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Resilience isn't just about bouncing back. It's about being ready. And when the threat comes, you hold back the chaos. Learn more@cohesity.com Resilience in business a gift.
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Bloomberg audio studios podcasts radio news. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
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This is Bloomberg Tech. Coming up, Nvidia strikes a deal to invest $2 billion in chip design software makers Synopsis One of its own suppliers.
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Plus crypto concerns continue amid a wide ranging sell off that has strategy and stablecoin tether in the crosshairs.
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And Open Air is taking an ownership stake in five holdings, adding to a growing list of circular deals involving the ChatGPT maker and its backers.
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Oh, we go be talking circular deals today that Nvidia deal with Open Air. But now we look at the broader markets and we're under pressure once again running off by 3.10percent on the overall NASDAQ 100. But remember, it had a brutal month of November, the worst sell off that we'd seen since March. And more broadly, we are starting to reassess these ongoing narratives of AI momentum trades, crypto and the like. We're seeing bitcoin off by another 7%. We trade at 84,678. We're going to deep dive into that, but you're going to deep dive on some single names right now.
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Yeah. Are we going to be talking about circular financing maybe? Nvidia shares higher, Synoptis shares higher but off their session highs. Nvidia investing $2 billion buying into Synopsys at $414.79 a share. You can see we're now pretty far beyond that. What will happen is Synopsys will take Nvidia's GPUs and its software library CUDA X and basically integrate it into the number one tool for designing and validating chips. But on a webcast just now, Jensen Huang, Nvidia CEO, saying there is no requ requirement that synopsis by GPUs as part of the deal. And actually any chip maker that already does business with Synopsis can do so freely. There's no exclusivity here. Still, that was the reaction. Circular financing it is.
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And let's dig into the rationale a little bit more deeply now. Mandeep Singh is here with us, covers semiconductors, of course, the Bloomberg intelligence. Mandy, what is in it to solidify a partnership that was already very strong? Why take an equity stake, do you think?
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Well, at this point, I think Nvidia is strengthening its relationships with all its suppliers, whether it's TSMC and the purchase commitments it has with TSMC or for that matter with Synopsys which provides the EDA software. And look, the ASIC threat, which wasn't really that big of a threat before, has really kind of come to the forefront now with Google TPUs and you know, Broadcom has talked about how it has got three or more customers that are taping out their new chips. So from that perspective, you know, the suppliers of Nvidia come to the focus and on the EDA side it's really an oligopoly with, you know, Cadence Synopsis and Siemens. So from that perspective, it's not surprising to see, you know, Nvidia really investing in one of their suppliers.
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C
I'd like to dig into that last part a little bit more, Mandeep. I mean listening to Jensen Huang and the synopsis here on the call, basically they're explaining that engineering tools still largely run on CPU based systems. Right. And EDA Electronic Design Automation is kind of the next frontier, ripe for improvement with AI. Is that something you see as being real here?
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I mean, look, I mean you can talk about how, you know, developers may benefit from, you know, a coding agent type of functionality when it comes to EDA software tools. But to my mind, you know, you don't need a big training cluster for EDA software. That's not the, I think the sense of what they're doing here. It's more to do with just strengthening the relationship with their suppliers. And some of these could be M and A plays, I mean, who knows? And that's where I, I think having stakes just give them some skin in the game.
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And to be clear, Jensen Wong saying in a webcast that's ongoing, there is no requirement that Synopsis uses the funds from the investment to buy Nvidia GPUs Mandeep Singh of Bloomberg Intelligence appreciate you kicking the show off with that. Let's get more on what's happening in financial markets right now. Fiona Cincoda, senior analysts from Citi Index joined us. It is the first day of December and actually a couple of hours ago we started things looking pretty bleak. Nvidia has turned a corner which has kind of changed a little bit the tone. But basically tech lower, crypto lower. And we started December in risk off mode. Why?
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Yeah, I mean we had a really solid rally last week, you know, on those expectations that the Federal Reserve will be cutting interest rates in December. But as we start off this new week, there's been a turnaround in that sentiment and I think the catalyst for that for me came from Japan. So we had bank of Japan Governor UADA adopting a more hawkish tone, really ramping up sort of expectations for a December rate hike. Now what does this mean and why is it important? Basically there are concerns now that we might see the unwinding of the carry trade. So that's when we sort of have institutions, investors borrowing in the low interest yen in order to invest in higher yielding, riskier assets. Now if we're seeing the bank of Japan raise interest rates, we've got yields in Japan 10 year yield at 7%, 17 year high. There is this concern that we're going to start to see the repatriation of those funds back to Japan. Now this is important because liquidity changes and those sort of sectors of the market, such as crypto, such as tech, which are really sensitive to liquidity, where we're seeing that sort of risk off.
