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- [00:01]
Host (Bloomberg Businessweek Daily)
What if data didn't sit still? What if intelligence moved with us, not buried in reports, but activated in real time? Where lives are being shaped, where decisions are being made. It all starts with the where is the potential. Totality turns data into clarity, intelligence into insight, insight into action. Because when intelligence moves, we all move forward. Intelligence beyond bounds.
- [00:31]
Mark Pincus
So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions. Resolving 94% of common questions. Not noise proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smarter business. IBM.
- [01:01]
Mandeep Singh
Okay, before we get into it, little side note for the IT leaders listening in. I was reading up on a Microsoft Commission survey the other day and learned that teams using Windows 11 Pro PCs report 62% fewer security incidents compared to Windows 10 PCs, including three times fewer firmware attacks. Pretty significant. With security built in, you'll have AI ready IT that sets you up for operational efficiency as well as long term resilience. Upgrade to Windows 11 Pro@Windows means business.com
- [01:36]
Host (Bloomberg Businessweek Daily)
Bloomberg Audio Studios Podcasts Radio News this is Bloomberg BusinessWeek Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.
- [02:06]
Mandeep Singh
This is a different conversation, it's a different data center. Right now this is about AI and but it's a valid question, right? So I will give you the same answer that I gave when we entered the automotive business, when we entered the industrial business and everything that we have been doing to diversify the company. Those are fast moving markets now changing with technology. So where we really focus is not what the data center is doing today, but what the data center is going to be doing tomorrow. The data center is now moving to agent tech. That's why you see CPU companies on the rise, you see demand on the rise.
- [02:42]
Host (Bloomberg Businessweek Daily)
Good stuff there. Cristiano Amon, Qualcomm CEO there with Romaine Bostic and of course the host of Bloomberg Tech, Ed Ludlow, who kindly is joining us right now from our bureau in San Francisco. Do you want to point out Qualcomm shares are up about 7%? They're off their highs of the session Micron. We're going to get to that too. It's up about 17 and a half percent. I think it's at an all time high as we speak.
- [03:02]
Mark Pincus
Whoa.
- [03:02]
Host (Bloomberg Businessweek Daily)
Ed Ludlow, where do we begin?
- [03:05]
Bloomberg Intelligence Analyst
Talk to us.
- [03:05]
Ed Ludlow
Yeah, it's quite a lot.
- [03:07]
Host (Bloomberg Businessweek Daily)
What do you think? Let's talk about Qualcomm. We just heard a snippet of the CEO.
- [03:11]
Mark Pincus
What's credit where?
- [03:12]
Ed Ludlow
Yeah, credit where credit's due. Right. You know, Qualcomm is the world's biggest provider of smartphone processors, a market that is not doing great right now. And they have made this entry into data centers. And what you heard from Cristiano, I'm on there, was the answer to the question, didn't you already give up on data centers? And secondly, if you look at what they announced, Wall Street's clearly cheering what they've said about the future financial opportunity. But they're a little bit late to the game because these CPUs come online in 2028. Their accelerators, their custom AI chips for running inference workloads aren't here yet. And the problem is they're in this environment where Nvidia absolutely dominates the market. And whatever's left AMD kind of come comes up and gets the rest. But both of those companies have a new chip every single year. Qualcomm's chips are two or three years away. But, you know, he was honest about that. Like, the market opportunity is absolutely ginormous and they are very confident they're going after a very specific bit of it because their chips are nothing to be sniffed at. They're like highly performing, very efficient chips on a dollar per token basis or a dollar per kilowatt basis.
- [04:22]
Co-host (Bloomberg Businessweek Daily)
Ed, you mentioned amd, you mentioned in video. What about Intel, Broadcom, Google, Amazon?
- [04:30]
Ed Ludlow
Yeah.
- [04:30]
Co-host (Bloomberg Businessweek Daily)
Can we, can we throw Cerebras in there?
- [04:33]
Ed Ludlow
Yeah, you absolutely can. I mean, the field is becoming more crowded in terms of the number of players, but based on current data, which you can say is just simply sales or its deployments, Nvidia has a technical monopoly, which at Bloomberg, we believe a technical monopoly is more than 70% of a market. So, you know, the opportunities there and clearly based on the share performance and also like what they said, right, you know, like they're going to do $5 billion of datacenter sales next year, fiscal or calendar 27, and that will go up to 15 by 2029. That shows progress for a company that has historically not been in that market.
- [05:12]
Host (Bloomberg Businessweek Daily)
All right, so Micron. Yeah, Micron. Yeah, it was the thing that leading up to yesterday's results, after the closing bell, every market guest that we had on said this is going to be really important. So what was so important about the results that has this stock I think at an all time high as we speak.
- [05:33]
Ed Ludlow
Yeah, it's not about beating the expectations of the Street. Micron reset the expectations of the entire industry. And by the way guys, I felt you both did a really excellent job to try and get the story from the earnings statement because that's all you had to go on at the time it was that supply was tight and it's going to be tight for a long time. And clearly higher prices is what moved the needle for Micron, not necessarily selling more units and like that's exactly how the call played out. So the big wow number was that in the fiscal fourth quarter, the current period, Micron saw $51 billion of sales. And it highly relates to datacenter and high bandwidth memory. And the street was seeing maybe 43. But the bigger picture is like that's the best position for Micron to be in where there's very tight supply, they have pricing power and everyone wants the thing you're selling. Compare and contrast. It's not good for the companies who are in the market trying to get hold of those chips.
