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- [00:00]
Caroline Hyde
When your data goes dark, Veeam turns the lights back on. Partner with Veeam to increase your data resilience and get your data back so fast you won't even have time to miss it. With Veeam, it's all good. Keep your business running@veeam.com that's V E E A M.com There are two kinds.
- [00:18]
Akshat Ratty
Of people in the world. People who think about climate change and people who are doing something about it. On the Xero podcast we talk to both kinds of people. People you've heard of like Bill Gates.
- [00:29]
Mike Shepherd
I'm looking at what the world has to do to get to zero, not using climate as a moral crusade and.
- [00:35]
Victor Riverbelli
The creative minds you haven't heard of yet. It is serious stuff, but never doom and gloom.
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Akshat Ratty
I am Akshat Ratty Listen to Zero every Thursday from Bloomberg Podcasts on Apple, Spotify or anywhere else you get your podcasts.
- [00:52]
Dana Wollman
Bloomberg Tech is live from coast to.
- [00:54]
Caroline Hyde
Coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
- [01:02]
Ed Ludlow
This is Bloomberg Tech coming up. Another day, another deal. Samsung and SK Hynix forge initial agreements to supply chips and other gear to open AI Stargate Project plus Peloton shares.
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Caroline Hyde
Drop after hiking prices and announcing an overhaul of its hardware lineup and a new AI system.
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Ed Ludlow
And Google also introduces new Nest branded hardware including video cameras, a doorbell and a compact speaker as the company vies to integrate AI throughout the smart home.
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Caroline Hyde
Hardware abound. But let's get to the hard facts of the data when it so the markets we are flat on the NASDAQ 100. A lot to digest for investors whether we're looking at weaker jobs data once again signaling weakness that the Federal Reserve might cut rates into. But will we get of course the nonfarm payrolls on Friday? We are amid a government shutdown and we will go to that press conference as and when it starts with the leaders of the Democrats in the House. But I'm looking at Gold Spot currently at a record high that anxiety fueling a bid for a haven. Ed but what are you looking at?
- [01:59]
Ed Ludlow
Yeah, I think we've got to get out to talk more about what's happening with the shutdown because it's impacting markets right now in including the tech sector. Bloomberg's Tyler Kendall is at the White House in D.C. for more sorry Tyler, explain the basics of where we stand in the shutdown and what we're expecting to happen next.
- [02:16]
Dana Wollman
Right. So at this point we haven't seen any side really budge on their main points here. So at this point, negotiations are continuing, but the government is shut down. Now, we did hear from Republican leadership earlier today, including House Speaker Mike Johnson, and his words, more pain will be inflicted the longer this shutdown goes on. It's our understanding, understanding that House Republicans will hold a call later today with the OMB director Russ Votes about the potential for permanent layoffs. This has been a threat that has been issued from this White House essentially as a negotiating tactic in these talks. But we should note at this point, we haven't actually seen the agencies outline plans for permanent firings. As of now, Republicans are really standing firm behind this idea that they want to see what's known as a clean continuing resolution that would fund the government until mid November with no other provisions attached. But Democrats say they want to see policy changes now. And they all have to do with health care. Really at the heart of this, the chief concern is extending those expiring Obamacare premium tax subsidies that are set to end at the end of this year. I would watch out on that front because we have heard from Senate Majority Leader John Thune there could be some room for negotiation on that, but the government has to reopen first in order for those talks to start.
- [03:30]
Ed Ludlow
We were just showing some live picks of what we expect to be House Democrats in a press conference on the shutdown. And as Carrie said earlier, when it happens, we'll bring you what you need to know. Bloomberg's Tyler Kendall staying in deep D.C. for us, that's kind of the big picture of what's happening in tech markets. But there are stories out there that are driving specific movers as well. Principally I'm looking at micron moving pretty much 6% to the upside like it was lower in pre market. On the news that its big rivals in memory, SK Hynix and Samsung have won the Stargate deal. Do you expect it to be up 6%? Well, it is. And then there is tension between the United States and Taiwan. Taiwan pushing back on the idea. There's an agreement here that they will push more manufacturing to be onshored in the United States through TSMC. TSMC is U.S. aDRs are up 2%. We need to get the details.
- [04:20]
Caroline Hyde
There is a through line between these two key stories. And Michael shepherd, as always, can talk us through the nuances of what's happening when it comes to the chip industry and Washington's interplay. So talk us through. First and foremost, we've got Samsung, SK Hynix. Hynix, of course, basically Asian players winning contracts with Open Air and Stargate but this is as the leadership in Washington are really pushing for more domestic manufacturing. Just talk us through it.