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C
Come through December historically strong, particularly for technology. Right. And when I was on vacation last week, what a week to pick. And we had the Thanksgiving holiday. Circular financing was a factor in video in particular weighing on the index level. You just heard the reporting about how the synopsis in video deal is not circular financing to the mind of the leaders of those companies. Do you buy it and how big a factor is that in this market right now?
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Really good question. I mean this is front and center I think in a lot of investors minds at the moment, particularly as soon as we hear the name Nvidia. And it has been Investing in firms that you know are or will be major customers of its products. So, you know, that has raised concerns within sort of the markets and we've seen that play out in previous weeks where Nvidia really has come under a lot of pressure. It does feel like that that is sort of starting to turn a little bit of a corner. Obviously those comments today I think will help a little bit to ease those concerns. But at the end of the day, there is this sort of worries surrounding circular financing and they're not going to disappear overnight. And that's because circular financing makes an ecosystem fragile. You know, it just takes one disappointment for, for the whole loop to fall apart. So I think it is right that the market does question and question whether this circular financing could be a problem. Meanwhile, Fiona, you could think that these are companies that are strategically thinking of how they can ride extra upside should the AI wins really come to bear. We're going to be digging into how Open Air is backing a fund of its own VC partner that is looking at integrating its technology into portfolio companies, into service companies, for example. It wins not only by adoption of its technology, but on seeing some equity upside. Fiona, it's. What do you need to see to vindicate that the productivity gains are there? Yeah, this is why it's so difficult. Because I think sometimes or often if you're in that bubble and it's falling apart, you often realize when it's actually too late. So, you know, I think the numbers that we've been seeing from Nvidia have been encouraging. You know, the latest reports, earnings report was, was extremely positive. There weren't really any faults there. I think this is just a nervousness that we're seeing. But I think at the end of the day, we know that AI technology is solid. We know that exists. It's going to increase productivity. There are obviously concerns over monetization, circular funding, revenue lagging investment. But I think, you know, longer term this technology does have a broad use and I think that's why over the longer term this trade is still one that has upside. You know, if we just think about the horizontally automation, R and D, customer service vertically, different sectors, and then infrastructure level as well. So this is a very broad, broad technology which, which sort of helps ease those concerns over the bubble fears, I guess. What about crypto? Yeah, crypto. I mean, what if. What every, every, every Monday I feel I wake up and something else is happening in CRYP saw that rejection at that 92,000, just above that 92,000 level, which was a pretty key level. And I think again this is that unwinding or fears over the unwinding of the Yang carry trade. Crypto is very sensitive to liquidity and that fear that there might be a slight reduction in liquidity if that unwinding of the carry trade happens is what I see. Pulling on crypto institutional demand is still very weak. You know, we saw November ETFs, they, they saw outflows of 3.48 billion. So huge outflows, I think second largest, second worst month that we've seen so far. So that really does need to turn around before we can expect to see any sort of recovery or solid recovery in the bitcoin price or crypto prices. Talking about the broad application of AI and perhaps the less broad application in the here and now of crypto. Fiona Sincotta, it's great to have some time with the senior analyst over at Citi Index. Meanwhile, let's talk about data centers for a moment. But when it comes to financial prices because datacenters do support the cme, for example, one of the world's largest derivatives exchanges. But we know that now the data center behind the CME has bolstered its own backup cooling capacity after overheating. Last Friday, CME's markets were out for more than 10 hours after a failure in cooling system at the facility run by privately owned Cyrus One at.
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Okay, coming up, we're going to dig more into crypto markets and what's behind this week's long sell off. That's next. This is Bloomberg Tech.
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Resilience isn't just about bouncing back. It's about being ready. It's how you show up every single day. Because every name in your system is a person who trusts you and every password is a door you're responsible for locking. And when the threat comes, and it always comes, you hold back the chaos. Learn more@cohesity.com resilience support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long stocks, bonds, options, crypto. It's all there. Plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities, options and bonds and a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by Zerohash Complete disclosures available@public.com Disclosures in business A gift does more than say thank you.
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Cryptocurrencies fell again today. Bitcoin dipping below 84,000 USD per token at 1000 point ether dropping more than 7% to below $2800. Joining us now on the crypto markets weeks long sell off, Bloomberg Senior Digital Finance editor Anna Herrera. We're writing on the Bloomberg Terminal about how we started December in risk off mode. But actually traders in the crypto space are bracing for even bigger moves lower. What are the factors behind that?
