Bloomberg's Caroline Hyde breaks down Google's updates to its AI products coming from the company's annual cloud computing conference. Plus, Tesla may be headed for another sales decline according to some analysts on the Street.
From Mahard where Innovation, Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline Heinde Bluemerg's world headquarters in New York.
Ed Ludlow, He's off. This is bluemog Technology.
Coming up Google, It unveils a host of updates to its AI products to show its offerings are enterprise ready. Or break down what came from the company's annual cloud computing conference. Plus Tesla maybe headed for another sales decline back to back as according to some analysts on the street.
Or break down the outlook and.
Here from the former CEO of Tesla and GM's cruise. Well, it resumes Robotaxi testing over in Phoenix after grounding its fleet last year. We'll discuss that and so much more coming up throughout this hour. But trading off by four tens percent on Bow, of course, maker of the seven three seven Max besieged with issues a near attack catastrophic incident earlier in January.
January, of course, now.
This is as we see the first quarter of sales for Boeing be what we think is the worst that we've seen all the way back to twenty twenty one people really seeing a slowing in production as well of seventy three seven maxes. Why because they need to make sure that the supply chain is ready, that they're managing to ensure that everything is safety first.
For Boeing.
More broadly, let's just dig into this story because it does have this technology element to it. Bloomberg opinion columnist Brooks Southerland is with us, I'm pleased to say, and let's just get to.
This breaking news. And the deliveries from Boeing. They're poor. We probably expected it, we.
Did, and I mean again, it's sort of a good story, bad story Boeing for Boeing here, and I mean, of course, the delivery numbers are not what they want them to be, not what their customers want them to be. But this is the result of the company really taking the time to hopefully get to the bottom of its quality control issues here. And remember, the FAA has capped Boeing's production rate at AB thirty eight seven thirty seven jets per month. Now they are nowhere near that pace right now, and it's going to slip even further because they're really trying to dial back on this concept of traveled work, and what that means is putting a priority on moving that plane through the production process, even if you don't have all the parts, even if the quality control isn't where it should be. Boeing is moving away from that. They're taking a step back and really trying to drill into safety and their engineering processes. Now that is a good thing in the long run, but certainly not going to show up in their delivery numbers right here in the short term.
And let's just reaffirm what the delivery numbers are, because it's eighty three jets were delivered in the first quarter Lowes since the second quarter of twenty twenty one. Interestingly, twenty nine jets in March were sold.
And that's twenty four to seven three seven Maxes.
It clearly just shows the importance of.
This particular model.
And I'm noting that they were booking one hundred and thirteen gross orders in March and only two cancelations. Is any of this really putting off demand for the seven three seven max.
I don't think that it is overall, because you have a duopoly in aircraft manufacturing and airbus is sold out of its marquee narrowbody jet model into the twenty thirty. So if you were an airline and you need planes, you really only have one option in the short term, and that is Boeing. And I think that, to your point, shows just how important this airplane is and how important it is that Boeing ultimately gets this right and gets to the bottom of what their quality control issues are. Now they are losing market share to Airbus. The Airbus has been able to pull ahead specifically in that narrow body jet market. They are winning more orders, but you're certainly not seeing demand fall off a cliff for Boeing, and I think that does provide some support but also some encouragement for the company to just try to figure this out and get the customers the jets that they want to buy. They want to fly from Boeing.
And let's just dig into Airbus because we're anticipating deliveries there. In fact, it was under pressure more than the rest of the French benchmark earlier today.
What are we seeing in terms.
Of ultimate economic hit sentiment heading both Airbus and Boeing, And there's are any sort of tech angles we can weave in here.
I mean, I think air travel demand has held up pretty well. I mean, even in this inflationary environment, you're still seeing strong demand for air travel. And you know, really both going and airbus have a demand problem or sorry, I have a supply problem at the end of the day, not a demand problem. And you know the onus is on them to be able to churn out these airplanes and give them to customers.
Love having you on Bloomberg opinion columnists Brook Sutherland jumping on the latest delivery numbers. Let's get back to our bread and butter right now, though, because Google is having a big event surrounding cloud. It's in fact, I'm bailing a host of updates around its artificial intelligence offerings today and it's really trying to show how this technology is enterprise ready after well some pretty obvious mishaps earlier this year when it came to consumer use.
