contingent. And for the Democrats in particular, they've really relied on young people on the last presidential election and the midterms to help them win on the ground. So though President Biden has said he would sign this bill if it passed through both chambers and hit his desk. That is certainly something that strategists we are talking to say that politicians need to pay attention to youth voter turnout poles say might be a lot lower in the past. That could be a real problem for Democrats in particular. So is upsetting that cohort of people a smart idea? Well, I do think that some people are potentially thinking twice even though they think that this might be really important legislation, either on data privacy or specifically on TikTok and.
Just remind us Alex. This whole debate throws up so many questions.
One key one is who would buy it if they were divested and.
What sort of price point? Who the names in the ring?
The names are, it's an interesting shortlist. Bloomberg Intelligence puts the US business at about thirty five to forty billion dollars in valuation.
Not too many.
People could write a check that big, and some of the names like Meta, Amazon or Alphabet who would be the obvious ones, might have a hard time getting that through antitrust review. We've already had people like former Treasury Secretary Steve Manuchin come out and say, hey, I want to get a group of buyers together to buy this asset if this bill goes through. But it is an incredibly valuable one. So while that list of names might be short right now, if this bill does get signed into law, I can probably guarantee we'll have folks across the board who are saying, hey, this is an incredibly powerful asset. What can we do to kind of put together either a consortium, sell a piece of it public, or keep it private so that we can keep this really kind of money making, lucrative potential asset in the hands of Americans, but keep it making money for those owners.
Your old M and A be coming straight back at you, Alex Spirenka, perfect person be talking about all of this.
We thank you so much. Meanwhile, let's turn to the legal.
Implications of any sort of potential ban or indeed divestment of TikTok. David Greens with US Senior staff attorney and Civil Liberties Director over the Electronic Frontier Foundation. Now that's a nonprofit organization that defensible liberties in the digital works. And David, what's been interesting is some of the reticence from certain senators has been we can't just deploy a leaf out of China's book here.
We can't do what they do, which has banned.
Ultimately social media forms of expression that we don't like.
Is that something you're thinking about.
Oh, yes, I'm thinking about it quite a bit, and I'm actually glad to hear that senators are thinking about it as well. The US, you know, historically, really really without exception, over the over the past or at least sixty years, has been a champion for the free flow of in around the world, and we've chastised other governments when they have shut down apps and calling those actions undemocratic. I think most recently, or maybe most famously, when the government of Nigeria shut down Twitter because it accused Twitter of disseminating misinformation about the Nigerian government, and they shut down Twitter for six months, and the US State Department issued a very strong statement telling them that even if they didn't like the content and thought it might be harmful, that it was undemocratic to cut off a mode of communication that was used by its people. And we are now doing the same thing, And it is quite ironic that's happening in the context of China, which is, you know, a nation that doesn't have a good human rights and civil liberties history, and yet here we are really, you know, taking a page out of an undemocratic playbook to try to address concerns.
Those concerns, let's dwell on them, because maybe people would say, Okay, we need to adopt a leaf adrada out of their book because we cannot risk manipulation on the platform itself. We cannot risk us data getting into the hands of the Chinese. But couldn't they just access the data any how without TikTok?
Yes, absolutely, And I think there's really good reasons to be concerned about the amount of data that TikTok and really almost every other social media service collect about US users. They collect a tremendous amount of data, they retain it, and then they share it widely. And there's a whole industry of data brokers that buy information from social media companies and other online services and then sell it all across the world, including to governments like China and other foreign adversaries, even those who don't operate their own social media companies. So I really think it's safe to assume that China has regardless of ownership by ByteDance. China has a lot of information about US users. The way to address that, of course, is to pass comprehensive data privacy law. And this, the bill that the House past, is not a privacy law. It says very very little, It has very few provisions in it that actually guarantee privacy for US users, and really just shutting down TikTok will do will be just a very tiny step and largely ineffectual one in protecting US data.