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So as you know, crypto is not immune to big price swings. And you know, we've had these before. What's we're not a stranger to it, but what's different this time? It seems that there's, you know, there's not been any big crypto event like, you know, fraud or something that's very dramatic. That's typical to crypto. It seems like cryptos may be starting to mature in a way and it's starting to follow more the macro environment and starting to behave a bit more like risk assets. So one of the factors today was sort of the bank of Japan, which you were you were talking about before and how that trade is unwinding and people are concerned that there will be less liquidity and of course then less Money to spend on riskier assets like crypto. There are some idiosyncratic issues at play here though Anna. One of them being perhaps standard and pause putting out a bit of a risk warning on Tether, the stablecoin most widely used one and worrying about its collateralization. But then we look to what's happening in strategy. Of course a big purchaser of bitcoin that shook the market by potentially saying it could even sell off that bitcoin if really forced to do so. But now they try and come in and temper those fears with news of well really a reserve fund. Why isn't it working? Why isn't pushing strategy back higher Again, I think, I think again perhaps everything in crypto tends to move together still. You know, we had it with Coinbase for a while when it was the only listed company attend to react to Bitcoin even before the ETFs. Right. It was kind of a gauge on the broader crypto market away investors could go in. So I think perhaps the mood is just risk off in general. And so no matter what strategy is saying, investors are still a bit concerned and a bit cautious. And again, you know we mentioned, you mentioned before sort of the big withdrawals and redemptions on the ETFs again until that changes and there is more investment in the ETFs it's hard to see how you know the mark the crypto market will pick up again. But you know, crypto is also very strange to predict. So you never know tomorrow there might be another day and very different. Well said. Bloomberg's Ana Herrera. We thank you very much. Let's keep the discussion going. Jalak Jovan Putra is with us. Managing partner at Future Perfect Ventures is an early stage firm. The focus on blockchain technology, crypto assets and more for you. You're about the builders and the companies that are trying to use the underlying technology. Jill, act but just paint the macro picture right now. What does bring institutional retail money back into the ETFs or to the crypto as they stand? Sure. I mean your previous guests have mentioned the bank of Japan news which was significant for Bitcoin as well as the broader crypto markets. And we've seen crypto since the ETFs have been issued and we've seen more institutional involvement move more in line with other risk assets. Before, you know, we saw a decoupling of the price behavior but, but now, you know, we're looking at the macro outlook and it's, it's challenging for risk assets right now. We also have the added challenge of the bitcoin treasuries that have been built up. And if we start to see selling as Strategy mentioned they may do, that's going to create more downward pressure. However, we still believe that there is great global demand for Bitcoin specifically and we're going to continue to see ETFs and new products develop on Bitcoin. That's just going to happen in the next year or so. I mean, you're all about the ecosystem. Blockchain. Blockchain.com BitGo also thinking, of course, how you've been in Moonpay, but when you see worries around stablecoins or when there's a broader macro downward pressure, does that impact those that are trying to build or do they shake it off? Well, it certainly impacts in the short term, but a lot of these entrepreneurs have been building for years towards a rewiring of the financial system that is fast, faster, cheaper, offers broader access to different types of financial assets. And we have seen over the years that that trend is not going away. There's going to be short term blips as we're seeing now, but stablecoins are going to be an important part of the new financial order. And we're seeing companies like Stripe and others start to adopt access to stablecoins.
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C
That that is the state of play that you've just summarized. Everyone is bullish on the long term about the role of these technologies in the global financial system. And in the near term we're in risk off mode because of worries about interest rates and the direction for interest rates. And that in the moment is moving markets. How long does that carry on for?
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Well, there's a great amount of uncertainty I think through the end of the year. And we're, you know, I'd say I'm looking towards the early next year to have that certainty back. We have several companies in our portfolio lined up to go public on nasdaq. We're probably going to see some of a short term delay on that until market conditions improve. But I do believe that they will improve early next year.
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C
Can't help myself. What is your 2026 year end Bitcoin prediction?
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Well, I don't believe we're going to see massive kind of price movements. I've been invested in the sector, as you know, since 2013, specifically in Bitcoin and we've seen massive upswings, downswings. What we're seeing now, I think there'll be some tight trading. I can see it go up to 200. I'm not one of those that's going to predict that it's going to go to a million.