That's bringing in Bloomberg's Davy.
Albert and really Google's trying to shake off what has been happening earlier in the year when it comes to Gemini application across particularly image generation.
How fit for purpose is it from an enterprise perspective?
Yeah, Hi, happy to be here. Google is really framing these announcements as this is cloud's moment and enterprise, and it says that the same risks that were around for the consumer product are not really there for enterprise customers because marketers, you know, client cloud clients have a lot more controls over the outputs. Google has said that it is providing up to like nineteen fine tuned controls for people who use its enterprise enterprise platform, and so with that level of control, you can kind of make sure that the images and outputs that the AI is generating aligns with your brand's image.
It's really interesting.
Earlier today we were looking at how best buys integrate, integrating AI generator AI.
Google a partner for them.
Who are the kind of businesses who are adopting Google using Google Cloud as well to ensure that they got the compute power to be building generative AI systems themselves.
It's a lot of startups actually AI generative AI startups in particular. One bit of news that came out today is that Google is continuing to sign up these kinds of customers for its cloud platform. So last year in August, Google said that it had signed up up to seventy percent of AI unicorns, and today they're saying that that figure is up to ninety percent of all generative AI unicorns are using its cloud computing services.
Now interesting that they're really focusing on that particular area.
I'm also just want to know how good it is, Davy.
I mean, this has been the perennial issue many have felt, even though they were at the very well iterations of generative AIS because of the work and the R and D that Google did that got us to where we are today, but they've lost market share and mind share really to the likes of open AI.
Yeah. Absolutely.
Google says that there are a couple of things that differentiates itself from the competition. So one thing that is pretty unique to them is that they have Gemini one point five pro that is underlying a lot of these AI offerings for enterprise, and that model has the longest context window. Google says of any AI model. It can process up to one million tokens at a time, which you know, tokens are essentially like words or pieces of words, and that means that marketers can upload audio files, photos, images, videos, potentially thousands of them, and that will be the basis from which the AI generates new content. Another thing that Google says is unique to them is that they are more open compared to other cloud computing platforms. And you know, Thomas Currian, who we spoke to ahead of the announcements today, didn't name any specific competitors, but that seemed to be referring to open AI. And you know, one thing that he emphasized was Google Cloud wants enterprise customers to be able to choose a platform, not an AI model. So within its platform, it actually makes available a bunch of different models, including anthropics and metas, and developers can pick and choose what AI models they want to use.
A lot of this all comes back to chips, Davey, and it looks as though Google is focusing more on in house chips. It's notable that in videos down on the day, it's notable that Boomberg Intelligence is saying, look, there's a deepening relationship between Broadcom and Alphabet. What do you make of the chip move.
Yeah, Google has long been working on its own chips, but you know, especially with the demand increasing for AI computing power, this is something that they can kind of bring get their experience, bring it to bear on this effort. So one of the announcements today was that Google was rolling out its own advanced chips and hopefully that will help it to compete with the likes of Nvidia and other chip makers. Google's cloud strategy and it's AI strategy on the whole appears to be let's have our fingers in kind of every pot and keep pushing the ball forward on AI to make sure that we remain relevant after having laid the groundwork for a lot of the AI innovations that we see today that are being used across all sorts of companies, including Open AI.
Well, the event continues on the other side of America. David Albert, We thank you so much for bringing us all the latest coming out of it key cloud event for Google I. Meanwhile, coming up, Tesla's former CEO and co founder.
Says it would be a shame that the EV.
Maker scraps plans for a cheaper car.
Will get his take on that and the EV transition more broadly, that's coming up next to the Bloomberg Technology.
Now.
Tesla once upon a time had a previous CEO, Martin Everhard. In fact, he was one of the true founders of the company. He said Tesla should rethink its plans to scrap the low cost electric car that seems to have been being reported on a plate that the company needs to focus on costs to keep it sales growing. He sat down on Bloomberg's has I'm in in Hong Kong and starting off on whether or not the EV transition is actually slowing down.
Take a listen.
I don't think that's true. Maybe Tesla is slowing down, but the whole industry has slowed down. I've noticed in the last year or two, particularly in the US.