- [06:27]
Host (Bloomberg Businessweek Daily)
I just want to know I'm leaving 731 because love the praise. I feel like I've done it. When Ludlow says we did a great job, oh, I gated company like Micron.
- [06:37]
Co-host (Bloomberg Businessweek Daily)
I thought we were going to talk about soccer, but that's ok.
- [06:41]
Host (Bloomberg Businessweek Daily)
I'm good, I'm good. Love you. Love you as always. And you also helping us always make sense of all of these reports. Ed Ludlow, thank you so much. Be well at Ludlow. He's the host of Bloomberg Tech. Check it out on Bloomberg TV. 11am to noon Monday through Friday.
- [06:55]
Co-host (Bloomberg Businessweek Daily)
Stay with us. More from Bloomberg businessweek Daily coming up after this.
- [07:02]
Host (Bloomberg Businessweek Daily)
What if data didn't sit still? What if intelligence moved with us? Not buried in reports, but activated in real time? Where lives are being shaped, where decisions are being made. It all starts with a question. Where is the potential? Totality turns data into clarity, intelligence into insight, insight into action. Because when intelligence moves, we all move forward. Intelligence beyond bounds.
- [07:32]
Mark Pincus
The thing about AI for business, it may not automatically fit the way your business works. At IBM we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slashed repetitive tasks and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM Venture Global, we think about what can be done, not what's usually done through Innov, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building.
- [08:26]
Co-host (Bloomberg Businessweek Daily)
That's Venture Global.
- [08:28]
Mark Pincus
That's unstoppable energy.
- [08:33]
Host (Bloomberg Businessweek Daily)
You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [08:47]
Co-host (Bloomberg Businessweek Daily)
We're going to stay on technology and how it continues to transform amid the AI backdrop. And it takes us to someone who's been innovating and disrupting as well and remembers all too well the boom and bust and changing landscape of the dot com era. He's best known as the founder and CEO of Zynga, the social games company that IPO'd in 2011. But he's built and invested in so much more and through every iteration of the Internet, the 90s boom and bust, the social media boom of Web 2.0 and now the era. Carol, he's also a prolific investor.
- [09:15]
Host (Bloomberg Businessweek Daily)
He is indeed. He's invested. You'll know these names, folks. Napster, Space X. And he had, he held on to his shares. His $38,000 seed investment in Facebook, now Metta, for about half a percentage of the company, would be worth many, many billions of dollars right now. Smart investment, I would say.
- [09:30]
Co-host (Bloomberg Businessweek Daily)
We're talking about Mark Pincus. He's got a new book out and we know all this thanks to the new book. It's called Life at the Speed of Play. Launch products people love. Mark Pincus joins us here in the Bloomberg Interactive Brokers studio. Welcome, welcome. How are you? Congrats on the book.
- [09:44]
Mark Pincus
Thanks, thanks. By the way, I really am happy about the memory stocks.
- [09:48]
Host (Bloomberg Businessweek Daily)
Okay, well, why?
- [09:52]
Mark Pincus
Well, for diving right into the AI trade, we are. Let's not mess around. I'd say that, that it's, it's a pretty simple trade at this point. It's a belief. And either you believe that the AI infrastructure investment is going to pay off and keep playing out, in which case all of these companies are generationally undervalued. It's a generational buying opportunity. If you're getting a peg ratio of 0.3 or less or you think that it's not going to play out and then you should stay away from all of it. So. Well, I'm a believer.
- [10:32]
Co-host (Bloomberg Businessweek Daily)
So it's funny because we just spoke with Ted Oakley. He manages money for Oxbow Advisors and he sent us a bunch of stocks. And missing from there were tech names and memory names. He does own some tech, but he said the memory got too expensive. And he said, I've been doing this for decades, many decades. I remember the 1990s, we sold intel and I watched intel stock go up for the next 12 months before then it went down. So he understands these cycles. Are we in one of those cyclical moments right now?
- [11:00]
Mark Pincus
Well, we'll know in the future, but it'll be. It's only cyclical if this, if these AI growth rates and numbers don't play out. If they play out, I think he would even agree that they're still undervalued.
- [11:16]
Host (Bloomberg Businessweek Daily)
You know, Mark, one of the things that we thinking we want to get into the book and talk about, you know, life at the speed of play and what it all means, but we are curious. You have been in Silicon Valley for all of the iterations of the.
- [11:29]
Mark Pincus
No, no.
- [11:30]
Host (Bloomberg Businessweek Daily)
Seasoned like a great wine. Like that's how I think it. Love talking with people who have seen cycles. Right. And can sometimes figure out the silly from the stuff that really matters. How do you, like, how do we make sense? Like, we see the money going in, we see the circular financing that makes us a little uncomfortable. We see the narrative around AI changing. I get it. Disruption. This is what happens. But help us understand, like is this a boom cycle with no bust or is there going to be a breaking point at some point or for only maybe for some.
- [12:05]
Mark Pincus
If I had the perfect answer, you
- [12:07]
Host (Bloomberg Businessweek Daily)
wouldn't be talking to us.