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C
The reason I asked that I was trying to marry those two points. The long term bullishness on the underlying technology and the short term price volatility. I did find it interesting reading the Bloomberg terminal that the data set that is giving most concern is lack of inflows into the ETFs which you've discussed. What would change the psychology of people to push inflows in a positive direction?
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I think it goes back to certainty. We want to see where the interest rates are headed on a global basis. You know, the October sell off in the crypto sector was due to the tariff uncertainty around China. We also saw people taking profits when, when Bitcoin went up to 126,000. So in the span of three months or less than three months, we've seen over a 30% drop. That being said, I don't see a downward spiral because there are going to be people who want to get access to the asset. I mean, we just came off of Thanksgiving in the US and dinner table conversation was, was all around crypto. Of course I also, but crypto was a big part of it. So there's still a lot of retail interest. And you know, I think they get concerned when you just see these, these big price drops. But we'll start to see that reverse.
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C
Jill act job on Putra from Future Perfect Ventures. Great to have you back on the show. Thank you, Carrie.
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B
Yeah. Now it's time for talking tech. And first up, well, we're looking at Elon Musk, expanding snail Brooklyn, Texas. The company town tied to the boring company. Correspondence between Musk's executives and local officials show plans for new housing, a science center and a gym. It comes as the Musk Tunnel building company negotiates with the county over tax breaks and environmental concerns. Plus, Australia will become the first democracy to ban its youth from popular services like TikTok and Instagram. A law requiring platforms to block under 16s takes effect December 10th. Companies don't comply. They could be facing fines as high as $332 million. And SoftBank founder Masayoshi sun says the company would have held onto its Nvidia shares if it had unlimited cash for its Next Investments. SoftBank has doubled down on AI backing the Stargate datacenter project, buying chip designer Ampere. And it plans to invest more in OpenAI by the end of the year. At. Open Air. Well, it's agreed to take an ownership stake in Thrive holdings an investment vehicle of its own VC backer, Thrive Capital. It's all about accelerating enterprise AI adoption, we're told. OpenAI says it plans to boost speed, accuracy, cost efficiency among the companies within Thrive Holdings. Bloomberg's joins us now on the latest that some will say again, circular ideals, how is it, is this going to be a win win for OpenAI?
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It does have the appearance of circularity. We'll figure out more of the details soon. But OpenAI is going to help the businesses that Thrive holdings invest in by embedding its own teams within those businesses to help them speed up and become more efficient in AI deployment. And of course Thrive holdings is part of Thrive Capital, which played a really pivotal role in backing opening I over the last couple of years in multiple rounds and making it what it is to so mutual.
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C
Seth, I think we're both hearing in sort of pushback to whether this is or is not circular financing, that there is no exchange of money or funds between Open Air and the holdings bit, which makes it confusing basically. Therefore it kind of is like a venture capitalist who's an operator. Sounds like OpenAI comes in and goes we'll help you of all these things for $0.
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Yeah, I think we're trying to figure out what the precise deal terms are here. But regardless, this is Open Air that was primarily backed by Thrive Capital over multiple investment rounds. Now having a stake and you know, investing interest in seeing this other arm of Thrive, you know, Thrive and its businesses do well, what dollars changed hands we don't know yet. But it fits into the larger mold here of a lot of these non traditional arrangements between VCs, chip makers, cloud providers and the up and coming AI developers who are all kind of bound tightly together. And I think the industry would say, well this ensures that they all kind of rise up, they all help each other and they all do well. But I think those, those interwoven agreements are also a real cause for concern right now.
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It's also about how VC itself is pushing boundaries and the new types of vehicles. Vehicles. Josh Kushner, who found a Thrive Capital the way back in 2010 is now only recently in April, I think founded this Thrive holdings and it's about buying stakes or even growing accounting companies.
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Yeah, I think, you know, Thrive at one time was more into smaller investments and now they're kind of doing the private equity thing. You know, they're launching or acquiring bigger firms and they see as a real opportunity to expand their portfolio in a way that maybe the traditional VC arm would not have done. And OpenAI seems very eager and willing to come along for that ride.
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C
So Bloomberg, Seth Figgman out of New York City on the Thrive Holdings Open Air deal. Thank you. Welcome back to Bloomberg Tech. We have a deal of sorts this Monday and that's in video. Investing $2 billion into Synopsis, a leading name in electronic design automation software, or eda, Basically the software tools that help you lay out a chip's design. Nvidia buying in at $414.79 a share. Synopsis Currently trading at $432.53. It's an engineering agreement Nvidia Tech integrated into the Synopsis platform. But what it does not include is any mandatory requirement for Synopsis to buy Nvidia GPUs. Here is Nvidia CEO Jensen Huang speaking in Aragon.