So yeah, And in terms of Tesla's own Brecknek growth, is that over some sap Perhaps yeah, it's done and dusted.
I don't.
I mean, looking at one small downturn, maybe it's over. Maybe it's not. I think in some ways it doesn't really matter because the EV phenomenon has taken over the entire auto industry.
Well, we'll see.
EV's coming out of China here like crazy in the next several years. The Korean evs are amazing, and even in the US there's many companies making EV stuff.
So the current growth pace is going to be the new normal.
I think that eventually we're going to see all of the cars replaced with EV's over the years, and who the players will be. Not everybody will survive. I think Tesla probably will.
Do you do you buy the spin that perhaps Tesla is in between two growth waves.
Maybe that's the way to look at it. I read recently that that Tesla has decided not to pursue their model to the lower end car because they don't think that they can compete with the lower end Chinese cars. I think it's a shame. They might want to rethink that. It seems like a better market than that gigantic truck they make.
Why do you think Tesla is so reluctant now?
I mean, and why has it been.
So difficult and it's so slow to get to the cheaper versions of those evs.
It's a new technology and it's difficult to drive the technology price down. It's you know, it's the profit of high volume. Sorry, the profit of high end luxury cars is much higher, and it's easy to make money in that space. But we want to move down into lower price markets. You need to have the ability to build at a very different level.
So where is Tesla going wrong or where should Tesla be focusing on to get to where it needs to get to in terms of those cheaper models.
Tesla needs to be focused on cost. Test needs to be focused on cost instead of focusing on technology for the sake of technology.
Does it need new talent initiatives?
Oh, I don't think so. I think they'll manage along just fine.
In terms of Tesla's future, maybe five ten years down the road, where do you see Tesla Because some say that perhaps you know, it could be concentrating on EV's, but it could be other projects as well. How do you see Tesla in terms.
Of growth in the next far to take.
What I'd like to see is Tesla succeeding to make evs in the foreseeable future. I'd like to see them continue to make EV's and drive into the rest of the market spaces they aren't occupying right now. Whether they do that or not is not my safe.
You were with Volkswagen for quite some time, in fact two years after you left Tesla. Yet when it comes to the EV strategy, they've not been able to replicate what Tesla has done.
Why is that it, let's just say innovatives dilemma. Right, Volkswagen has been very, very successful, more successful than pretty much any other company making gasoline and decent powered cars. It's hard for a company like that to be pushing a technology that suggested buyers ought to buy something other than the cars that have been making the money for all these years. It's hard to be the ones who invent the technology that make your own products. Absolutely.
The former TESA CEO, Martin Eberhard there along with our own has Linda I'm in. And now let's just come full circle with where Tesla is at the moment and maybe headed for in fact, perhaps vehicle sales declining in another quarter.
So back to back drops.
After surprising investors with that drop that we saw in the first three months of the year, it's at according to annis such as Robert W.
Baird, lu Mergs Craig Trudell. Is here to sort of.
Sum up what is the narrative in the market. Look, we almost front run this with the stock move the beginning of this year. We've seen Tesla significantly underperform and now that's starting to be born out in delivery numbers. Who thinks that this sort of decline is going to be continuing?
Yeah, I mean this idea that Ben Calo at Robert W. Bird, as you mentioned, expects the second quarter to be another decline. I think, you know, just looking at the chart we have on the terminal with that story, it does speak to this idea that there will be, you know, at least in his estimation, a bit of a tick up in terms of, you know, just from the seasonally low first quarter. But to his point, the comparison from a year ago is tougher. And I think, you know, as you mentioned just earlier this year, you know, the stock was underperforming because we kept hearing analysts after analysts, you know, talk about this idea that the outlook for sales, you know, wasn't that great, and then you know, lo and behold, the company comes in way below analysts expectations. I think this really sort of leads people to second guests, you know, their assumptions for this company through the rest of the year.
Let's just talk a little. This is a great street wrap.
Bringing back does a wonderful job of summarizing what all the anists out there are saying, and many have been wanting to talk about this robotaxi focus versus perhaps the coln of no longer having a model to a cheap car. What do you make of some of the views on the ROBOTAXI.