- [12:08]
Mark Pincus
Yeah, I would have held my Meta stock too.
- [12:12]
Host (Bloomberg Businessweek Daily)
You did okay. You did okay.
- [12:14]
Mark Pincus
Yeah.
- [12:17]
Host (Bloomberg Businessweek Daily)
How do you think I would say, look at some of this.
- [12:19]
Mark Pincus
I, I built a boring enterprise software company in the middle of the dot com boom. It was called support.com, but it was actually an early SaaS company. We went public on the last day of the IPO window. I'd say that then versus now. My peers and I thought it didn't make any sense during the dot com bubble. We thought it was crazy what we saw going on around us. And now my peers, my smartest friends think this makes a lot of sense. I mean it was dark fiber then and now it's like hot GPUs. I mean it's actually being used. It was betting on a whole consumer that didn't show up or didn't show up yet. And now the investment, the infrastructure is going to enterprises who are bottom line oriented. And you know, then it was eyeballs and now it's ARR, you know, it's actual revenue. So it's definitely not the same. I think what we do have is extreme volatility and I think that the volatility comes from where it's hard to remember this level of growth market. And when there's this level of growth like we've seen just this week and today, when there is a negative data point or even absence of more positives, it starts to be run for the hills and doom and bubble. And then when we see like Micron's numbers and guidance, all of a sudden everyone's bullish again. And we're going to keep seeing that. That's my take.
- [14:02]
Co-host (Bloomberg Businessweek Daily)
One thing that you write about in the book repeatedly is that you know, and you get into your whole background, Wharton, Harvard Business School, going and working for some investors that our household names to the Bloomberg audience, I mean Steve Ratner, John Malone, I mean these are, these are legends. You are constantly saying you don't know how to code, you don't know how to write code, yet you built all these companies. What struck me about, about reading that was that that kind of doesn't matter now in a way that it that mattered when you were building all these companies that you write about. How has the idea of like OpenAI's Codex or Claude code from Anthropic, how does that completely change the game moving forward?
- [14:43]
Mark Pincus
Well, if you pull the camera back and even think more broadly, like how has the game of startups just changed and how is this another step function change? In each chapter, the amount of capital that you needed to get going has gone down, you know, not up. When I was starting my first company, I had to recruit these government mainframe programmers, have them learn C&HTML. I needed a fair amount of money to convince them to quit their jobs and each of my subsequent companies. Today you don't need that, you don't need as much capital. You don't need to go and necessarily recruit a whole team of the world's best engineers. It's being democratized today. Really. There's, it's more possible than ever for somebody with an amazing idea who's willing to move on it now to really get somewhere in a far more capital efficient way.
- [15:49]
Host (Bloomberg Businessweek Daily)
Yeah, I mean I feel like we also saw that in the pandemic of people just being able to start things while they were home. I am curious about the Speed of Play because that is on your book. Talk to us about that and the importance of it.
- [16:04]
Mark Pincus
Sure. So there was a lot of debate with my, my co author Carly, my amazing editor Hollis, on the title to the book. It was originally called Proven Better New, which We can get into. But that's, that's kind of some of the core value in the book. And I eventually said, you know, it's just, that's not the whole gist of the book. It's Life at the Speed of Play. And that's because it's both the place that we are moving into in this AI era. It's really. I start the book by saying that this is. Elon is the one person who's already been living his life at the speed of play. And I definitely think he's having more fun than the rest of us.
- [16:49]
Mandeep Singh
Okay.
- [16:49]
Mark Pincus
He's also working harder.
- [16:50]
Co-host (Bloomberg Businessweek Daily)
I want to push back on this because Carol and I talked about this.
- [16:52]
Host (Bloomberg Businessweek Daily)
He doesn't always look like he's having fun.
- [16:53]
Co-host (Bloomberg Businessweek Daily)
Yeah, he, he really, I mean, I think he's been really public about having this tortured existence and how difficult it is to be Elon Musk and the challenges that he struggled with personally, I think more so than professionally. Do you actually think he's having more fun than the rest of us?
- [17:08]
Mark Pincus
I do. He's. He's got an amazing sense of humor. He's. Every time I see him, he's joking, laughing. I was with him at a friend's house one night and it wasn't long after he had bought Twitter and it was basically like an hour of the best stand up comedy I've ever seen. I mean, the way he talked about his experience of coming in to Twitter and how insane the company was, was just. Was just really funny. So my point of view, whether he's having more fun, who knows? I think that, that what I, what we can see, you know, I said, maybe he's the one who solved the simulation. What we can see is that he can almost tweet something into existence that he said there, this traffic in LA is terrible. There should be a boring, boring company tunneling company. And then a few months later, and a few billion dollars raised, there was. And my point is, to some degree, we all are on the brink of living a part of that. And the reason I call this Life of the Speed of Play is that to me, what the book is really about is a product mindset. And I think that every so many of us have an idea, but we don't know how to pursue it, or we are pursuing an idea, but the odds of success are too low. Too many founders are failing for the wrong reasons.
- [18:38]
Host (Bloomberg Businessweek Daily)
So a good idea is a good idea, but that's not enough necessarily to run with something and build something that lasts for longer or has some significant impact. Correct?