- [04:47]
Mike Shepherd
Well, when you think about it, you have to look at it in the broader AI context. And for the Trump administration, this would certainly support their goal of propelling investment in Stargate, in OpenAI, in that big data center project that the president heralded at the beginning of his term. But there were a few questions left unanswered. One is the price tag and will this help support port what is part of a trade deal with South Korea that calls for as much as $350 billion in South Korean investment in the US over the next several years? Also left unanswered is where all of this high bandwidth memory is going to be produced. Carol, we don't know whether this is going to be made in Asia or if they may try to do some of this production in the US and that is certainly a goal of the US and of the Trump administration to ensure more of that chip production. And so there may be pressure from the administration on these two companies, on the government in Seoul to try to make some more of that happen.
- [05:47]
Ed Ludlow
Shep, another headline out of D.C. trump's proposed changes to visa rules assailed by the chip industry. What's the team been reporting on here?
- [05:57]
Mike Shepherd
Well, this is another crosscurrent that we're seeing here in Washington, and that is namely that for all of the push on getting manufacturing onshore here, there is a tension over the workforce. And we have heard administration officials talk about trying to develop the workforce. But the industry has outlined a major challenge, and that is simply that the country is not producing enough graduates here in the US to meet the potential demand of all of that manufacturing and Data center and AI expansion that is projected to happen over the next five years. There is an estimated 67,000 job gap, according to the semiconductor makers. Now what we're seeing is pushback from chip makers against an administration plan to crack down on the F1 student visa. This is a key pipeline for talent in the tech industry. It is something that they have relied on for years. Students currently are able to stay for an indefinite period as long as they're actively in a course of study. But the administration wants to shorten that to four years. And industry is saying, look, a less friendly approach to immigration will drive away talent to other countries that are more welcoming and it will hurt competition. One CEO wrote in. An unnamed chief executive from a semiconductor company wrote in to say that they were deeply troubled to see this and that it will harm competitiveness for the industry here in the US and this comes as also the administration is raising the fee for H1B visas to $100,000 for new applications and for chip companies that could mean one hundreds of millions of dollars in additional trying to get all that talent here in the U.S. to meet this demand that they have for jobs.
- [07:42]
Ed Ludlow
Bloomberg's Mike shepherd with two critical stories out of D.C. and there are several that we didn't touch on. We'll try to throughout the hour. Energy Secretary Chris Wright says the US has taken an equity stake in Lithium Americas in a bid to level the competitive playing field with China. Wright said on the close that the US government will have a 5% stake in the company and a 5% stake in the actual mine, all with an exit strategy.
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Mike Shepherd
So we did was a creative deal.
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Akshat Ratty
Engaged with GM and Lithium Americas to find a way to bring more capital.
- [08:16]
Mike Shepherd
Equity capital into the mine. Yes, for us to take an equity stake in the mine and to do those things.
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Akshat Ratty
So the mine's going to be viable, economically sound.
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Mike Shepherd
It's not going to be the next Solyndra and then we can advance the.
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Akshat Ratty
Loan capital that will help that mine get finished.
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Caroline Hyde
Plenty of creative deals coming from the administration. Let's get to the broader tech read across there for Fiona Sinkholt as a senior market analyst at Citi Index. Look, we talk about anxiety in the market. We talk about a government shutdown. We worry about maybe the push and the pull of trade deals, whether it's with Taiwan, whether it's with South Korea, and yet Nvidia is at a record high today. Micron's at a record high today. Fiona, do you just keep on allocating to the trade?
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Fiona Sinkholt
It feels like it's that way. I mean, while we are seeing pockets of safe haven demand. So obviously we've seen gold trading at record high. We've seen the Japanese yen is strengthening against the US Dollar, and we're seeing equities still remaining very well supported. So I think there is very much this sense that particularly tech stocks are still attracting a lot of attention because investors want to put their money somewhere. And big tech in the US Remains a solid trade. You know, we've still got the outlooks. We'll be getting more information of that when we get into earnings season. But it does feel that we've had this sort of, you know, gradual climb higher that's not really letting up, even though there are clearly plenty of risks out there, such as the shutdown of the US Government. But still those, you know, optimism surrounding those Fed rate cuts is still helping the sector as well.
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Caroline Hyde
It is about the macro policymaking, whether or not we get the jobs data on Friday or not. Fiona, what's happening in Europe, because I'm looking at ASML is also up 1.3%. Are you getting a pull across to other regions right now?
- [10:09]
Fiona Sinkholt
Yes, I think there has been. And you know, it's quite interesting because I think there was a period just recently where Europe was struggling against the US we were seeing the US Climbing to fresh record highs. We were seeing the Nasdaq up, we were seeing the S&P 500 up. And yet in Europe, we were sort of suffering a little bit on down days. But I think there is a sense now that that is starting to turn around again, as you said, there is that sort of pull across that we're getting from the US into tech stocks in Europe, which is helping as far as sort of other sectors. There had been strength in defense stocks in Europe, which I think has just sort of wound down a bit.
- [10:48]
Dana Wollman
Little.
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Fiona Sinkholt
Little bit. But yeah, as far as tech stock are concerned, we are seeing some encouraging signs.