I think their skepticism is sort of borne out just from the year after year a pattern of Musk talking about robotaxis being just around the corner.
You know.
I think we're actually coming up on the five year anniversary of Musk holding the first Tesla Autonomy Day when I remember, you know, covering this with Dana Hole and you know, watching Musks talk about this idea that you know, by the middle of twenty twenty, he was saying that, you know, the million Tesla's that were on the road were going to be capable of turning into robotaxis and that people would be able to even fall asleep in their car. Obviously that has not come to pass, and so you know, the expectation that Tesla is going to be able to deliver a fully self driving vehicle, you know, I think Wall Street's going to need to have some show there.
Yeah, for now, twenty buys on the stock, fourteen cells and a price target that does seem to be declining a little bit. Crater Deell, great to have you wrapping it up, thank you. Meanwhile, look, General Motors Cruise autonomous driving business, well, it's preparing to actually resume testing of their robotaxes with safety drivers and Phoenix. This marks a pretty important step in its attempts to restart service after grounding its fleet last year. Remember, the company is set to announce and begin the testing as early as today. In recent months, Cruise has been in talks with officials in twenty metropolitan areas where it previously ran cars or had started mapping in.
Preparation to run them. This is really meg technology.
Neuro One is a developmental stage company committed to brain impact technology and it's just completed its first surgery involving its.
One RF ablation system.
Now that's actually a device that can be used for mapping and then targeting brain areas with a normal activity. It's used to treat a range of neurological conditions such as Parkinson's disease. Please to say, joining us now as SEO of neuro One Medical Technology is Dave Rosa, And well, congratulations on this surgery that I understand occurred just as recently as yesterday. And I want to get your perspective on how big a seismic shift this is for you.
I think it's a tremendous, tremendous accomplishment for the company, but I also think for the field. I mean, what patients have been dealing with that undergo these surgeries is they've had to come in for an invasive diagnostic surgery where the surgeon tries to locate the problematic area in the brain, and then those patients would be sent home and then rescheduled for a therapeutic surgery where another device would have to be placed to remove the tissue. And what we're able to do now with this technology is use the same device to do both in the same hospitalization, which we think will cut down on hospitalization, surgeries, and even cost for the procedures. So we think this is a major accomplishment.
Putting chips or other devices within the brain. The oxygen seems to have been sort of sucked out of the room by companies such as Neuralink.
And I'm interested.
In your perspective actually put the context around this.
How long has this been happening?
How long have we been putting bits of equipment devices into the brain to be ensuring that we know really what's going.
On there for actually many many years, So it's not new for brain mapping, and even with companies like Neuralink and synchron you know, putting BCI devices in patience to help them move a computer mouse by just thinking that's been done for quite a long time. I think the eloquence of how they're doing it now is much much different by using wireless systems or less invasive systems where you're able to place the devices through a blood vessel. So that's really where the advancements have come recently.
You're putting electrodes in the brain, and I'm interested as exactly what the different products are that you're developing and what they actually do.
Yeah, so the electrodes that we have and the goal of this company was to always be able to use the same device to do mapping, to do ablation, and to do stimulation, which is another therapeutic treatment for conditions like Parkinson's disease and even epilepsy. But really what excites me about the future of this technology is not just the things that companies like Neuralink are trying to accomplish, which is really be able to help people that are paralyzed. I think the next wave of utilization for devices like ours is to be able to deliver new gene therapies and drugs and deliver them precisely to the part of the brain that's causing the issues for patients, and then also be able to simultaneously monitor the see and then other indications, which I think again will be big opportunities or Alzheimer's primarily, and then also conditions like severe depression. Scientists have found the areas of the brain that control emotions, and there's also been some really exciting work done by the Mayo Clinic on improving short term memory using electrodes like this for Alzheimer's patients.
Dave Rossa, we always wish the future was sooner than it currently is. Thank you for painting out exactly what neuro one is doing. Neurowan Medical Technologies, We thank you for the time. Welcome back to bluembg Technology and Caroline Hoid in New York. Quick check on these markets that are bouncing off for their loads. But suddenly we did get a turn in the equity market, and we're still under pressure by some four tenths percent on the Nasdaq one hundred, some of them momentum names in particular under pressure and thinking of Viner, thinking of Meta in particular selling off even as we see actually bon yields coming down, money going into the bomb market ahead of that all important CPI print coming tomorrow.