So, David, why if we hear from Elizabeth Warren? She seems to want to broader privacy law, But what would stop that actually being executed? Is it lobbying from social media companies here in the US? Is it ultimately the negatives to some of that privacy overreach?
Well, it's I don't know.
I don't know what the reluctance of Congress has been, but I and it's not. It's not completely easy to write a good comprehensive data privacy law. There have been some proposed, and we eff haven't actually been completely pleased with a lot of the with a lot of the proposal because we don't think they go we don't they go far enough.
I don't know what the political obstacle is.
It seems, and it really makes me question because it has been so difficult to pass a data privacy law and it was so easy to get this TikTok bill through. It really makes me question whether the motivations behind this most recent TikTok bill are data privacy because this sailed through the House in three days, and we've and privacy legislations had a much tougher slock.
It was fast bipartisanship, which we don't say much TikTok issuing a statement of course saying that it's jammed through for one reason.
It's a ban.
David Green, we thank you so much, Senior staff attorney and Civil Liberties director over at the Electronic Frontier Foundation.
Some great resources there.
I Meanwhile, coming up that we're going to be speaking with Alis Spentink, CEO and co founder of Entrepreneur First is about opening up a new office in San Francisco, bringing entrepreneurs over from London, from Bangalore, from.
New York to the Bay Area.
Meanwhile, let's just focus in on what's happening in Africa at the moment, because well, there's been a real lack of access to the internet ultimately at the moment, and undersea cable damage has caused internet outages across Africa, we understand and we're seeing an impact not so much on an MTN group today it's up two point three percent. This in Votercom, Africa's biggest wireless carry is basically trying to tackle these issues of connectivity and they say multiple undersea cables failures between South Africa and Europe are currently impacting the network providers. Microsoft also impacted as well.
They're saying they're reported disruptions to its cloud services.
And Microsoft three sixty five is the Blombo technology Entrepreneur First and invests in early career technical founder talent that is now opening up in San Francisco, an office there to connect the founders in the world's best following ecosystem. Well, so they say, let's bring on Alice Bentink, co founder CEO of Entrepreneur First, which I know well from having covered the London scene for a couple of decades and seen the rise of EF You've then, of course built offices in New York.
They're over in Bangalore even as well as in Paris.
I'm interested as to why now San Francisco, What does that ecosystem have that the others don't.
Well.
For a number of years now, we've been working directly with the San Francisco ecosystem. So back in twenty seventeen, we raised the Series A from led by Graylock alongside reied Hoffmann and Founder's Fund. As we've been plugged into this ecosystem for a while, and what we've seen is there's a huge amount of demand from Bay Area investors to invest in exceptional talent that comes from Europe and Asia. We've had vcs like Andresen and Kosler and Sequoia invest in our companies at.
A very early stage.
And what we're doing now is we're building a bridge between the exceptional talent and the exceptional founders that were seeing in Europe and Asia and bringing them to the Bay Area to access not just the investors, but the wider ecosystem and the magic, if you like, of the Bay Area.
If you've already had this talent and success. For example, I mean what we're seeing portfolio now worth more than ten billion dollars. As you say, some of these companies that are well known, particularly in Europe and more broadly worldwide of received funding from read Hoffmann, who I know is going.
To be opening your office today.
Why there need to be even more plugged in if it's already worked thus far.
I mean, it's a great point, but I think if you look, the bridge is actually building in both directions. We see many of the firms that I just mentioned opening offices in London.
To access Europe.
But we really see this as a strengthening of the ties between the two ecosystems.
I think it's also.
Word saying that by bringing our companies here and helping them access the level of ambition, the depth of network, and it's not just about the investors here, it's also about who you can hire, who you're surrounded by, and we're excited to give our companies deep access to that.
It's expensive to hire that talent on the West Coast. What have been some of the nerves coming into those foulers coming over because you've got a whole raft of companies coming, but where do they see some of the worries?
So we've got thirty three companies that have joined us out here.
I think some of the worries.
Are around the cost of running a company here, but I would say that is offset by the benefits of the ecosystem. I think the real opportunity here is to expand their ambitions, give them access to the US market, and to give them access to a opportunity that they can.