- [18:47]
Mark Pincus
Yeah. And it might be that you have a good idea, but it's behind some. Some like, obvious mistakes that you're making. That the more junior a product maker or founder is and the less experienced they are, the more likely they are to do too much new to just reinvent everything. Steve Jobs talked about this. So the point of the book is, I like to think that this book is like a cheat code that you can, whatever it is you're doing, you can change your odds of success and getting to a hit. It's the book I wish I had early in my career.
- [19:25]
Host (Bloomberg Businessweek Daily)
So is this for founders? Like, who do you think about? It sounds like it is for people who have an idea or want to run with something. Right.
- [19:31]
Mark Pincus
This book is. Every one of your listeners right now probably has some instinct, they have some sense. It's either a specific idea or a sense that something could be better. And the book is. The point of the book is that they should. What is when you think what should they do with that instinct? Very few of them will act on it and turn that into a product or a company. And then their odds of success will be so low because they're going to take one shot on goal and it's probably going to miss.
- [20:07]
Co-host (Bloomberg Businessweek Daily)
Well, I like how you write about that in the book because you use the idea of Uber as an example in the book, you had the idea for Uber in 2002.
- [20:14]
Mark Pincus
I did. I did.
- [20:15]
Co-host (Bloomberg Businessweek Daily)
SMS dispatching to a cab.
- [20:18]
Mark Pincus
Yeah.
- [20:18]
Co-host (Bloomberg Businessweek Daily)
You're not Travis Kalanick. You did not start Uber.
- [20:21]
Mark Pincus
No.
- [20:22]
Co-host (Bloomberg Businessweek Daily)
So you make this argument that I think a lot of people, everybody has these ideas.
- [20:25]
Mark Pincus
I had that idea.
- [20:26]
Ed Ludlow
Yeah.
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Co-host (Bloomberg Businessweek Daily)
Just because you had that idea doesn't mean you actually create the company. Why was Travis able to do it but Mark Pincus, who was in Silicon Valley in 2002, wasn't able to do it?
- [20:37]
Mark Pincus
I can't tell you why Travis was, but I can tell you why I wasn't. I didn't. First of all, I looked at the world as it existed, not as it could exist the way that Travis did. And by the way, in 2002, there wasn't a mobile smartphone. And I thought about it in these Conventional ways. Oh, I'm going to deliver your order to the taxi broker who will call a cab. I didn't ever think Travis's idea of the gig economy. I'm gonna let anybody become a driver and have a driver within a minute of you. That was brilliance. But I had an instinct, an instinct that we should be able to order a phone through our. Order a taxi through our phone. And the importance. The point I'm trying to get people to focus on in the book is that if you assume your instincts are right 95% of the time and your ideas right, at best, 25% of the time, what would you do with that information? It's like a time machine.
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Host (Bloomberg Businessweek Daily)
You write about these instinct veins, deep sources of insight about human needs and behavior that can spawn multiple product ideas, even whole new industries. Is that what AI is right now? Like, what we're doing? Is that what that is?
- [21:56]
Mark Pincus
Or is that is beyond an instinct vein? I mean, AI is. Is a fundamental shift in. In computing. I mean, the way that the Internet was. And so. So I would add apples to apples.
- [22:10]
Host (Bloomberg Businessweek Daily)
Yeah, yeah. No, it's interesting. You know, one of the things that I find also is some of the things you talk about, like leadership, you talk about micromanagement is beautiful. And I think about how many times when you think about leaders that it's like, don't micromanage people.
- [22:29]
Mark Pincus
Yeah, I was told that so many times.
- [22:31]
Host (Bloomberg Businessweek Daily)
Right. No, think about it. Like, you bring in, you know, you know, experts or consultants, and they're like, don't micromanage your people. Why is it so important.
- [22:40]
Mark Pincus
Why is it so important that you do do that? You do micromanage? Yeah, because the point I'm trying to make here is that at the end of the day, what matters most is your customer experience, not how you delivered it. And so the point to me is, deliver the best possible customer experience any way that you get there. And if it's through, micromanage it. If you can guarantee the quality, if you can guarantee the delivery because you micromanaged, then by all means do that. I'm like, I don't care that McDonald's served 15 million burgers today. That doesn't make mine any better. I want the colonel cooking mine, you know, individually.
- [23:26]
Co-host (Bloomberg Businessweek Daily)
Well, that's a major theme in the book, is sort of throwing out this idea of the minimum, minimal viable product. Yeah, I'm not going to repeat what the chapter's called, because, no, we're FCC regulated here, but we're a family.
- [23:38]
Mark Pincus
Well, that chapter, you can say, was The MVP trap. So other chapters now.
- [23:42]
Co-host (Bloomberg Businessweek Daily)
Okay, cool. Yeah, great. There it is. Why we've been sold this idea though, of iterating and Silicon Valley. Sort of throw something, see, you know, see if what sticks and iterates on that over and over again. Why wasn't that ever right for you?