Currently off for about four or five basis point when you can get a.
Two year, but really across the curve, we're seeing a little bit of dip buying.
We're seeing bitcoin under pressure. Is risk asset sell off. We're off almost four percent.
We're going to be digging into bitcoin in a moment, but we'll off of those seventy three thousand dollars level highs sixty nine hundred and twenty three.
Moving on some of the individual movers.
I want to shine a light ones actually managing to be one of the biggest point contributors to the Nasdaq one hundred to day, we're up one point two percent. Many trying to digest really what the announcement in August surrounding Robotaxi innovation is going to mean for a company that maybe is pulling back a little bit on some of the cheaper offerings that they were planning, and really trying to read the room on where Tesla is going and how much they've been sold off already. Cisco getting an uplift from certain analysts Augustani liking it up two point two percent, really feeling that there's been too much bearishness around this particular name, Galaxy Digital interesting one of course traded over in Canada. We all know Mike Navogatsu's leading this particular business off by eighteen percent, hit hard while they're raising money one hundred and twenty five million dollars a bit. They're doing an all stock deal really with Cnical genuinity of buying up some of their overall stop managing to put this towards working purposes and ultimately continuing to keep on fueling the business. But we're off significantly on the back of that supply. So keep an eye on some of the crypto names, as crypto is indeed under pressure. And let's just dig in a little bit there, because while we've seen crypto selling off today, the momentum has been up into the right of late, and that's because we've had plenty to talk about from an ETF perspective.
But also coming up in a couple of weeks that highly.
Anticipated Bitcoin halving event, which as a history of lifting the price even more.
And we're hoping there are.
Hopes more generally that maybe the high in light of bitcoin's current rally and more than fifty percent or record high this year might actually still have room to run. What's exactly going on, Let's speak it all down and what the harving means.
Take a listen on the horizon is a preordained event that will change the business of bitcoin forever. It's called the hea. It will become much more difficult for miners to produce new coins.
After the having. Margins will be cut overnight by fifty percent.
So the halving might be good for the holders, but it's not necessarily good for the miners.
Some companies are either bulking up for scale or finding ways to diversify.
Some companies that in the past we're bitcoin mining, they've shifted over to training these ever BIGGERAI models.
This is kind of a moment for bitcoin that is arguably one of its biggest ever.
Twenty one million that is the total number of bitcoins that can ever exist, and over nineteen million of those have already been awarded. The having is the mechanism designed to create scarcity and control Bitcoin's limited supply. It happens every four years, and when it does, all future block rewards are cut in half.
The having is a natural phenomenon in bitcoin that disciplines the entire market and forces it to become more efficient.
You can watch the rest of this episode on Boomberg dot com. But now let's dig into the harving and more broadly, the ecosystem a bitcoin with Rienasha, vice president of Operations of Products at Trust Machines. You build applications for bitcoin. It's all about a broadening out of the ecosystem. But Rena, when we go to the halving, how much of a fundamental lift will the speed.
Do you think?
Firstalent, thank you so much for bringing me here on today. I'd say bitcoin having is going to have a huge impact on bitcoin markets today. We are in a very unique cycle because we are ten days away from having. We're at an all time high, and a spa etf just came in America. So at this point, what I'm seeing is that the supply will be shunk. We will have less bitcoin entering in after April twentieth, but the demand is at an all time high from institutions and retails coming into bitcoin. What this means is that more people are going to be looking to bitcoin to turn it from a passive asset to a productive asset, and that's what our company trust machines. It's all about building real products to do more with their bitcoin.
Go to the passive bit Though, with your experience of the head of the exchange of at Finance US, is it true that we've seen more institutional players come in or of late, have we just been powered by more retail accessing spot ets in the US for example?
I think it's a little bit of built that we're seeing on the institutional side more and more coming in because they now have new access to bitcoin. But on the retail side are seeing new developments with bitcoin through Ordinals Bitcoin NFTs, and it is creating a brand new supply of artists and creators building with bitcoin to create a new form of art. This is a very different retail phenomena that we're seeing.