- [10:54]
Ed Ludlow
Again, Fiona, a story we did not get to with Bloomberg's Mike shepherd was Taiwan's vice premier coming out and saying that the country rejects the United States demand for Taiwan to actively help in bringing 50% half of semiconductor manufacturing for the US supply base into the United States. This is a sort of part of the negotiation broadly on trade with that nation. But it speaks to other things that Caroline outlined to you, which is the impact of this administration's policy on the technology sector. What do you make of that?
- [11:31]
Fiona Sinkholt
Yeah, you know, I think with this administration, policy is very much a central part of how markets are responding as to the outlook for the stocks and also for sentiment, as we've talked about. You know, it does feel like this administration is having a very active role, as we know, in setting out policy and involving themselves in policy, which is affecting stocks. It's affecting sentiment to a degree. But I think also that there is a little bit of caution. We're not seeing the same rapid, quick responses that we used to to see at the beginning of Trump's administration where he would make these announcements and we would see a big reaction in stock, big reaction in the markets. We're seeing more relaxed response, I would say, to the comments that come out from Trump, although they are still there. They're just not making the same impact that perhaps they have previously.
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Ed Ludlow
Fiona, did technology investors start looking for opportunities in sectors and companies where a US Government might take a stake?
- [12:40]
Fiona Sinkholt
Yeah, that does seem to feel like it could be the next one to be watching for. You know, I think they have been much more proactive in looking for stakes as we've heard with the lithium deal as well. They are keen to, to get a foot in and perhaps make the US potentially even more, more competitive than it is against peers such as China. So that could be the next one to be watching out for.
- [13:06]
Caroline Hyde
Fiona, do you see signs of a bubble?
- [13:10]
Fiona Sinkholt
I see that we are high value, there are high valuations at the moment. I mean that was something that was noted by Federal Reserve Chair Jerome Powell just a few weeks ago. But I think really what we need to see is what earnings are going to be telling us. You know, I think there's going to be of a lot, lot of focus on earnings season, on forward guidance. I don't think we're in bubble territory, but I do feel that we are quite overstretched in some areas. But that doesn't mean to say that we necessarily are going to see a big collapse here at all. I think there is potential for some consolidation and if we do get okay readings from the earnings at the end of this month going to November, then I think think that could potentially be a reason, a catalyst for another leg higher, especially if we're seeing the Federal.
- [14:01]
Ed Ludlow
Reserve cutting interest rates further ASML earnings on October 14. How is it earnings season already? Fiona, Cinco de from Citi Index. Thank you, we're ready. Coming up, why some investors are rethinking their private market playbook. We're going to speak with Matt with Isla Wellington Management late stage growth lead. This is where the conversation is right now and as you know I want to talk about debt. This is Bloomberg Tech.
- [14:28]
Caroline Hyde
When your data goes dark, Veeam turns the lights back on. Partner with Veeam to increase your data resilience and get the right data recovery options for any kind of disruption so you can undo the unpredictable and get your data back so fast you won't even have time to miss it. With Veeam, it's all good. Keep your business running@veeam.com that's v e e a m.com.
- [14:57]
Ed Ludlow
There'S a lot happening in technology and private markets today. From London to la, startups are raising money and in some cases like the UK's N scale in the form of quick follow on round. Around the world pension fund, state backed inventory investment firms, venture capitalists are rethinking the private markets playbook. Matt with Hyler Wellington Management's late stage growth lead joins us now. Wellington management has more than $9.6 billion in assets under management in the private investment bucket. I have so much to ask you, but we were showing a really well read story on the Bloomberg about any participant in private markets after an era of easy gains is now changing approach. Is that true of you and what you're doing in your strategy?
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Akshat Ratty
Well, I think for us, similar to what we've seen over the last multiple decades is companies are just staying private longer.
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Ed Ludlow
Right.
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Akshat Ratty
And as that happens, then the historic returns and public market investors would have gotten as companies went public and then appreciate in the public market. Those are really only available those returns in the private market as those companies continue to grow. So for us it's more of the same continuing to capture capitalize on that trend and apply the kind of full picture of Wellington which is seeing the public markets and applying that knowledge to the private markets.
- [16:09]
Ed Ludlow
Matt, across infrastructure projects largely relating to AI and M and A debt is in the headlines on a daily basis at the moment, different types of mechanisms. I'm trying to understand how worried or not private market participants are about the use of debt. Like the Cielo market must be like this is great. The M and A market is claiming it's the connective tissue issuance giving life to it. But others are saying this is really worrying.
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Akshat Ratty
I mean, I think the amount of leverage we see being deployed as CapEx expense for AI and all things AI continues to increase. I think that the debt service for that will be wholly determined by the revenue streams that AI in general is creating. And so assuming AI continues to deliver on the dream and continues to deliver on the revenue forecasts, then I think that that leverage and that debt is probably okay. But obviously if, if, if the secular shift in AI doesn't actually result in the revenue that people are expecting, then that over leverage will be a challenge.