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There's no purchasing relationship between the investment and anything else. Synopsys is already a customer of Nvidia's. And in the future, of course, as we move into the world of accelerated computing and AI computing, it's a much larger customer of Nvidia. I recognize that none of this is exclusive. Synopsys has a lot of chip partnerships they're going to continue to nurture and continue to advance. Nvidia has a lot of partnerships with Cadence and Siemens and Dassault that we're going to continue to nurture. Advance.
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From ideals to holiday shopping deals, consumer spending is showing some resilience, even if discounts this year haven't been as steep as in the past. So what are we seeing this Cyber Monday and in e commerce sales more broadly? Bloomberg. Spencer SOPA joins us now. The stats please, for this Cyber Monday?
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Yes, still very early. You know, Cyber Monday is one of those days where people really load up their carts all weekend and then sometimes wait for the final minute, you know, to, to push the buy button. So the activity is really going to pick up this evening, you know, before, before midnight and the deals, the deals close. But so far we are seeing that patience is paying off for people who waited for Cyber Monday. Discounts averaging, I think 31% according to Salesforce on Cyber Monday. And that compares to about 27, 28% on Black Friday. So people who waited a little longer are getting a little bit better. Deal, Spencer.
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C
I think there's a lot of value for the Bloomberg Tech audience to hear from you which data sets you're tracking, which platforms we play most attention to. And throughout the last few days, if there's any kind of bigger picture consumer behavior trends that you've spotted.
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A
Yeah, that's a great question. And actually I, there's a lot of talk about consumers being cautious. I think even data providers are being a little more cautious because we are getting the data a little more slowly. This is our first year, our first holiday shopping season with, you know, since the tariffs were announced. We've, and also we had the big government shutdown. So there's a lot of mixed signals going in. There's still pretty rosy projections, things like the NRF and Adobe predicting, you know, another, another record year for, for the holiday. But you know, a lot of those predictions were made a little bit earlier and even before the government shutdown was, was lagging. So I'm curious to see how, how it plays out. There's a lot of mixed signals going into this holiday shopping season, even more so than a typical one.
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C
Bloomberg, Spencer Soper, thank you very much. Okay, what's next? Let's stay on the topic of holiday shopping because despite some of that economic uncertainty, Spencer was talking about disappointment over the size of discounts. US shoppers did open their wallets on Black Friday. So what does that mean for the month ahead? Harley Finkelstein, president of global commerce company Shopify is here with some good data, some good insights. I mean, where we ended it there with Spencer, Holly, the forecasters, the predictors say that this will be another record shopping season. In aggregate. The data available to you, what are you seeing? What, what are the trends?
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Yeah, you know, I heard what Spencer said there. I mean, look, Friday was another record breaking Black Friday weekend. We saw but $6.2 billion in sales for Black Friday. That's about 25% from last year. We saw peak sales of $5.1 million per minute on Friday. That happened around noon on Friday. That's up from 4.6 million last year as well. And if you pull up, actually anyone can see this BFCM do you can actually see global commerce happening right now in real time. We are currently seeing about $2.5 million per sales in sales per minute, about 25,000 orders per minute. And we've seen just shy of 70 million unique shoppers buy from Shopify stores. So it's certainly shaping up to be another great day. And happy to go into some of the merchants and some of the trends we're seeing across Shopify.
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C
Holly, what I'd like to do is actually take a sort of geographic breakdown because in the limited data that we went through with Spencer, I think we're recognizing different speeds of growth. US versus Europe. Could we start there?
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A
Yeah, sure. I mean, look, if you look at top selling countries across the world where Shopify sells. We have millions of stores in places like the US we power 12% of all E commerce. So we have a really great view of things. US, UK, Australia, Germany and Canada are the top five. Look at top three selling cities. You see LA, New York and London in US alone, LA, New York and San Francisco were the top three. The other thing that we also saw is cross border. But 17% of orders were cross border orders so shipped to a different country as well. And then in terms of top trending merchants that we saw, we saw Hatch, which is sort of this, it's called the Restore 3, which is this phone free alarm for kind of morning routines. Crunch Labs has a sort of kids build it yourself monthly toy subscription, Brooklinen on their super plush robe and then Base has their weekender travel bag as well. So we're seeing across a bunch of different verticals do really well. But a big thing actually that we're seeing now is last year seemed to be a lot, a lot of talk about getting outside gifts were about the products being sold were about, you know, things like skiing or hiking or camping. This year seems to be that home is really, you know, the winner here where people are buying things for their home, whether it's kitchens, stuff for the kitchen, or puzzles or blankets. But generally consumers are buying from brands they love and we're fortunate those brands are on Shopify.