Okay, different from the NFTs that we all love to talk about a.
Few years ago.
Reena, and I'm interested when you're thinking about a bitcoin network that many have thought of was usually look either something that you were gaming in some way. It was more of an asset that you bet upon or indeed stored value.
If that was the way that you saw.
It largely, you know this was something that wasn't being built on from a smart contract perspective that we saw over with ease. But you're trying to change the narrative around that a little bit, as you say, make it more productive. Where is the production coming from web three apps that are being built?
What are the most nucrative for you?
So I think if you were to think about bitcoin as a market opportunity, we have one point three trillion dollars in BTC as an asset class, so we have surpassed the store of value. But we're trained to move into now the medium exchange. If you were to build applications on top of bitcoin like layers like what lightning is building, or DeFi or stable coins or anything under the sun, you can have a larger economy as a flywheel on bitcoin. So think about this. All of the value is what we see on the surface, but the untapped potential of a one hundred two hundred billion dollar market is below the surface, and we are just scrapping the surface through new layered technology on bitcoin.
Like what like what technology? What use cases?
A lot of different use cases. The first is the idea of bitcoin. L two's Bitcoin is having a moment and a lot of people are thinking about how to scale bitcoin by creating new layers like what Ethereum has with Polygon or other l twos with bitcoin. This means that I can have smart contracts with bitcoin, meaning that BTC lightent capital that asset can be deployed directly into DeFi. RWA's thinking about tokens, treasury bills. Kind of the world is the limit on the idea of new products being built on bitcoin, but using most secure and stable blockchain in all of the world.
So real weld assets a key focus.
I'm interested in your business, in particular trust machines. What was it a revenue growth of you seeing how you managing to bring in money the same time as the costs there involved.
There is always costs in doing any sort of business. There's no secret in that our product lines are very diversified. One of our products is the leading bitcoin while it calt leather meaning not your keys, not your crypto. We help Americans and people all over the globe get access to bitcoin and secure it safely here at home. The other product that we're building is a little bit revolutionary and very new. We are bringing the web to functionality of a tld SO a domain. If you say as a passport into web three and bitcoin, meaning I take my digital identity everywhere we go.
Okay, feels like we need to get you on a little bit more to dig into my new digital identity and whether or not that's having just got my eye or not, Rienisha, I may please spend the tiety vice president of Operations and Products over at Trust Machines.
Really fascinating across the cryptospa.
I mean, while watching shares of Intel today, let's just keep an eye mo broadly on some of the chip makers as we see really a bit of a sell off that's.
Been happening across the world.
Now we're actually seeing a spike higher than the world of Intel right now, almost managing to trade flat on the day this as we see an announcement more around Goudi three. They're saying they're unleashing enterprise AI with Goudi three AI, open system strategy, New customer wins is what's coming out. This is Intel's vision twenty twenty four and really breaking down some of those proprietary rules they say to bring choice to enterprise generative AI markets. Isn't it interesting that seems to be coming on the same day as Google's announcements, and also they're teaming up with Broadcom, so we're just seeing a release of new AI hardware to compete within video in VideA. Of course, under pressure today this is blue made technology.
Investing in privately held companies.
It can be difficult for retail investors in particular, but Destiny Tech one hundred is trying to change that. It's a publicly traded closed end fund and holds shares the private tech startups think Stripes, SpaceX, Open Ai, Discord, Epic Games, and it trades publicly now on the New York Ticke Exchange under the ticker d XYZ.
But it's investments are private. They're a liquid and the fund.
Plans to expand its holdings to include stocks in one hundred startups now other the companies it has invested in cell or go public. The returns from those investments can be distributed shareholders as a divindard or indeed reinvested back into the fund. As you saw, it has been incredibly volatile, in fact paused several times today for trading, having risen about eight hundred percent in the last few trading days. But you want to get back to the opportunity of investing in the secondary market private companies.
Drew Glover, I'm pleased to say is with us.
He's partner at FIAT Ventures and founding partner of FIAT Growth, and that is where you help advise scale, bring to bear fintech companies in particular, you then get really close to them, understand he investment chunks. Secondary market is something you've been giving an eye on. What do you think of it?