- [17:18]
Caroline Hyde
So what is your, your base case for whether we meet the hype?
- [17:23]
Akshat Ratty
I think we believe that AI is a once in a decade, maybe once in a generation technology shift and that as a result a lot of this leverage and a lot of the debt that's put into the system actually will be fine. I would say, I think our take is really that this trend of companies staying private longer does have implications for the availability of AI businesses in the public market market, which is I think a really interesting topic.
- [17:48]
Caroline Hyde
Let's delve into that topic. If we look at your portfolio, we can see the companies that you did back from an early stage while a late stage growth area in the private markets and have successfully Gone public, most recently Klarna, but Airbnb affirm. I'm also thinking about the ones that still haven't gone public. Stripe. I mean massive company that many would have thought would have gone to IPO and hasn't as yet. Databricks, just a hundred billion dollar valuation. When is it likely the IPO market will open for these companies? Is that just too much to be gained from remaining private? Look, we've just had a return to the private markets if the deal goes through.
- [18:24]
Akshat Ratty
Well, I think there's two ways to answer your question. The first way is to say that over the last three years we had a historically low period of IPO activity. You all talk about it on the show all the time. Q3, there were 13 venture backed IPOs. Those companies raised $36 billion in the public market or have a combined market value of $36 billion. That's 3,000% more than happened last year at this time. So the IPO market is absolutely coming back and we're starting to see signs of that.
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Caroline Hyde
If the FCC is open, if the.
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Akshat Ratty
SEC reopens, that will throw a wrench in companies like Navon, companies like Ethos, companies like Wealthfront that have filed their S1 and are waiting. The SEC is not open for business, so new issuances will be down.
- [19:08]
Ed Ludlow
Matt, has your definition of a late stage growth investment changed?
- [19:14]
Akshat Ratty
Definitely it has because companies stay private longer so.
- [19:18]
Ed Ludlow
I know, but to be fair, you've said that before. So I'm trying to sound like what specific company fits your profile right now.
- [19:24]
Akshat Ratty
Yeah. So let's talk about databricks, which I think is a great example. When I started a decade ago investing in late stage private companies, the idea that we'd be investing in a 60 plus billion dollar now hundred billion dollar private company was really hard to wrap my head around. But as companies stay private longer, the larger companies are just commanding more market cap in the private market. And that's a big, big change from where things were a decade ago. There was no 60 or $100 billion private companies 10 years ago. Today we sit and we can count dozen probably of them.
- [19:57]
Caroline Hyde
What's interesting is Wellington does well in both scenarios, as we said. And you've well, haven't exited yet. Klarna. Because Klarna goes public, you still hold, but there's a lockup situation. Eventually maybe Wellington on the $1.3 trillion assets on the management side starts buying that up in the public markets. But when is it that you decide to exit from the late stage growth perspective is it always when the lockup expires, how long do you want to ride these companies once they do go public?
- [20:23]
Akshat Ratty
For us, we think about holistically as a firm where the return characteristics for specific strategy lie and are we able to achieve those return objectives. And so oftentimes what will happen is one of our companies on the private side will go public. We will have generated sufficient return to what we underwrite to that may still leave plenty of opportunity for the public market side to be buying. And it's that combination of again, as I said before, seeing the full picture of here's how they operate in the private markets and how they executed and here's what we believe can happen in the public markets mean that although we may be selling out of the private side, our 1.3 trillion on the public side may be potentially buying those companies really quick.
- [21:06]
Ed Ludlow
We broke the story in July. Space X at $400 billion it was a tender secondary as a case study, with your assets under management, can you even get into something like that at that valuation and at that stage?
- [21:18]
Akshat Ratty
The answer is yes, assuming that we think that the return potential is there. And I think one of the really interesting trends is companies stay private longer is really to highlight the fact that perpetually private for the vast majority of companies is not a thing because the volume of liquidity in the private markets is not sufficient to give employees, founders and investors return of capital that they need. The best way to illustrate that in my mind is to point out the fact that the entire private market transacts in a year volume that equals five business days of trading in the public market. So all the private universe transacts in just five days in the public market. So liquidity in the private markets isn't there to stay private forever and only.
- [22:03]
Caroline Hyde
For a few really big key names. Matt with Hyla Wellington Management Always fascinating to have important on the show. It is time now for talking tech. And first up, intel says it remains committed to its plans to building out a sprawling chip manufacturing plant in Ohio. This after US Senator Bernie Marino pressed the company about delays in the project. In a statement released, intel says the Ohio one initiatives quote remain an important part of our long term plans. Plus, Apple defended its decision to use OpenAI over Elon Musk's X AI in their iPhone6 software. This after Xi sued the company in August alleging favoritism, stifling innovation and reducing consumer choice. In a Tuesday court filing, Apple said it's quote, widely known it plans to partner with other AI chat bots in the future and Matter is said to be acquiring chip startup Reverse to strengthen its in house semiconductor effort. That's according to sources now the move aims to cut Matters reliance on Nvidia, lower costs and support the company's push towards superintelligence.
