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- [00:00]
Adobe Marketing/Brand Voice
Adobe is turning AI promise into marketing reality. A reality where personalization feels more human, automation feels authentic, and customers feel more connected to your brand. From AI frenzy to roi, it starts with Adobe.
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Chase for Business Representative
Small businesses are the pulse of every community. They bring people together, create opportunities and drive growth. Chase for Business helps business owners like you with personalized guidance and convenient digital tools all all in one place. With that guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn more@chase.com business chase for business Make More of what's yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply JPMorgan Chase Bank NA member FDIC Copyright 2026 JPMorgan Chase Co.
- [00:55]
IBM AI Representative
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, slash 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,
- [01:27]
Adobe Marketing/Brand Voice
Bloomberg Audio Studios Podcasts, Radio News
- [01:33]
Bloomberg Tech Anchor/Host
yeah, this is difficult and worse analysis. So two of the big movers to the downside within the technology sector are Alphabet, the parent of Google, and Meta Metta having its worst day since the end of October, October of 2025 last year. The morning started with Mag 7 under pressure because of the belief by the market that the war in Iran will be prolonged. But there was big piece of news in the last 24 hours. A jury verdict finding Matter and Google liable for harming a young social media user with products that the court decided were deliberately or negligently designed to be addictive. This was the first social media addiction trial. Let's bring in Bloomberg's legal reporter Madeline Meckelbag, who was in the courtroom for that verdict. And let's start with the very basics. The jury decision, what that decision was based on, predicated on and we'll go from there.
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Madeline Meckelbag (Bloomberg Legal Reporter)
Madeline Right, so a jury in Los Angeles spent about nine days deliberating on evidence that they heard over a roughly four week trial. They heard from people including Metta CEO Mark Zuckerberg, Instagram head Adam Mosseri. But then they also heard from people within the life of this young woman who brought the suit who were able to speak about the harms and suffering that she experienced as a result of using these platforms. But these cases, as you mentioned, are about this claim the central idea that these companies knowingly and intentionally designed their platforms to be addictive and should have known that they would cause harm to young users.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
Therein lies the crux, Madeleine, because before the arguments have been about the content from which in many ways they are shielded. But this is about how we are served said content more broadly. What is it that is deemed to be harmful and are we already expecting the business model changes are going to be interpreted from this? Because things have changed. Companies have responded to a certain extent, but they were deemed in many ways negligent because there weren't warnings to younger people.
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Madeline Meckelbag (Bloomberg Legal Reporter)
Right. That's why you've heard this case be referred to as a landmark case because this really is a novel legal theory. As you know, these companies have been shielded from immunity from suits alleging harm by users due to content on their platform. But this is about the design. So jurors heard a lot about the algorithm itself and then they heard a lot about features that these companies use that they had experts come in to say are designed to be addictive. They called it addiction by design. That's being peppered with notifications, that endless scroll, being able to pick up your phone and scroll to through the social media feeds and not really reach an end of content. It's about videos that automatically play once you finish watching one. And so they say that all these features cumulatively are designed to hook you and keep you on the platform as long as possible and that children are particularly susceptible to those kind of features.
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Bloomberg Tech Anchor/Host
We just showed statements on the screen. But in summary, both companies disagree with the verdict matters. Looking at its legal options. Google plans to appeal. And as we said at the start of the segment, both stocks are under pressure. Later in the show we'll get into the kind of business and side and why the stocks under pressure. But you set out the what happened. Bloomberg's Madeline Meckleback who was in the courtroom in Los Angeles. Thank you. Joining us now with more on the implications of the case is Eric Goldman, associate dean for research at Santa Clara University School of Law. And Eric, you've joined us throughout this process. We now have a jury verdict. I think to start just your response to the outcome of this specific case.
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Eric Goldman (Associate Dean, Santa Clara University School of Law)
The whole point of the jury trial is that we needed an answer from average Americans about how they viewed the culp availability of social media services and we got unanswered. It's an answer that I think the defendants don't like. The plaintiffs I think are happy with it. But it's just one answer of what is expected to be multiple answers coming from additional trials.