- [23:56]
Mark Pincus
Well, the, the original concept that Eric Rees had of minimum viable product and moving fast and being in the market is a great concept. It's just that we. Now, the point I make is that we no longer have time to go, wait, the learning is too slow. If we build a minimum viable product, there's hope in the word viable that this might be your launch product and then you're going to invest more in that product than you should. And I like to say just build it wrong before you build it right. Just build to learn. Be whatever gets you signal from your customer the fastest is, is. And, and in the age of AI, we can prototype something or test something so much faster, but it's dangerous. What I'm seeing with AI is less that people are using AI to test and learn faster, but more build faster. And so if I can build something now in three months instead of three years, that's so alluring that I might go do that, but I don't have three months to learn. I'm wrong. Does that make sense? I don't have.
- [25:11]
Host (Bloomberg Businessweek Daily)
Yeah, that makes sense.
- [25:12]
Mark Pincus
Viable word is tricky.
- [25:14]
Co-host (Bloomberg Businessweek Daily)
Well, I think you had also shared in the book the example of Twitch and building. You know, the founder of Twitch, their team was changing their product every two or three days at that point. Yeah, they were twitchy and that ended up being a good thing for them. They got immediate feedback.
- [25:30]
Mark Pincus
Yeah, well, they, I don't even know if it was getting any customer feedback. The feedback was just from themselves. It was, I don't like this product idea anymore. Let's switch. And so that's also important. And part of, part of what makes it so hard to be a founder, to be a CEO, is that we're supposed to express confidence when we don't personally feel confidence. Right. And so how do you come in on Monday and what if you just. What have you learned something in the past week that just said this product isn't quite right or it's finally part built and you're like, I'm just not that into it.
- [26:09]
Mandeep Singh
Right.
- [26:10]
Mark Pincus
Do you go to your team on Monday and say, guys, I know I got you to work nights and weekends for this, but I don't think this is right anymore? Or do you say, well, I don't want to demotivate my team. And so I'm just going to continue on this path for this whole product cycle or I can't. I'm afraid to tell my investors who backed me that I was wrong.
- [26:32]
Mandeep Singh
Right.
- [26:32]
Mark Pincus
And so the question is, are you more committed to the intellectual honesty or to harmony?
- [26:38]
Host (Bloomberg Businessweek Daily)
I would say intellectual honesty.
- [26:40]
Mark Pincus
Most people would not. Most people would not act on that.
- [26:42]
Host (Bloomberg Businessweek Daily)
I know, but it's like, I don't know, at some point you need to be doing that. Hey, we're talking with the Mark Pincus, founder of Zynga. He's got a new book out. It is entitled titled Life at the Speed of Play. Launch products that people love. Are there products? I mean, the product cycle, is it getting shorter or longer? Especially when it comes to technology. Because I feel like there are things that people are so into and then they move on to the next thing and there's so much out there from a consumer.
- [27:08]
Ed Ludlow
Yeah.
- [27:08]
Mark Pincus
Standpoint. Well, I say in the book that I think there's a metric that I don't know anyone but me who focuses on it and my former teams. Day 365 retention. So if 100 people were using your product today, you know, or a year ago today, how many would still be using it today? And it's such a hard thing to build against because we don't have a year to wait. Right.
- [27:33]
Co-host (Bloomberg Businessweek Daily)
But you never would have made your. That maybe works from a product perspective of building a company, but from a venture capital perspective that doesn't work. You write about what attracted you to Mark Zuckerberg when he was a teenager still was that they were able to sign up, you know, schools 20% on the first day, the next 80% the next week. Like that happened instantly.
- [27:53]
Mark Pincus
Yes, that's. I didn't know. But. But it turns out that this is necessary but. But not necessarily complete insufficient. Is that that if you have 60% engagement, 60% of your users show up every day, which has been true to this day with Facebook, the likelihood that you have high day365 retention is. Is highly correlated. It may not be the case, but it's highly, highly correlated.
- [28:25]
Host (Bloomberg Businessweek Daily)
Did you knew know the minute you like spoke with him that this was just something remarkable? Meaning face?
- [28:31]
Mark Pincus
Yes. Yes. And by the way, so would you, both of you. So people who point to the fact that they invested early on in Facebook or these companies as a sign that they're a great investor, it does not necessarily mean that they are a great. That their judgment is so great because we all would have said, yes, their access is very impressive that they had and you didn't have. But. But here's what's so painful. If you think about it. That story is less like kudos to Mark that he invested and it's more like, like Mark, how is it like, think about this. How is it that in 2004 when I met him, I was doing Tribe, I was doing one of the first social networks right before I started. Before he did.
- [29:22]
Bloomberg Intelligence Analyst
Yeah.
- [29:23]
Mark Pincus
How did I manage to fail? It's an act of willpower that I failed. It wasn't just Facebook. There was eight or nine social networks. There was Bebo, tagged MySpace, Friendster, Friendster, which I invested in. They all worked. I had to pick one idea that didn't work and stoically, heroically stick with it no matter what. I don't care.
- [29:50]
Co-host (Bloomberg Businessweek Daily)
We are with Mark Pincus. He's the founder of Zynga. He's the author of the new book, it's out this week, Life at the Speed of Play. Launch Products people love. I want to pick up with a headline that we just heard from Amy just now. It's coming from the New York Times about how Open Air is leaning toward waiting until next year for its ipo. Rob Copeland and Mike Isaac writing this over at the New York Times saying that they're holding off on their initial public offering until next year. Three people involved in the company's deliberation said it punctuates an uncertain future for fast rising and AI giants. That's again coming from the New York Times. Mark, you're an investor in Open AI. You understand also what it's like to take a company public. You did that with several companies in different periods of your professional everything sometimes, right?