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Ed Ludlow
Welcome back to Bloomberg Tech. There's just so many technology news stories to get in today. Here's a couple that I'm looking at. Qualcomm lowered by about a percentage point. They said overnight that a Delaware Court has dismissed ARM's legal challenge against them. You remember that the district court was looking at a case where AAM had accused Qualcomm and its subsidiary Nuvia of breaching licensing agreements. And according to Qualcomm, that case has been thrown out, although it's not doing anything to support the stock. Now Reddit is down 10% on social media, there is some discussion about a drop in citations that Reddit's getting on the open AI platforms. Our analysts at Bloomberg Intelligence have also cited that data, saying that it is a concern the Stock is down 10%, though we've heard nothing official from either Reddit nor OpenAI. And you know, we're going to continue to look into this one. But that's the basic logic. It's a data relating to the drop in citations that Reddit's getting on open air platforms. And we'll find out more.
- [24:11]
Caroline Hyde
We will. Meanwhile, let's just talk about a stock that has run up in recent days, maybe taking a breather today. It's Core Weave is winning over Wall Street. Nearly half of all analysts covering this stock now have a buy equivalent rating. That's after the company announced a slew of new business deals, including one just yesterday with matter. Remember now for more Bloomberg equities reporter Carmen Renicke is here to join us. It was 14 billion with matter, but they'd already just done an extension with open AI. They've been beefing up outside of Microsoft, the analysts, the notes, we're suddenly seeing more positive read across.
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Dana Wollman
Yeah. So we've seen a slew of upgrades to buy ratings for Core Weave. As you said, nearly half of all analysts now have a buy equivalent rating. That's up from just 20% just a few months ago. Now, Corey went public in March. So, you know, analyst ratings and coverage sort of trickles in as a company goes along its lifetime. But this is really a shift in sentiment. And as you said, these deals are making Wall street analysts feel more secure, more bullish about the future of the company and that it has a diversified revenue stream that's not just focused on Mr. Entrator.
- [25:12]
Ed Ludlow
The CEO has done a couple of interviews with Bloomberg in the last two weeks, one on TV and one with with Brody Ford in the print domain. But his point's really clear. Post ipo he felt they were getting dinged or at least the stock could have gone higher had they demonstrated a diverse customer base. Now they are. That's kind of what the market's fixated on, right?
- [25:31]
Dana Wollman
Yeah, that's really what we're seeing. It's this idea that the long term, you know, in the future things are going to get better for this company. And right now that's really overshadowing sort of some of the concerns that more bearish analysis analysts have brought up around the level of debt that they have versus the amount of revenue that they're bringing in. So it seems like a lot of those fears have been quelled, at least in the near term. And the other thing that's interesting is, you know, the average price target is bumped up to $141. That's the highest so far. And at least for now, the last time that I checked it was above the current stock price. So analysts have even been seeing some upside for shares, which they weren't for months. You know, when it had this huge run up after its ipo.
- [26:10]
Caroline Hyde
I mean there is competition. It's interesting. The N scale, still private in Europe, has just raised a pre Series C, having just days ago completed their Series B. All of this speaks to the furious nature of trying to get AI compute right now. And that is what's also helping the wind in and call these sales. Right?
- [26:29]
Dana Wollman
Yeah, exactly. It's. And I think it's one of the first ones to sort of come public and be a very well known name in this space. It obviously has these great deals, but it has great partnerships as well. You know, it's been linked with Nvidia Open Air. You know, these are really the key names in this space.
- [26:44]
Caroline Hyde
Carmen Bernanke, always love her reporting. We thank you. Meanwhile, Microsoft, it's just unveiled new agentic security capabilities to its Sentinel platform, hoping to offer a unified security offering in this age of AI. We spoke with Microsoft Security corporate Vice President Basu Jakal about the updates and to discuss how AI is actually impacting a new age of cybersecurity.
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Dana Wollman
We're very excited about the superpowers that AI brings for defenders because you're right, we need to use AI for defense and it is going to change this asymmetry in the threat landscape. This is why we're Introducing the Security Store because now anyone can build an agent through Security Copilot and they can publish it in the Security Store. It enables, it enables organizations to quickly discover what agents are available to them right in the tools like Defender and Purview that Microsoft supports.
- [27:34]
Caroline Hyde
How much have you had to beef up talent within, you know, the hiring practices at the moment? Because all we talk of is talent wars at the moment. Is it really fierce within the cybersecurity area as well?
- [27:45]
Dana Wollman
Yeah, it is. Cybersecurity is a cultural transformation and as part of Secure Future Initiatives initiative, we've taken a big initiative on skilling and upskilling. We have a security academy at Microsoft where we have, we are training every single employee to learn about how to do security in this new age of AI. And we also extend that training to our partner ecosystem and our customer ecosystem so we all can learn AI and we can learn security together.