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B
What does that cross border stat, that 17% signal to you? Is that growing? I mean, how does that stand up to last year when perhaps tariffs went such a headwind?
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A
Yeah, I mean it's. What I think it means is that consumers generally are somewhat geographically agnostic. They want to buy from their favorite brands. You know, we heard from Gymshark they had their biggest Black Friday sale ever online AG1 Athletic Greens was up 50%. Brent, where it got an order every five seconds. So if you think about where consumers are purchasing, they're buying from brands they love. The Voris, the Figs, the Aloe Yoga is the on runnings of the world. And I think they're agnostic to where those are coming from. The other thing that we're seeing which is really interesting is that this really wasn't just about discounts this year. People shop brands, not channels. We're almost living in sort of a post world channel where you know, consumers bounce from a TikTok video to an AI agent to a website to a store. Even in video games like Roblox where Shopify powers commerce. The brands that really won the the weekend made the experience feel the same everywhere they were. And, and that, that continues today.
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B
Let's talk Holly about the inevitable AI question because you are like the global commerce company. You're helping people be digitally native. How are they interacting therefore in this world of brands with various agents, whether they're their own or whether they're external third party.
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A
Yeah, I mean look, it's still very, very early, but since January we've actually seen AI driven traffic on to Shopify stores up about 6x. But we've been preparing for this for years. We've been laying the rails for Agentic. We're already, we've already announced deals with Perplexity and more recently with ChatGPT where brands on Shopify can sell directly in those conversations. No links, no redirects, just sort of this very seamless experience directly in the chat. And so I think we're going to see a lot more of that now. What permutation eventually wins, we're not sure yet, but we'll be ready for it. But the other side of it is really interesting which is that brands, the merchants themselves are using AI to support them on the biggest shopping season weekend of the year. So we have something called Sidekick, which is the AI assistant built into Shopify, which knows everything about merchant stores, knows everything about Shopify. And We've seen over 100 million conversations with Sidekick. So merchants are able to do things like, you know, design, copyright, market, create these incredible analytics dashboards where they can decide where to spend in a much more sophisticated way. And so it's giving smaller merchants a real leg up against the bigger guys because this AI empowers them them.
- [34:15]
C
I want to go back to tariffs, Holly, but with a slightly different way of asking the question. You can look at overall spend but the question we're asking ourselves in the Bloomberg newsroom is are consumers still spending and getting less in return? So what are the data sets that you're tracking that evidence that impact of tariffs either through a diminished spend or same level of spend but you just get less for it.
- [34:39]
A
We actually measure, you know, both consumer confidence but also consumers appetite to spend at checkout. And so far, I mean as we speak right now, Ed, $2.5 million are going through checkout every single minute. So we've operated through all types of macro environments and our focus is always the same which is for merchants. And I think what we're seeing though is that, you know, whether during the pandemic, for example, we introduced tools like, you know, contact list, delivery back in 2020. Well now we're creating tools to help merchants navigate cross border tariffs and navigate sort of some global uncertainty to make sure they have everything they need. So we're not complacent about this. We're tracking macro, macro conditions. But so far Shopify merchants consistently outperform the overall market and we're seeing that, that they're, they're, you know, they have a lot of buyers right now.
- [35:22]
B
Heidi Finkelstein, Great to have some time with you. President of Shopify. What a weekend it's been for you, I'm sure. Now coming up, we speak with Runway CEO Cristobal Venice Valenzuela as of course the company is launching its latest text to video model is already top of the leaderboards. This is Bloomberg Tech.
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- [38:12]
B
Runway. It's announced the launch of its latest AI model, Gen 4.5, which aims to deliver all the best in the world. Text to Video Joining us now to break down why it's that that is Cristobal Valenzuela, Runway CEO. Last time I checked on the leaderboards, certain of them already have you at the number one spot. Crystal Ball. What is it that yours offers versus Sora to versus the latest Google offering.
- [38:36]
A
Yeah, that's true. So we just released Runway Gen 4.5, our latest video model and it tops the charts in terms of performance and benchmarks across all other models, which is kind of like a big deal within Research is the first time a company has leave led the leaderboards. And this company not being basically a large research lab, it's a model that surpasses pretty much all other models with incredible consistency, really good realistic results and just like across the board, amazing creative results. So really, really excited to get this model out and have people use it.