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Bloomberg Tech Anchor/Host
Again, the companies do not agree with the outcome. Google plans to appeal. We know Matter is looking at his options. One of the things that you're cited as is looking at is the level of damages awarded in this specific case. And I think we discussed in prior conversations the context that there are other legal proceedings going alongside this in parallel with this case. But why focusing on the damages, why is that important?
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Eric Goldman (Associate Dean, Santa Clara University School of Law)
It allows the parties to start to estimate how much money are we even talking about? And until we got a data point like the jury verdict, really, the parties couldn't even imagine any agreement. They were so far apart. Now we can start to quantify the numbers. If there's 3,000 plaintiffs that are currently pending, we're talking about roughly close to $20 billion. Now, those are numbers that are huge. And yet there are numbers that Google and media might think that they can afford. So now that we know how much money might be in play, there's new grounds for discussions about settlement.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
It's not just the consumer protection angle, though, but there's also the public schools. There's a states, Eric. But I want to go to what happened earlier in the week on Tuesday in New Mexico, because actually a much larger sum of money was being demanded of Matter after it was deemed not to protect teenagers in that particular state when it came to sexual predators. Now, can you weave in that particular legal strike on Matter and what that means more broadly in this context?
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Eric Goldman (Associate Dean, Santa Clara University School of Law)
Yeah, it's a reinforcement that, again, a different jury was asked to essentially the same set of questions, how responsible are social media for the harms that their users suffer? And the jury came back with, functionally the same answer. Now, in that case, they were limited in terms of how many damages they could assign to any particular victim. So we don't really know how that number might have looked if a different set of legal theories were used. But it is the sign that we have two juries saying we will impose substantial damages on social media. Those are two really key data points.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
And Eric, of course, as we've mentioned, both companies disagree, and Google is coming out strongly saying, you misinterpret our very business model. YouTube is not a social media platform. It's a streaming platform. Whereas Matter is looking at its own arguments, but more broadly, its argument has been there is so much more to mental health than one particular platform, one particular app. And they actually had some evidence from various doctors showing that in some ways, certain of these social media platforms offered positive narratives to that. It was indeed a woman called Kaylee, we understand who brought up the particular court case in this hearing. Eric, what do you make of those arguments?
- [08:23]
Eric Goldman (Associate Dean, Santa Clara University School of Law)
I think that it's so we're so easy to focus on the parties in the courtroom. We have Kelly, the victim and telling her story and we've got the social media services telling their story. But there's a whole bunch of other individuals who are affected by the discussions taking place in that courtroom. There are many users who benefit extensively from social media, who make it an integral part of their day and often the best part of their day. And if there were any changes in social media, either due to the financial pressure or due to legal compulsion, those benefits for this other users might reduce or go away. And none of that was really relevant to the trial. And as a result, there's a lot of people who are going to be affected by these cases who don't even have a voice in the proceedings.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
Well said, Eric Goldman. Appreciate you coming on Santa Clara University School of Law. Really deep dive there now. Coming up, we've got more on the wider market implications for tech after the landmark social media addiction verdict against Matter and Google from New York and San Francisco, this is Bloomberg Tech.
- [09:32]
Adobe Marketing/Brand Voice
Effective marketing is smarter, not louder. Cutting edge technology alone won't deliver better experiences or outcomes. Adobe helps marketers use data and AI to drive smarter engagement, reduce noise, and use AI effectively and responsibly. The brands winning in the AI era aren't the ones chasing every trend. They're the ones with the right systems and strategy. It's time to lead with insight, agility and innovation. It starts with Adobe.
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Public Investing Platform Representative
Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high RD spend small cap stocks with improving operating margins or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market and paid for by Public Holdings Brokerage Services by Public Investing Member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor Crypto Services by Xerohash Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures@public.com disclosures being a small
- [11:16]
Chase for Business Representative
business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all all in one place. With their digital tools looking for tips and advice, their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn more@chase.com business chase for business Make More of what's Yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply JPMorgan Chase Bank Naomi Member FDIC Copyright 2026 JP Morgan Chase Co.