- [28:13]
Ed Ludlow
That was Microsoft Security Corporate Vice president Vasu Jakob, Google's top executive in Europe, said the continent should simplify complex and conflicting rules on AI and technology. This is Silicon Valley's biggest companies gripe about their impact on their ability to do business in the eu. She spoke with Bloomberg's Francine Lacqua at Bloomberg's Women, Money and Power conference earlier today. Listen to this.
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Caroline Hyde
I really think it's problematic that we have so much regulation that is in conflict. Another so I am eager to engage in my new role with sort of, I would say industry broadly because whenever I talk to business leaders there is universal frustration. I would say about 60%. I think of a recent survey of.
- [28:55]
Dana Wollman
Business leaders say they'd like simplification of regulation in the European Union.
- [29:00]
Caroline Hyde
I'd like to join arms with other.
- [29:02]
Dana Wollman
Fellow interested parties and really advocate for a simpler regime here.
- [29:06]
Ed Ludlow
Okay. Be sure to catch more of Bloomberg's Women, Money and Power conference. Tune in on the terminal at live Go car. What's next?
- [29:14]
Caroline Hyde
Coming up, UK startup Synthesia is launching video agents. We'll talk to the CEO about the tools aimed at making videos easier to create and interact with. Cue your avatar ad. This is Bloomberg Tech. A video startup, Synthesia is introducing an updated version of its Platform 3.0, the company known for creating AI clones for corporate videos. It counts Nvidia Adobe among its backers and it serves 80% of the top 100 companies with its video offerings. Synthesia co founder CEO Victor Riverbelli joins us now. Congratulations on the launch, Victor. What am I going to get with 3.0? It's a bit of an overhaul Hit.
- [29:59]
Victor Riverbelli
Thank you so much and thanks for having me all excited to be back here. So 3.0 is a bunch of different things. The main thing is that we're evolving video from being kind of a static broadcast format, right? You record it once and everybody essentially watches the exact same version of that video into video that's conversational. And we're launching this new product called Video Agents where you're going to be able to create your videos like you've always created your videos, but then you can insert these agents at different points in your video and they can serve different purposes. If you're doing a training video, for example, you could have an agent that actually checks if the person watching the video has understood the content. If you're doing recruiting, for example, you could have an agent that interviews, gives a case study to a candidate that's kind of on the spot. So it moves video away from being static to something that's much more dynamic and conversational. And in the wake of that, we're also launching a whole bunch of new features just make the core product better. So launching new copilot, making it easier for people to create video in a chat style interface, Launching new avatar technologies where you can take and prompt new avatars into existence. You can take the avatar that you already have of yourself and you can say, hey, I want to be on a boat, I want to be in a corporate office. Want to change my outfit. And it said it just opens up a whole bunch of new creative possibilities.
- [31:07]
Caroline Hyde
New possibilities at a time where we're questioning the effectiveness of these AI agents and indeed adoption within enterprise. Victor, just talk to us about how you've been talking to your customers. We've had the MIT report saying 95% of pilots aren't working. How is it working within your clients?
- [31:27]
Victor Riverbelli
We've always had this mantra called utility over novelty. You know, we've always said technology is amazing and it's cool and of course it's what we build our company around. But ultimately we have a solve to have to solve a problem for the end customer. Right. I think that might see reporters is pretty bang on. In my own personal experience. I think that like 80% of AI tools today simply just don't work. 15% of them kind of stumbled their way there and the last 5% actually work. When you look at our business and I think the kind of numbers that we're delivering, it's very clear that our product really truly works. We increased our NR to 142% from up 13% from, from 12 months ago, we have, you know, four times as many customers paying us more than 100K than we did 12 months ago. And all these things only happen because people actually get value of the product. Right Now, I think what we've discovered today, these here, is that as important as the models are, right? Like, of course, generating the avatars, generating these, like, video clips for people is really important, but ultimately it's about a workflow. Why do you make a video? You make a video because you want to communicate something to someone. What we spent the last couple of years building out is a platform that helps you with that entire process. You create the video, you edit it in this PowerPoint sort of style interface. You collaborate with your colleagues, you have content management, translation. We have a publishing platform with our own video. And so what we've managed to do is to take that process and make it as quickly as we can.
- [32:40]
Ed Ludlow
You quantified the market for these tools and gave numbers and those that you feel don't work. And we as a team can go away and check that math. But for Synthesia 3.0, do you have some benchmarking data that that is evidence of its performance and capability against the large field that is text to video?
- [33:04]
Victor Riverbelli
Well, I think the way you benchmark these things depends very much on the use case, right? If I'm creating a training video, that's a very different benchmark than creating a marketing video, for example. I think what we've seen very clearly, like, you know, 3.0, a lot of these things, we're literally releasing them as we go right now. So they haven't been in the market for 12 months. But what we see is that if you do training content, for example, engagement is increased by 30% versus sharing that as normal text. And there's a benchmark is other text to video tools. What we're really good at is avatars. That's the thing that we deeply care about. We're now integrating other models as well. If you want to use VO3 in the product, you can use that. We're adding a bunch of other models as well. So I think for us as a company, I don't really think it makes sense to benchmark us against text to video tools. You know, for us, it's about the process of communicating something to someone. And that goes much deeper than just the models themselves.