- [39:11]
B
Now you had it out there on the leaderboards with a pseudonymous before it was launched in public, Crystal ball and you had it called David. Is that a Goliath David construct. Are you. How are you competing against these vast generative AI companies?
- [39:28]
A
Yeah, it was a little bit of a play with that with David and Goliath. I think we've, we've managed to outcompete the largest research labs by being very focused. I think it's the era of both research and efficiency. And if you're able to maintain the focus as a team, you're able to deliver kind of groundbreaking results. And we're proving this. It's the first time I think we're again, anyone has kind of topped the leaderboards, not being a large, well funded research lab. And I think part of it is really like the team and it's really also the vision. We've been working on this for almost seven years. We started working on video models when, when there weren't even like leaderboards to start with. And I think eventually you build some sort of intuition and really good like momentum as to how to improve these models over time. And look, this is still like the worst the models will ever be. And so we have a bunch of more releases coming up that I think will further improve both pre training and post training. And so we're very excited for that.
- [40:21]
C
Chris, you're not that small. You raised $300 million in April at a foremost $4 billion, $3.3 billion valuation. I do think there's some value in you explaining what was different this time around in the training of gen 4.5 and the data set. What is it that you did differently and that has allowed you to release such a competitive model?
- [40:44]
A
I think there's a lot of different things. On the one end, pre training has been one of our focus for a long time, making sure that both the algorithmic improvements are there, but also the way we caption, we structure data, we build the models themselves and test them. The best way really to think about a lot of the research is you need to conduct multiple experiments through multiple months. And there's, there's a lot of learnings within what you, how you run those experiments. And I think what we're kind of proving is that infinite resources, I mean, you're right, we're definitely not in the smallest side of our company, but we're not a trillion dollar or $4 trillion company yet still managing to outcompete the resources of those companies is kind of, it's kind of insane, to be honest. And I think a lot of it has to do with the experiments and the research taste, which is if you're running all these experiments, how do you make sure they're effective and efficient? And I think that's, I think something we've done really, really well, which is focusing a lot on pre training.
- [41:40]
C
Gen 4, 4.4, 4.5 apologies has been released to enterprise customers straight away. What's the business model for it? You know, how do you guys monetize? On top of that, you've just talked a lot about research.
- [41:54]
A
I mean, it's pretty straightforward. We have subscriptions and we have credits that people can buy to use the model. We're releasing this model to gaming companies, to studios, to brands, to production companies, to creative. Around the world we have tens of millions of users actively using Runway. And again, the efficiency side is not only coming from the pre training or the training side of things. We've also been incredibly efficient and deploying the models we partner with Nvidia for a lot of this work. And we managed to get really good performance of inference. And so we actually make money every time you use the model. And that's, I think, a remarkable feed not only on how we think about the research that needs to be done, but also the market and deploying this so the unit economics make sense because I think real quick.
- [42:36]
C
So you're saying you're profitable running.
- [42:40]
A
We're making. I'm saying we're making money by every time you use the model. We have a good margin on the model itself and how you use it. We managed to deliver really good performance on inference. So the model is still like cheap to use compared to other models while still being the best model in the category. And that's incredibly hard to do. Again, it just goes back to the focus the team has set for quite some time.
- [43:03]
C
Crystal Ball Valenzuela, Runway CEO it's great to have you back on Bloomberg Tech. It was a landmark opening for Disney. Zootopia to the sequel delivered the biggest global opening ever for an animated film film grossing $556 million worldwide. The strong debut is a welcome boost for Disney's animation unit. After several lackluster releases over the Thanksgiving weekend, Zootopia pulled in $156 million in the US and Canada.
- [43:35]
B
Carrie can't wait to watch it. Meanwhile, staying in media is the final day for second round bids from Comcast, Paramount, Skydance and Netflix in their pursuit for Warner Brothers discovery. Here to break it all down, Felix, that look, are we likely to see sweetened deals coming on here and how are we going to know who's in the running for first place? Because some of them want part of the business, some of them want all of it.
- [43:55]
A
Yeah, it's not exactly an apples to apples comparison. You know, obviously Netflix and Comcast want just the streaming studios, whereas Paramount is seeking the whole company. You know, I think the big question is, can David Zaslav get the $30 a share he's after? You know, there's been some skepticism that the bids will come in that high. I think all of these companies, you know, they're looking at the future. It's going to be an incredibly competitive landscape. They feel like they need these assets to compete with all the other distractions online, the, you know, YouTube, the tech talks, everything. So yeah, it's going to be a big deal. And I think it remains to be seen, will they meet what Zablob wants?