- [12:21]
Bloomberg Tech Anchor/Host
We're looking at Matter and Google Metta in particular, on track for its worst day since October. The summary of the sell side is that there is going to be an overhang on this name a headwind, a risk relating to social media addiction because the landmark jury verdict holding Google Matter liable for harming a young user is being compared to the groundbreaking cases that force changes for Big Tobacco that could have an impact on social media firms, advertising businesses. Let's get out to Bloom as Kurt Wagner, who leads our coverage of social media as an industry, this is what you've been writing about that Matter and Google Risk a Big Tobacco like response because of the outcome of yesterday's trial. What's the reporting telling us?
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Kurt Wagner (Bloomberg Social Media Industry Reporter)
Yeah, well you know the jury found that these products can be addictive, right? You think of other consumer products over the years that have been found to be addictive. Big Tobacco is probably top of that list. And you see the tarnish on an industry like that and you have to sort of think is this the same kind of thing that's going to be happening to the social media platforms? You know, Eric was just talking with you guys in the last segment about the fact that there are thousands of other cases looming with similar arguments. This is just the first. Obviously each case is different, but if you sort of look at what's happened this week between New Mexico and the trial in L. A and say, okay, juries are buying this argument. Juries are, are believing that these, these companies and platforms are responsible. And you extrapolate that out thousands of times over the next couple of years, you suddenly are looking at a very different industry with a very different reputation.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
And cut this comes with the current context that already the landscape has shifted. Australia has a ban on sixteens and under, we're looking at Asia replicating Europe, is discussing, even California thinking about it. And at the same time we've actually seen the companies try to respond with changes and certainly telling us about the changes and the protections that certain parents and kids have. Will business models have to change?
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Kurt Wagner (Bloomberg Social Media Industry Reporter)
I think that's the ultimate question. Because if they just simply have to write a check and this problem goes away, what's the incentive? These are trillion dollar companies. They're not going to balk at writing a $6 million check. If Congress, especially in the U.S. sees these types of trials, sees these verdicts, sees the momentum that's being built around the child safety sort of movement here and says, hey look, this is sort of what we've been talking about but been dragging our feet on. We're going to pass a law that changes some of these features and forces the companies to change their products. Now it gets really interesting because if these companies can't get people to come spend as much time, spend as much time scrolling, obviously that's going to affect how much money they can make from revenue. These are attention based businesses and so anytime the attention is not on them, it could hurt.
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Bloomberg Tech Anchor/Host
In the report that you did with Alex on the possible product changes, what are they? And they're part of those that are taking legal action against the companies. They are pushing for specific changes or features on those platforms and what are they?
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Kurt Wagner (Bloomberg Social Media Industry Reporter)
So the individual plaintiffs like what we saw this week in L A, those are personal injury cases. They're not seeking changes to the product. But the school districts that are suing these, these platforms are seeking changes. I spoke to one of the lead lawyers who's going to be representing the school districts yesterday. She talked about notifications as being a big one, right? Bringing people in sometimes in the middle of the night to open up their phone and go on these services. She talked about parental controls. Age verification is a big one, making sure that young kids that aren't supposed to be on these services are not on them. So those are the types of things they're going to be pushing for and you know, those also align with what we see members of Congress talk about. They just haven't really gotten anything over the line in terms of a law here.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
We most cut Wagner, who's been across this story. We thank you so much. Let's get more of what this means for the business model, what it means to the market. Mita Smiley, senior analyst covering social media at ease Marketer, joins us now. Minda, do you anticipate significant changes to revenue for these companies off the back of these landmark cases?
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Minda Smiley (Senior Analyst, eMarketer)
Yeah, I mean I don't think we're going to see any big changes happen overnight.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
Right.
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Minda Smiley (Senior Analyst, eMarketer)
I think I'm going to, I'm going to draw a parallel to tick tock here. You know, whenever we saw a lot of uncertainty around the ban and we didn't know what exactly what was going to happen to the app in the US we actually didn't really see, see a lot of advertiser pullback or even user pullback. So you know, that's all to say that I think in these moments that are very, you know, headline grabbing and whatnot, even though they, they are big news, it doesn't necessarily mean that we're actually seeing marketers pull back quite yet, users pull back quite yet. Now that's not to say that in the long run that, you know, that that won't change. I think ultimately, as Kurt was saying, if we do see these products or these apps and these platforms significantly change in terms of how people can use them, what features are on them, then yes, that's the moment I think we would definitely see see a larger pullback from marketers and users.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
Amanda is so interesting that of course you referenced TikTok because we should remind the audience that TikTok and Snap settled ahead of this trial, but they too are implicated in a lot of the other cases. And this isn't just a matter and a Google issue more broadly. So how far and wide could this net be cast?