- [33:49]
Ed Ludlow
This week, the big focus has been on Meta's vibes, the funny name, and the reporting that OpenAI is looking at a video tool in conjunction with being a social media platform. You've been on this program and discussed, you know, the risks of AI generated video content in social media domains. But what's your reaction to those two moves by those two players?
- [34:18]
Victor Riverbelli
I think it's very predictable. I'm quoted, you know, I think four or five years ago in a book say that I think by 2026, 95% of all content on the Internet is going to be generated. I think that's, that's where we're moving towards now. It feels odd, it feels weird. I think that we're going to be watching AI generated content but I think, you know, ultimately we'll care less about how something was produced, will care more about the content itself. A lot of the content people make with AI today is what most people would call slop, right? It's not very high quality. It's kind of like engagement farming, engagement baiting. But I think they'll eventually be be replaced by people using these tools to create awesome content. There's so many great creators and incident they'll pick up these tools and they'll adel and they'll use them to create great content. As for the big platforms moving into this space, I think again highly predictable. These companies ultimately make their money off ads, right? And to launch an ad in one of these networks, you want that to be video in 2025 because that performs way better. And these platforms, they want to offer you the tools to make those videos for those ads, right? Which is exactly like Google owning the platform to create AdWords for, for search engine marketing for example. I think it's very predictable they're going to move into this space. I think it's predictable that they're going to offer these tools inside their apps. You know, it feels new, maybe that they're adding a video but really they've been doing this for six, seven years. No, like putting dog ears on yourself with face filters. All this stuff is roughly the same technology, right? So I think it's just, it's just like this sort of trajectory of more and more being part of, of the concentration flows both in our personal lives but also very much in our corporate life.
- [35:44]
Caroline Hyde
And boy am I getting sort of to made videos coming my way. And the standalone app has been announced just yesterday Victor but I'm interested in your story with at the moment Avatars are being liked by Nvidia no less. We said that you already backed by Nvidia and Adobe. Jensen's just went on stage last week in the UK saying he's going to get into your next round when's that next funding round happening?
- [36:07]
Victor Riverbelli
Time. Time will show. You know, we are very appreciative of Jensen and our Nvidia partnership. And I think if anything for us, it's enthusiast. A testament to the fact that we drive so much real value for our clients that we're way past the kind of demo stage. I think, you know, we're well capitalized. We raised a bunch of funding rounds. Who knows where the next one is going to come? But, but, you know, we've, we've given Jensen our word that he'll get to participate in it.
- [36:29]
Ed Ludlow
Victor Rippabelli, CEO of Synthesia. Great to have you back on the show. Thank you. Amazon is overhauled devices, including its Echo and Echo Studio. We spoke with the company's head of devices and services panels Panay, who says the products were built to be showcased in the home and could help customers stop glancing at their smartphones.
- [36:55]
Mike Shepherd
A lot of times we take out our phone, we get distracted. I'm at the dinner table with my kids. We have this idea that we want to keep our phones down, right, because we want to be present with each other. And there's so many times where you pull out your phone to answer a question, almost like you just said. But now it's just changed. It's completely different. Just say Alexa, have the conversation. It's quite literally all the information there and it's conversational. Not only that, she can then get the next thing done for you.
- [37:20]
Ed Ludlow
Bloomberg's Mark Gurman has written, and it's based in part on a conversation with you, that Amazon's overhauling its devices to take on Apple in this era. Do you agree with that? Hmm, I haven't seen it.
- [37:38]
Mike Shepherd
Can I say that, Let me read that article, that here's what I'd say. We build our products for our customers and, and for people. My whole goal is quite simple. We want AI to be useful for people, end of story. And like I think we're building devices to do just that. And I do believe they're beautiful. I think they fit in the home. I think they're so well thought through that when people use these devices that they're going to love them. They're just going to love them. I can't. Like, this is something, I just want people to get their hands on them.
- [38:07]
Caroline Hyde
Great conversation. Amazon's SVP of devices and services, Panos. Panay. Look, right off the heels of that, Amazon launch Google out with its new smart devices powered by Gemini AI. Let's bring in Bloomberg's Dana Woolman for more. So there's doorbells, cameras, there's speakers. What caught your eye?
- [38:23]
Dana Wollman
Right. So there's two cameras and a doorbell and a smart speaker, which actually isn't coming out until spring of next year, which is going to give Amazon quite the head start with its own smart home lineup which as you noted was unveiled yesterday.
- [38:35]
Ed Ludlow
So we have a little bit of competition here on our hands. Team Amazon, then Google, they both seem to be making a claim. Dana, to the home, the air in the home. What's kind of your reflection on the last two days of announcements?