- [44:36]
C
Do we know what they meant by sweetener bids? What it is they wanted in addition.
- [44:41]
A
Yeah, I think there's, you know, part of it is just how they're going to finance it. Also, apparently they want more cash versus stock. You know, will there be breakup fees? All of these companies face pretty, you know, big regulatory questions about whether or not these deals. I mean, Netflix has the number one streamer. You'll be getting HBO Max Assets which would be, you know, number three streamer in the market. You know, with NBC they have a broadcast license. What do you do with that if you need to transfer? We've seen all these FCC issues come up over broadcast issues. And with Paramount, you know, they've just bought, you know, they're still working on the previous deal with Skydance and Paramount. So there are issues facing all of these companies. You know, Paramount's been very aggressive but about saying, oh, we have, you know, Trump's blessing. And so it's going to be we have the easiest, clearest pathway to get this deal done.
- [45:38]
B
I think it's been a very busy weekend for many lawyers, at least on an M and a strategist of the deal, Bloomberg's Felix Gillette. Great breakdown. Now turning to Amazon's Re Invent conference kicks off today in Las Vegas where tech leaders are gathering for the latest innovations in cloud and networking technology. Let's get to what we can expect. Banner Agrana, he's Bloomberg Intelligence Senior Tech analyst. So it's been a busy weekend in run up, I'm sure for Amazon employees too. I really want to hear about training 3. Is that what we're going to be hearing about, about the competition in chips?
- [46:08]
A
I think they have to because, you know, Google's really put down the gauntlet for all the rest of the hyperscale cloud providers to say that, you know, we have this chip that's doing really well. What can Amazon do, in fact, what can Microsoft do down the road in that framework? Because at the end of the day, if you can build your own chip, it's much cheaper in terms margins and you know, your workloads, etc.
- [46:31]
C
You know, reinvent is a developers or industry conference. Right. There's going to be things specific to that. But actually an Iraq, I think you'd agree there's like some very general questions the US needs to answer about capacity planning, their exposure to one type of GPU or accelerator versus another. What would be top of mind for you? Just to get the basics from us on.
- [46:53]
A
So one of the things we'll be hearing for is what is their expansion plans right now? What are their customers doing in terms of deploying AI. One of the most important parts of AWS story that I don't think people understand. It's like knee deep into enterprises and that's where a lot of the data resides. So for the next level of growth for us, it's not going to come from consumer apps, it's going to come from enterprise AI adoption and a large portion of that is on aws. What are they doing with it? What's kind of their partnership with OpenAI right now? How many models do they have on their services and what kind of adoption rate you're seeing?
- [47:28]
C
Started 2025 asking what would happen between us and Open. I kind of know a bit more now. How interested are you in that relationship?
- [47:38]
A
I think it's a very important one because at the end of the day, OpenAI will not be able to get into enterprises at that same level as it has on the consumer side if it's not on us. Because at end of the day, you know, if you look at the relative size of us in terms of revenue compared to the others, it's still much bigger. The issue that they are facing is, you know, they don't have a consumer app like Chat GPT that runs on on aws, but when it comes to enterprise workloads, they're still the the place to go.
- [48:10]
C
Anurag Rana Bloomberg Intelligence Teeing us up. Thank you very much. That does it for this edition of Bloomberg Tech. Tune in to Bloomberg Television tomorrow. Carol for more out of Bring you a live conversation with us CEO Matt Garman and actually many other executives at.
- [48:28]
B
You're going to be racing there. Meanwhile, don't forget to check out our podcast. Find it on the terminal as well as online on Apple, Spotify and Iheart. Plenty to digest in the latest ideals. Are they circular? Was this just a virtuous cycle? From New York for San Francisco, this is Bloomberg Tech.
- [48:58]
A
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You know what a girl's best friend is? Not diamonds her lawyers.
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Original Series All's Fair now streaming on Hulu and Hulu on Disney plus for bundle subscribers terms apply. This podcast is brought to you by FedEx. The new power Move hey, you know those people in your office who are always pulling old school corporate power moves? Like the guy who weaponizes eye contact. He's confident, he's engaged, he's often creepy. It's an old school power move, but this alpha dog laser gaze won't keep your supply chain moving across borders. The real power move? Having a smart platform that keeps up with the changing trade landscape. That's why smart businesses partner with FedEx and use the power of digital intelligence to navigate around supply chain issues before they happen. Set your sights on something that will actually improve your business. FedEx. The new power Move.