Access in Europe.
But our companies are trying to build globally from day one, and the US market is so large and recently consistent that we believe this gives them a better opportunity to build a globally important company from the very beginning.
What kind of companies have come, I mean we're just thinking of why Combinator, for example, and guess what a whole load of their recent batch have been AI and generative AI focused. Is Is that the kind of slant that you're seeing with the companies you're enticing over I mean, AI is the defining technology of our generation, and so yes, a lot of our companies.
Are the majority are using AI in some way.
We've actually been investing in AI companies since twenty fourteen, and we built Europe's first computer vision Unicorn, and in some ways that's a great example of why we're doing this. So it was a founder from Romania, a founder from France that built together in our office in London and then actually got their seed investment from a US based firm called Zetta that's based in San Francisco, actually next to our office in South Park, and I think that demonstrates the importance of the bridge between the two ecosystems.
You're clearly bringing geographical diversity as you talk about those two technical founders you brought together, and it is quite such an interesting concept you built basically find those founders early, back them, pre idea pre team, pre product market fit, and actually build it within What is the.
Cohort looking like as well?
I mean it's a boring question for one woman to ask another, but there is a question of diversity.
If you work in technology, diversity is always a challenge. So about twenty percent of our founders are women, and we know the technology industry does struggle with gender diversity in particular, and it's something that we've been very intentional about ever since the beginning of founding Entrepreneur First. We actually built an organization alongside EF called Code First Girls, which teaches women to code for free across Europe, and that has been an important driver to help shift the narrative around diversity within technology, but also to actually change the numbers of women that we see founding companies. So it is something we see that we take very seriously. We have some amazing female founders in this cohort that we're very excited by spending.
Good luck with the launch. We thank you so much. Co founder and CEO of Entrepreneur.
First, let's stig into general to AI a little bit more. Now we're going to be talking with Cerebras Systems. It's announcing it's third generation wafer scale chip. Basically the way in which we're seeing the infrastructure being supplied to the training of data for generative AI, but also a new AI supercomputer digging into all of it. Andrew Feldman, co founder CEO of Cerebras, and just tell us with this new third generation, what would people see feel trained differently?
Thank you so much for having me again, very much appreciate it. In a new generation, one hopes to be able to do the same work in half the time, right and to pay the same price.
And that's what we were able to achieve.
And so.
This is a four trillion transistor chip. This is the largest chip ever made in the history of the compute industry, and it's optimized for the training of AI work, a big generative AI and it slashes the amount of time it takes to complete one of these projects in half.
And so this is a huge st forward.
It cuts the cost per unit compute in half and is the foundation of a new supercomputer we're building. And so it's a big, big lead both for us and for the industry.
We can see from the art behind you almost the architecture is within and throughout you.
I'm interested in the ultimately what does this mean? Like what when you talk.
To us For the audience who don't exactly know how the biggest chip in the world is made, what technology goes into that?
Well, the art behind us actually is the chip and that was really cool. One of our engineers got fired up on a on a project. A chip of the size takes years of development. It involves a thinking of how you're going to do the math underneath artificial intelligence.
And what it means for your every day user is.
That their their mapping software UH that uses AI is more efficient, that their recommendation engines that select or recommend things for them in UH, in their shopping or on Netflix is even better. It means that they're the generative AI models. They play with, whether it's uh chat, GPT or others. These are less expensive, These are more powerful. These have bigger impact at work, not just at play. And so I think as you build faster compute, the the AI infrastructure enables the what everybody cares about, which is the AI to permeate through UH the economy, through the way we live, work and play.
Well. It's a big announcement, a notable one ahead of in videos, big event next week, and we thank you so much Andrew Feldman, who's a key player in the infrastructure of AI co found or CEO Cerebras.
Meanwhile, that does.
It for this edition of Bloomberg Technology. You do not want to forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify and iHeart Boy, who've had a big one in terms of TikTok, go back, consume it all.
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