- [38:49]
Dana Wollman
So both companies have the challenge of making exciting devices that really are designed to blend into the home. I don't think people tend to get as excited about a smart video camera or smart doorbell as they would, let's say, a new iPhone. And so both companies have overhauled their lineups and both are really staking the future, or at least the near term future of their ranges on artificial intelligence intelligence and weaving in AI in a way that is useful for consumers. Google for instance, is saying that you can ask there's a new feature called Ask Home where you can literally ask your products, let's say what happened with the vase and it will sort of dial back the footage and tell you why an item is misplaced or broken. Let's say in a really extreme example.
- [39:33]
Caroline Hyde
It is about an ecosystem though and keeping old users engaged. That seems to be why they're saying that they speakers delayed. Right. Because it is quite a delay until spring 2026.
- [39:43]
Dana Wollman
That is the way Google has positioned it. They are saying that they are prioritizing current users of the ecosystem, many of whom have devices that go back if not a decade, close to a decade. So trying to roll out those features to as wide of a population of devices as possible. And then they say eventually unveiling this new and shiny smart speaker that's coming.
- [40:05]
Ed Ludlow
Bloomberg's Dana Wollman with the reporting across devices. Thank you very much. Sticking on the devices front, Peloton is raising prices on both hardware and membership fees as part of a product overhaul. The news sending shares down significantly, although they pared some of that decline in the last few minutes or so. Our consumer tech reporter Samantha Kelly joins us. What do we need to understand here? Carol and I are both hardware users of Peloton. We both are subscribers. What's new in our use of this tech?
- [40:32]
Dana Wollman
Yeah, so it's a revamp across its entire line. So five new products. That's a traditional base level bike, a bike plus premium model. There's the tread treadmill, the Tread plus premium again and the row plus. So the big differences here are the premium, all of them really. Get a new swivel screen, which might not sound so exciting, but the idea here is you can turn it around and it opens you up to doing yoga classes, strength classes. The premium line has had this before. Now it comes to the base level, the premium line. What's really kind of special here is the new camera system. It tracks you, tracks your movements, it blends AI to give you personalized custom workouts, really gets to know your movements, gives you pep talks and counts your reps. And then this is sort of what the company is banking here on. It is interesting, you know, just following up on Amazon and Google infused AI. Even Peloton, you wouldn't necessarily think there would be an integration here is also embracing AI as well.
- [41:34]
Caroline Hyde
Peloton iq. And it's kind of meant to be like a cross trainer in many ways. The thing is, I think you get new people drawn in. Or is it just getting at an eye to upgrade all the time?
- [41:45]
Dana Wollman
Yeah, it's a great question. So all the models, even existing ones, can upgrade to have this AI system now. But again the premium models can have the camera movements. But it's not necessarily something, you know you're going to drop thousands of dollars to get a new camera system if you have equipment that maybe you're not even using right now. So it's, it's definitely to drum up excitement and it is pretty fun. I got to try it yesterday. It is kind of neat. Yeah, it's pretty neat. The way it works is basically there's like almost like a selfie camera and they put you next to a prerecorded instructor. And you know, I was lifting weights and it was keeping track of it and it was giving me some suggestions and so pretty useful depending on what you're looking for.
- [42:26]
Caroline Hyde
It's so interesting though. I'm using Hinge Health. When it comes to physical therapy, you can just use your own phone as a camera. And so there is going to be this sales pitch they're going to have to do with why build it into the product. Why can't I know you and I are stuck, right?
- [42:41]
Ed Ludlow
So we were. I've bike and tread. I think you have bike, right and tread. So. So like, okay, we face a choice. But I go back to the stock reaction very quickly. Sam, I mean Mark was on the show earlier this week. It's the latest turnaround and investors are selling that.
- [42:53]
Caroline Hyde
Yeah, yeah.
- [42:53]
Dana Wollman
I mean it's also, it's like, are people going to actually do do this? It's like $50 a month they're in. They're increasing the subscriptions also. So five extra dollars to even keep you in these classes. And that that really adds up. Although Peloton says, you know, you can drop $40 on a standalone class. So maybe it really depends sort of what you're looking for.
- [43:12]
Caroline Hyde
So true. $40 if you want to go to the latest bar class in New York or you do a Peloton. Sam Kelly, glad that you are trying out for us. Meanwhile, that does it for this edition of Bloomberg Tech, right here from New York. And coming up, in fact, in the next hour, you don't want to miss our talk with Peloton CEO Peter Stearns joining and these new devices don't want to miss it.
- [43:31]
Ed Ludlow
Ed, that pace, that power, that focus, that's a big interview the show had. Pace, power and focus. Check out the pod. You know where to find it. It's on the Bloomberg terminal. It's online on Apple, Spotify and Iheart. It's Wednesday. I've got a couple more days here in New York. We've got a lot more to come in the week. Stay with us. This is Bloomberg Tech.