- [30:34]
Mark Pincus
Sure, yes. Like the last day of the.com IPO window.
- [30:37]
Co-host (Bloomberg Businessweek Daily)
Yeah. Just your thoughts on OpenAI and its path to becoming a public company?
- [30:43]
Mark Pincus
I, I'd say I. On the one hand, I'm not sure how much the timing matters other than if it changes their access to capital. So I don't think they can afford to get significantly behind in the capital and build out race. But it's not clear that you have to necessarily go public these days if you look at the, the sizes of investments. So I think OpenAI is just an amazing kind of generational company. And I think people who count them out and say this is all anthropic are short sighted. And I think that OpenAI has to catch up on the coding side. I think we'll see that happen with Codex and they have A clear advantage on the consumer side, which I think is currently being under weighted. I think people wrongly think this is all just about coding and enterprise. And I just think that is where the action is right now. That's where the most revenue growth is right now. But there's no question to me that the consumer side of AI will be just as big, if not bigger. So I know CO2 put out a report calling a $6 trillion market and I thought it was interesting that they capped consumer at 500 billion consumer AI out of 6 trillion.
- [32:17]
Host (Bloomberg Businessweek Daily)
That doesn't make sense to you?
- [32:18]
Mark Pincus
2 trillion just for the engineering, the coding side? No, that doesn't make any sense to me. That's not the way we've seen the Internet play out.
- [32:27]
Host (Bloomberg Businessweek Daily)
You seem to be someone who can think super big about things like how should we be thinking about AI and how it changes our world as consumers? Like how is it going to at home, at work, at play? Like how is it going to change our world? Or is it just another amped up way of communicating online? I don't know, what is it? How do you think about it?
- [32:49]
Mark Pincus
It's not a way to communicate online yet because it's still oddly a single player experience. Right. We're not, we're not, not in the AI, we're not in the GPTs and the chats together. But, but if you break your question down, I think first, if you think, you know, how will it impact our jobs and the job market? I think we're very, very quickly transitioning from a knowledge worker economy to something else we don't have a name for. But it's going to be, you know, a prompt worker. It's going to be about being generative and we're going to be whatever our job is, it's going to be very quickly. I mean, it's probably changed a lot for you guys and right. The amount that we have to rely on the AI, but the amount of leverage we get and the amount it's, it's moving from a value on knowledge to a value on questions and curiosity.
- [33:50]
Host (Bloomberg Businessweek Daily)
But you also have to have knowledge to ask a smart question for sure, right? Like, and we are learning too and we talk about this a lot that I forget who the one of the interviews we recently had that like a really good question with AI is going to be several paragraphs long, right. Like if you really want to get a smart, useful information.
- [34:08]
Mark Pincus
You guys both impressively read my book and you have great questions and I think if you'd relied on the AI, you know, And I'll say, even writing the book, I had this love hate relationship with AI that at first it's magical, and you're like, oh, my God, it can take this long talk. I just gave and condense it or can or editing is so painful. Wordsmithing. And then you start reading it and it's getting. It starts to get homogenized, and it's like, it starts to feel soulless. And it's like, where did my voice go in this? And I even tried a style guide, and I'm like, I want you sound like my voice. And eventually I was like, I don't want you to change my words unless you absolutely have to. And then eventually I said, you know what? It's really helpful for some things. It's part of a process to take a long talk track and condense it to make it more organized. But I started to really kind of like a vinyl record, appreciate the imperfections of how I talk and say, you know what? That's my voice, and that's how you know it is me.
- [35:05]
Host (Bloomberg Businessweek Daily)
Right?
- [35:06]
Co-host (Bloomberg Businessweek Daily)
You know, a major theme in the book is making decisions that your future self will respect. You have this. This framework, the Book of Life, which is, I think, a really important way to set up the book. I want to talk about that. Just in the last couple of minutes, we have. In the context of you being so public in 2024, coming out and saying, after so many years and so many millions of dollars donating to Democrats, I am now coming out in support of President Trump. I was surprised, I think, a lot of people to see you do that. How did your. Your Book of life framework and your idea of, like, looking back at that decision inform that decision at the time?