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Minda Smiley (Senior Analyst, eMarketer)
Yeah, it's a great question. I mean obviously in this exact case, like you said, it was just meta and YouTube. But this is just the very beginning and I think ultimately we could see a world where yeah, all of the major, all of the major social networks, Snapchat, Instagram, Facebook, you know, all the ones that, that continually come up in these conversations could be implicated meant something
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Bloomberg Tech Anchor/Host
I think that you guys at mark to recognize is that away from that specific case broadly the social media industry is facing change. Young people and I don't use that that term too broadly or lightly don't consume as much or spend as much time on social media, that's a kind of conscious thing. Equally, you know, the landscape is a battle for eyeballs. You know, you have a choice of where you, you spend your screen time. Where does this factor into that, that broader landscape?
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Minda Smiley (Senior Analyst, eMarketer)
Yeah, it's a great question to me that, that's something I've been talking about a lot lately, is that none of this is happening in a silo. I mean, these verdicts are landmark cases for sure, but we are seeing just generally social behaviors evolve and shift as they always do. I mean, we are seeing time spent on social media in the US Kind of hit a wall. To be clear, people still spend incredible amounts of time on these platforms, which is why these cases are happening in the first place. But we are kind of seeing, you know, that major growth that's been happening for four years now is starting to hit a wall. And we also are seeing the beginnings of sort of a backlash to social media, especially among younger people who are really, you know, they kind of know that they, they are addicted to these platforms and yet they also want to get off of them. They feel quite disillusioned by them. There is this push to be more mindful of how much time you're spending on social media. That's why we're seeing companies like Brick come up and just this push to really get off of screens in general and get offline. So these social media companies, they're dealing with these verdicts, but they're also just dealing with like, larger behavioral issues that
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Bloomberg Tech Anchor/Host
are having an impact mind big tech, more specifically social media having a big tobacco moment. That's not you. We've heard that before. It kind of comes and goes this time. Is it any different?
- [19:43]
Minda Smiley (Senior Analyst, eMarketer)
Yeah, it's. I does feel like this time is going to be different. I do think so. I mean, again, I don't think we're going to see massive changes overnight. But, you know, these are being called landmark cases for a reason. And the fact that these juries are not coming out, you know, in the favor of the, of these social media companies is not a good look for them. And I do think even, you know, I was talking earlier about how, you know, I don't think we're going to see, see like a massive hit to ad revenue or anything like that, but I do think it's going to, you know, marketers and users are like parents, you know, all kinds of stakeholders are going to be, you know, further thinking about how they show up on these platforms. And I think there is an element of like reputational damage that is already happening in terms of like, you know, do we want to be showing ads on these platforms that are increasingly just looking like, you know, don't, don't have a great reputation right now. And I think, you know, for a while the reputation hasn't been great, but it's certainly not getting better at this point. So we could see some shifts happening there for sure.
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Bloomberg Tech Anchor/Host
Matter is down more than 5%, having its worst day since October. Minda Smiley, senior analyst at Marketer, thank you very much. We got a lot more on this topic. Our own original investigation can't look away. The case against social media is available on all Bloomberg platforms platforms now coming up. Regulators in Europe are also stepping up scrutiny of online platforms. We have more on that next. This is Bloomberg Tech Support for the
- [21:08]
Public Investing Platform Representative
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- [22:02]
4imprint Advertising Voice
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IBM AI Representative
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.
- [23:38]
Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
It's time now for talking tech. And first up, China's food delivery leader, that's Meituan, posted a modest 4.1% increase in sales with the company's expansion efforts outside outside of China helped offset price war pressures From Alibaba and JD.com still, that rivalry has weighed on the stock just 45% over the past year. Plus Moonshot AI is in early stages of considering an IPO in Hong Kong now. That's according to sources. The company behind the Kimmy chat bot has reportedly held talks with China International Capital and Goldman Sachs, though deliberations are still ongoing. And in Europe, more regulators are stepping up scrutiny of online platforms. Now the EU has launched an investigation into Snapchat focusing on how it verifies its users, ages and addresses risks like grooming criminal activity. At the same time, it's advancing a separate probe at the moment into pornography platforms as over concerns it failed to adequately block miners from accessing its sites.