Yeah, so I've been keeping a close eye on this, mainly because we work with private companies, and I think what we've seen over the last call it, twenty four months is this shift from a momentum market into a fundamentals market and a lot of companies that were highly highly valued a couple of years ago have really been dormant in the private market. There's not haven't been a ton of IPOs. There's been a lot of companies building, optimizing, really trying to become profitable during this downtime. And what that's created is a lot of really incredible opportunities in the secondary market, but also, at the same time some not so exciting secondary market opportunities. Okay, and that is mainly because depending on kind of where the private market sits. There's always massive trends, massive things that drive over valuation, massive rounds, big valuations, And so you know what we're seeing in this market, in the secondary market right now is I think the really really educated buyers are making some really smart decisions, but it's still very easy to get caught up in the height of what some of these trends are AI.
You know, I could talk to trying to tell me the open AI isn't a good deal in the secondary market.
You know what, I actually can't tell you what the number is from an open AI standpoint, but the opportunity open AI has brings a number on their head that they still need to grow into. And when we're talking about trends in the private market, the valuations that are put out there are numbers that they expect companies to grow into. And so when you think about it, you're betting on the futures of a company versus some of these other ones that have done really well and have stayed really quiet, and because they're not public, the information on their success isn't as widespread, and so you really need to be an insider to understand where the value sits in the secondaries.
So sort of a cautionary tale to retail investors who need to actually do a little bit more digging than just go to the most hype name on a five across headlines or indeed on social media.
How do you start to get that insight?
Where do you start peeling the onion.
From Yeah, and so you know, I think you know there's a number of these different companies right now that are really kind of bringing together, you know, these consortiums of different private companies. Some are on the public markets, other ones are are are really just building different companies to kind of roll up some of these different pieces. I mean, you need to have you need to hash yourself to the attach yourself to the right minds that are that are leading this charge. Well at the same time, you know, you kind of just need to know the right people. You know, for example, I know the mafia of a number of different you know, really incredible companies that aren't quite public quite public yet. And you know that is just the nature of me being in San Francisco, you know, knowing a number of different people, but you really need to not only like know within your network, but you also need to stay close to the people that are living and breathing this every day. If you don't, you will get caught up in the hype cycle. The private company story in the mb kind of publication market that is the greatest story ever been told, because you don't have to work underneath the kind of public market scrutiny of how you really talk about your business to the world. So you know you can't get caught up in the hype because it can really hurt if you're trying to lead into the secondary space.
Okay, so let's go for real versus hype.
Where has been the real work been done?
From a fintech perspective, this is your area of expertise.
Is it B t C?
Is it B to B where some of the.
Company's been doubling down and generating revenue and actually profits.
Stare I say it?
Yeah?
So I think I think there's some big opportunities from a secondary standpoint in the direct to consumer space. I think what happened in this transition from momentum to fundamentals is a lot of people rode off large neobanks, a lot of people wrote off a lot of the really large consumer plays in fintech. And don't get me wrong, some aren't doing very well. Some are doing better than you could ever imagine.
Is there a discerning trend as to which ones are doing better than you'd ever imagine?
Yeah, well, in terms of in terms of trends, again, this is information that that's just like not widely available. However, you know what's happened is is what was happening before. What was happening before is we were really in the middle of a brand war. It was a number of different neo banks and consumer FinTechs that were all just competing to have the biggest brand, and that meant they were just spending a ton of money on Facebook and Instagram. And then once the momentum market shifted into the fundamentals market, you know, we pulled back on spends a little bit and we started looking internal to the business. How can we make it so we're not just building a company just based off interchange, you know, how do we make it so we can get more products in front of our different users and make recommendations maybe driven by AI that will help improve their financial health and their financial life, and really building internally to build additional products to drive revenue and build existing growth growth channels within the existing network to make it so we can drive more profitability, drive more revenue, drive more value to the end user. And so what's been happening from a private market perspective is these engines that were one note have now created multiple engines within their business to create long lasting value.
What's interesting is we might well get a public exit from a key fintech And I'm thinking of Klana.
Everyone wants to see what.