- [35:41]
Mark Pincus
It's such a good question. You know, it's definitely not something I signed up for in my Book of Life. However, it is important to me. Intellectual honesty is important to me and being willing to take an unpopular stand. And I feel like if I can't do that, if I'm so scared because of groupthink and the consequences of being taking a very unpopular position in my, you know, a lot of my communities, then who can? And it was actually my daughter, Georgia. I didn't decide until the Sunday before the election that I was going to vote for Trump. I decided I was definitely not going to vote for Kamala. And I had lost faith in the Democrats and the mainstream media establishment that I stopped trusting in that whole process. But I was also being very transparent in public on Twitter. I wrote a post in the Free Press saying, not that I support Trump, but that Biden at that time in late July of 24, felt even riskier than Trump. And that alone started a shit storm. If I can say that word, it's out there. Okay, so it's too late to take it back, but Georgia came to me on a Sunday before the election. She said, dad, you know you're gonna vote for Trump at this point. And I said, yeah, I think you're probably right. And she said, then you have to tweet that because you've been so open and transparent. And I said, yeah, you're right. And so then I wrote a whole post, I think the most viral post I've ever put up, because I think it was. It was oddly a touchstone for a lot of people because I was kind of like, this. That big Democratic donor and breaking ranks, you know, was. And I've kind of like. It's funny to call it, but I'm kind of like part of the, like, rank and file Silicon Valley founders. And so it was, I think, a little scary to some of the establishment to see this crumbling. And I put the post out, and I put my reasons out, and it was on the front page of the New York Post, like, the next day. I didn't think it would be news. And, you know, and it really, really was much louder than I anticipated. But I was like, you know what? If I'm gonna do it, I'm not gonna. It's silly that we should have to hide our political views because we're tagged with an identity. And I'll just say this. I'm not on any team. And I said that throughout. I said, I'm not on Team Democrats. I'm not on Team maga. It sounds cheesy. I'm Team America. I'm team my family, community. And in this environment where we just saw three pretty extreme left Democratic socialists win in New York, I don't know that any of us can really say we're identified with one party, because who the party is is really shifting. I'm a Chicago liberal. That's. I've always been that. I'm, you know, socially liberal. I want people to have their own rights and freedoms, and I'm fiscally and economically conservative. I want to see a responsible government. I think I'm stating some obvious things here that 80% of people, I don't know, 90% of people agree with. And so for that to then define me as being right, you know, far right, and to hear journalists say I need to get a. I couldn't find a far right founder in San Francisco. Can I interview you? And I'm like, you want me? I'm far right. I'm like, I'm still here. Nothing's changed. So weird. Yeah. Yeah. So it's and the partnering with my future self is I even though it was painful and there was some dislocations and I did lose a couple of dear friendships over it, I am Happy that Mark 2024 no, I'm happy Mark 2024 took a stand.
- [40:02]
Host (Bloomberg Businessweek Daily)
God, I feel like that's a perfect place to wrap. We don't really want to wrap. We hope you will come back.
- [40:08]
Mark Pincus
This is really fun and I was not expecting you guys to have read my whole book and have all of these really insightful questions. So I hope you guys follow the format of my book. I hope that you take an idea, prosecute it, and as a side hustle, you build a huge business and then this becomes your hobby. I love it.
- [40:33]
Host (Bloomberg Businessweek Daily)
I love it. You give us a lot to think about. And I have to tell you, we still have a bunch of questions like, I mean it. Please come back. We would love it. Mark Pincus, founder of Zynga, of course, founder of several companies, but his new book is Life at the Speed of Play. Launch Products People Love. There's a lot in here and a lot of great stories.
- [40:51]
Co-host (Bloomberg Businessweek Daily)
Stay with us. More from Bloomberg businessweek Daily coming up after this.
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Host (Bloomberg Businessweek Daily)
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Mandeep Singh
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Mark Pincus
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- [42:54]
Host (Bloomberg Businessweek Daily)
You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [43:08]
Co-host (Bloomberg Businessweek Daily)
I'm looking at shares of Micron. They're off their best levels, but still up 15 and a half percent. Remember, this was yesterday we were just talking about. This is the one to watch. Cameron Christ said after Nvidia and Alphabet, this is the most important publicly traded company out there.
- [43:21]
Host (Bloomberg Businessweek Daily)
Record high intraday. I mean.
- [43:23]
Co-host (Bloomberg Businessweek Daily)
Yeah, yeah. So this year, Mm. Micron, after today's rally, up 325%.
- [43:29]
Mandeep Singh
Hmm.
- [43:30]
Host (Bloomberg Businessweek Daily)
Just a little bit of a rally there.
- [43:31]
Co-host (Bloomberg Businessweek Daily)
Qualcomm shares jumping too, after the chipmaker forecast annual sales of more than $15 billion from AI components and data centers by fiscal 2029. We got to bring back Mandeep Singh. He's global head of technology research for our Bloomberg Intelligence team. He joins us from New York. I asked you the question yesterday, Mandeep. Does, does Micron make or break a cycle? You said, no, it's not big enough to do that. But I think it's fair to say after those results, it gives us a little idea of where we are in the cycle. Is that fair?
- [44:01]
Mandeep Singh
It is.
- [44:01]
Bloomberg Intelligence Analyst
And look, the picks and shovels continue to show very robust growth. And in the case of Micron, they now have, you know, 100 billion worth of contracts with 16 of their customers. These are take or pay contracts, and it gives them a lot of revenue visibility along with the margins. I mean, 85% gross margins, 81% operating margins. The kind of leverage these companies are showing is just phenomenal. So these kind of quarters are hard to come by, but when they do, you just got to applaud what these companies have delivered.
- [44:41]
Host (Bloomberg Businessweek Daily)
Well, based on what they reported, how many more quarters can they have like this? I mean, what's the, what's the Runway that you see for companies like Micron?