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Bloomberg Tech Anchor/Host
And just taking another look quickly at Metacarri because the stock is down severely. 2 standard deviation move on track for its biggest drop since October. And actually that drop is deepening. Remember a jury verdict finding both Matter and Google liable of harming a young user with negligible deliberate product design to make social media addictive. Okay, coming up on the program, Rachel Holt from Construct Capital is going to join us to discuss early stage investments in startups, modernizing critical industries, venture capital startups and the private markets. It is half time. From San Francisco in New York, this is Bloomberg Tech.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
Welcome back to Bloomberg Tech. Let's check in on a specific set of movers right now because I want to draw attention to memory makers and the chip sector more broadly. We are down by 7%. If you look to Asian trading of SK Hynix of Samsung, it was up by 6% as well. If you're looking at Micron here in the United states, it's up by 4% we are going even lower. This is all sparked by well a new algorithm coming from Alphabet, Google really talking up on X something actually they discovered a year ago. Ed but this is about the fact that you perhaps need less memory when running large language models to a factor of six fold less. But if I hear Jevons Paradox talked one more more time Ben analyst I need to start getting some money for each time I read it. And because there is this view that if you can do more with less, well you keep doing more.
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Bloomberg Tech Anchor/Host
Yeah, that's the basic sum of it. Turboquant is an algorithm that in the context of running an NLM has up to a factor of 6x less memory requirements. The market's taking that and saying that just means the hyperscalers, those building infrastructure will buy less memory. And that kind of went round the clock us, Asia back to to us
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
and now though we're still sort of having that knee jerk reaction more broadly because these stocks have run up so far so fast. Look, some of the names in Asia are up 700%. Micron was up about what, 300% in the previous fiscal year in terms of share prices. Maybe it's a bit of profit just coming off the table as we do assess what our memory needs are and what the bottlenecks really are.
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Bloomberg Tech Anchor/Host
It is one of the top most read stories on The Bloomberg Terminal On.com Carje's go get some some of the detail. In private markets, Shield AI has announced its raised $2 billion hitting a valuation of $12.7 billion, more than double from a year ago. The defense tech startup raised $1.5 billion in Series G funding led by Advent International. Blackstone is putting in an additional 500 million in preferred equity financing. Shield says it will be using part of the funding to acquire tactical simulation software software maker Each One Technology and the terms for that one disclosed. Shield last raised 240 million at a $5.3 billion valuation in March of 2025. That by the way included Bloomberg Beta, the venture firm backed by Bloomberg lp, the parent company of this organization.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
Cara I mean look defense tech, we've been talking about it all week Ed. And that was after we were of course at Hell and Value forum. We talked also about reindustrialization more broadly. And one venture firm that's been focused on exactly that is Construct Capital which recently raised $300 million in a vehicle to back early stage startups focused on foundational industries. Well, Rachel Holt is co founder managing partner at Construct. I'm pleased to say you join us and you were also in D.C. with us when Hill and Valley Forum was upon us. And Rachel, this wave, this movement into a realization of real industrial industrialization of defense tech needed in the U.S. are you seeing enough more buyer activity, the government realizing this and allocating money for you to put your money to work in an early stage?
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Rachel Holt (Co-founder, Managing Partner at Construct Capital)
Yeah. Well, thank you so much for having me, Caroline. It is so interesting to see what has happened in a really short period of time. We launched Construct Capital early, early in 2020, pre Covid 2020, with this belief that we needed to see see productivity technology enter what we describe as foundational industries, areas like manufacturing, supply chain, logistics, certainly defense tech. Because when you look at the numbers, productivity was declining in these spaces. It was literally taking longer to do the work. 100 hours of work was taking longer than it had 10, 15 years ago. And of course, in other sectors, we've seen tremendous growth from a productivity standpoint. So we really felt like now was the time to focus on these spaces. But as you point out, you know, there is a tremendous amount of interest, a tremendous amount of investor interest coming into these spaces. There's been a 20x increase in series B dollars going into these spaces since 2020 when we launched the fund to today. And certainly Hill in the Valley Forum was a knockout event. Sold out. You couldn't get anywhere near the space if you really didn't, you know, you hadn't really been building something legitimate in this space. And so we're very excited, we're very encouraged by the amount of interest, but the contracts have to follow and you know, but these spaces are big, they're important. And we're convinced, you know, that there are a set of companies that are really going to break out here.