Stripe's going to do at some time, but the buyd how pay later ship is where Karana is wrapped up. They're also talking a very interesting general to AI game at the moment and the productivity they're seeing that is that going to be an opening for other companies that you're currently advising and taking states in.
Will there be more fintech companies going public?
Yeah?
So I think there will be more FinTechs going public. Again, we're talking about a cohort that's been around for the last you know, fifteen years, you know, because old Yeah, a lot of these folks were hoping to go public a couple of years ago. And you know, what they've really done, like I was saying, is really you know, optimize the engine that they've been building. I think Klaranna is a really interesting one. I mean, like hot take here, Like I don't think there's going to be a lot of other by now pay later businesses that they get to reach the IPO space to about it. It's it's it is crowded, but at the same time it's a capital intensive business. From the standpoint of one, you need to really market it as a brand. Although it's a B two B two C product meaning I'm selling to a business and I'm trying to own real estate on their checkout page. When us as consumers land on that checkout page and we see a firm or Klarna, we need to feel confident in that brand for us to go into debt with that brand. So that's one piece is just like the brand side. The other one is it's a it's a debt facility. And one thing we've seen is the debt facility market's taken a big hit in terms of these debt providers providing risk to other companies. I've seen this in the you know, the the very early stage market. I've seen in the high market, and what we've seen with Klarna is, you know, luckily they are so far along. What they really are is they're an underwriting tool just like a firm. They're able to offer they're able to offer micro lending options for no interest at all, although they did just they just did just input a late fee charge. You know, there's some things that they're doing that try to optimize. We talked about AI. They're also potentially laying off seven hundred different folks to bring chat GPT in as their customer service arm of the business, which they've run some really interesting tests on that have been really successful. But to get to that stage you have to raise billions of dollars.
Well, we'll get you back on as and when that goes public and what are the new ones to keep enough on? Drew Glover, partner at Fiat Venture's funding partner at fat Growth.
We thank for his time.
Last year it was about a chief supply. People could not get enough in video chefs. Particularly this year is starting to transition to a voltage transformer supply. If you look out a year or two or certainly three years, it's just electricity availability. So those constraints in the hardware.
Side, you know, musk they're talking about chip supply shortage and the AI space in particular. Of course Tesla and AI Player, but so too is now Grok, which is developing. He was speaking on X yesterday with Nikolai Tangan is the CEO of Norgebag Investment Management. It manages about one point six trillion dollars in fact, in fact as the largest single owner of the world stock markets. Musk actually began the live discussion by talking.
Up how well the service worked.
Pretty soon the audio cut out on X and it happened again and again and going to we'll have to dig into it with Blueberg's BusinessWeek.
Columist Max Chafkin.
I mean, aside from technical glitches, Max, what was the key takeaway you think from that conversation.
I mean, you know, Elon Musk has been in this conversation a couple other forums over the last week, been painting a very sunny picture of AI, particularly around Tesla, and as we heard here Grok.
You know, he also, in addition to.
Saying like we're getting past these chips shortages as you just heard, he said that they are using a huge number of Nvidia chips on the next version of GROC, which he also talked up. I believe he said twenty thousand, h one hundred chips, which you know, that's an insane amount of money. That's you know, each one of those chips is between like ten and fifteen thousand dollars, So it's a it's a huge sum of money. And I think the real question is how does grock XAI, which is Elon Musk's AI venture, how does it? How does he finance it? Does he raise outside capital? Does he somehow does it somehow get closer to Tesla or closer to Twitter now now called X. I think that's one big question because these large language models, as people know, are not inexpensive to train, and they are and they are not inexpensive to run.
Elon's in damage control right now.
Yeah, so we heard last week some really discouraging sales figures which Musk had kind of previewed, and then you had a report from Reuters saying that the model too, that's the inexpensive electric vehicle, was killed by Elon Musk. Elon Musk has disputed that, but he's sort of been edging towards a chain an emphasis in ESSENTI saying no, we're prioritizing the Robotaxi, which is this almost mythical product that he has been talking about for almost a decade and yet, on the other hand, does hold a lot of promise. You know, the people who are really bullish on Tesla see this as the key to justifying the valuation, so you can kind of understand the strategy shift.
Max Chafkin, we thank him.
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