- [44:51]
Bloomberg Intelligence Analyst
It feels like it's Hard to top this one in terms of, you know, the magnitude of the beat. So I would say in terms of upward revisions, we probably won't get these kind of beats. But look, that's where when a company is going growing triple digits, it's hard to imagine a scenario where there will be a bust and suddenly they will have negative growth or anything like that which has happened with Micron. But the kind of demand drivers we see, and I know the comparison with Micron memory being a commodity right now, it definitely doesn't feel anywhere close to a commodity in terms of what they are selling and the pricing power they're showing. So until we get a big supply exp tension, I just don't see how they will, you know, suddenly go bust and, you know, stop growing in a few quarters.
- [45:49]
Co-host (Bloomberg Businessweek Daily)
Are you surprised by the stock reaction? I'm not, you know, we're not going to ask you to give a rating on the stock or a price target. Bloomberg Intelligence doesn't do that. But I'm just curious about your view on how the stock has reacted.
- [46:00]
Bloomberg Intelligence Analyst
No, I think these are strong fundamentals and the stock should be up on a print like this. So if anything, you know, they added more visibility. They said they support RPO going forward, remaining performance obligations and that backlog number should comfort a lot of the investors who may think, oh, suddenly things may change a couple of quarters from now. And we know the stock will be forward looking. But in this case, you know, it sounds like the supply constraints will exist through 2028. And so if a company is printing, you know, earnings like this, then the stock deserves to be traded at a higher multiple. And that's what you're seeing in the reaction today.
- [46:46]
Host (Bloomberg Businessweek Daily)
Mandy, you know, speaking of the semiconductor space, the company that we have talked about, it feels like nonstop for the last two, two and a half years is in video. And this one, we have seen it come down a lot since about mid, let me just look at my numbers here. Mid May, it's down almost 20%, a little bit more than 17 and a half percent here. I understand we're talking a lot about memory, but what's going on with Nvidia?
- [47:12]
Bloomberg Intelligence Analyst
I mean, look at, you know, Nvidia's supply chain. The fact that memory prices are going up that at some point has to reflect Nvidia's margins and they have to also pay up, you know, Micron and sk, Hynix and Samsung for higher memory costs, even if they are the largest player and they have signed these long term agreements with Micron. But I feel like that's where everyone is anticipating. You know, the margins can't go any higher because of all, all the inflation we are seeing in the component pricing and they are seeing more competition. Open Air just yesterday announced a new chip with Broadcom. Granted, it will take nine months to tape out, but if you start looking, you know, three, four quarters out, then you start to feel like Nvidia will probably have more competition. And that's where I think it's getting reflected in the valuation and the stock reaction.
- [48:08]
Co-host (Bloomberg Businessweek Daily)
Well, speaking of stock reaction, Apple shares fell as much as 6.6% in today's session. This after the company raised the prices of Macs, iPads, home devices and the Vision Pro to offset cost hikes caused by a shortage of the memory chips and storage that we're talking about. With regard to Micron and others, why is the stock reacting this way? Does this, does this show or why are investors reacting this way? Does it show that there's not confidence that Apple has the price pricing power and there could be some demand destruction?
- [48:37]
Bloomberg Intelligence Analyst
Yes, I think that demand destruction aspect is definitely obvious here because you can't expect to sell the same units if your product is, you know, 20% more expensive now. And so even though Apple has the pricing power and you know, a lot of their customers will be willing to pay that price, but the unit growth will have an impact. And look for some of the other hardware OEMs, they may not even have the option to raise prices because the demand destruction could be severe. I don't think that's the case with Apple because of their customer base. But this memory pricing will trickle down to the margins of a lot of hardware OEMs. And that's where there is no free lunch in terms of paying up for memory and the margins being stable for everyone else out there. And I think you will start to see that margin impact kind of flow through for a lot of the companies that don't have the pricing power.
- [49:39]
Host (Bloomberg Businessweek Daily)
Mandeep, these higher prices, do they continue for a lot longer? You know, we talk with you about this all the time. The imbalances between supply and demand right now and the semi space always being a little bit cautious about, you know, further building out because they've seen the booms and. But should we assume that these higher prices are going to persist longer rather than a shorter time period?
- [50:01]
Bloomberg Intelligence Analyst
Well, the risk here that I see with that, you know, continuous pricing story is if, let's say there is no big use case after coding agent right now, everyone is bowled up about coding agent and how large addressable market there is for coding agents. What if there is no new use case beyond coding agents? That's when let's say a meta or a Microsoft pulls back on their capex, then suddenly I think that enthusiasm is going to settle down and probably people won't be as excited about the capex because right now a lot of the hyperscalers are eating the memory prices in their capex and I think that is the risk to that story that if one of them pulls back because they're not seeing the gains, you will start to see some impact on memory.
- [50:51]
Host (Bloomberg Businessweek Daily)
All you need to know folks, right there. Mandeep Singh, thank you so much. That of course is the global head of Technology research for our Bloomberg Intelligence team. He is Mandated Singh joining us right here in New York.
- [51:02]
Co-host (Bloomberg Businessweek Daily)
This is the Bloomberg businessweek Daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm eastern on bloomberg.com the iHeartRadio app, TuneIn and the Bloomberg Business App.
- [51:19]
Mark Pincus
You can also watch us live Every
- [51:21]
Co-host (Bloomberg Businessweek Daily)
weekday on YouTube and always on the Bloomberg Terminal.
- [51:33]
Mandeep Singh
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