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Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
You and Dana Grayson have, as you mentioned, been doing this since 2020, let's say, before it got cool. And now everyone piling in. How have you distinguished yourselves with LPs? How have you managed with looking at your portfolio companies? The growth in Hadrian, for example. Is that what's brought people forward to want to back the next fund?
- [30:02]
Rachel Holt (Co-founder, Managing Partner at Construct Capital)
Well, I think first of all, we didn't turn our attention here. You know, we weren't a crypto investor web 3 investor in 2020, 2021, when that was cool. We have been dedicated our entire careers, really to investing and operating in and around these spaces. I joined Uber in 2020, 2011, when they had just had a series. Everyone told me I was crazy to go join a taxi company. Their words, not mine. But it was slow moving, heavily regulated High Capex and of course Uber is none of those things. Dana. Similarly investing at any, you know, in and around the earliest SaaS in the cloud, the earliest 3D printing companies, these companies that were not seen as venture scale outcomes when, you know, when we made those moves. And I think founders LPs certainly recognize
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Bloomberg Tech Anchor/Host
that there is a distinction between an effort to re industrialize and what's happening in defense technology. And there is a distinction on the policy side with artificial intelligence. But what broadly connects all of those is this administration focusing on cutting red tape, expediting permitting and basically giving political will to bring more things back to America at the early stage. How does that present an opportunity?
- [31:14]
Rachel Holt (Co-founder, Managing Partner at Construct Capital)
Yeah, that's a great point. And I really see, you know, we, many of these companies are dual use companies and I think that's important to distinguish. There are a lot of amazing companies in the defense tech space, but companies like Hadrian didn't start just selling into governments. And I think particularly at the early stages it, the sales cycles are still long. You need to have a lot of different compliance requirements. Getting into one of these government contracts is, can be critical, can be company moving. But fundamentally, you know what excites us about, about these companies is half the GDP sits within foundational industries. These are massive spaces. There has been almost no technology incumbents. And when you think about AI and you think about sort of what can, what we can do, we can really leapfrog forward. We are never going to be as good as China or other countries at sticking a large number of people doing repetitive tasks over and over. And software can change that. Software is what we are excellent at. Innovation is what we were excellent at.
- [32:17]
Public Investing Platform Representative
Rachel.
- [32:17]
Rachel Holt (Co-founder, Managing Partner at Construct Capital)
And I think there's broad recognition there.
- [32:20]
Bloomberg Tech Anchor/Host
Do these companies have a future that's more focused on selling to the, to government and the public, public sector or is there, is there an addressable market where all of these different companies are doing business with one another? I think there's a real distinction there too.
- [32:38]
Rachel Holt (Co-founder, Managing Partner at Construct Capital)
Yeah, I think, look, I think you need volume, you need the supply chains you need. And those things happen in a very symbiotic way. You know what we see is there are a lot of companies that are using maybe their commercial non government contracts to sort of build up initial capabilities, to build up supply chains, to start developing the relationships they need. And then you get one of these massive needle moving contracts like Hadrian just announced last week with the Navy and that can just completely accelerate a company's trajectory.
- [33:11]
Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
Rachel, how do you get that confidence before that contract is signed? There has been a lot of hype, dare I say it, market around certain defense tech names. How many people worrying that actually the proof point really isn't there?
- [33:24]
Rachel Holt (Co-founder, Managing Partner at Construct Capital)
Look, I think first and foremost it comes down to backing the most exceptional founders. Exceptional founders find ways to make things happen in ways, you know, you and I can only dream up. And I think what we what we see is is those founders are finding a way to do that today.
- [33:43]
Bloomberg Tech Correspondent/Interviewer (possibly Caroline or a similar name)
I have to to jump in, but we so appreciate you joining us today. Rachel Holter, Co Managing Partner at Construct
- [33:48]
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