Yaccarino Stepping Down as CEO of Musk’s X After Two Years

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1:58It was three words. What? Shut up, Dan. Oh. Three words. That's what Elon Musk, the wealthiest person in the world, posted in a message on X. Remember, he's the wealthiest man in the world. In response to a post from the tech analyst, Dan Ives. Dan Ives is a global head of technology research at Wedbush Security. He joins us from New York. Dan, I had a viewer send this tweet to me yesterday. The response, Elon telling you to shut up. First of all, you were making three recommendations for what you think the company should do. What happened there? Babe, look, I mean, I knew Elon was not going to be happy.

2:40But the reality is, you know, the board, they basically need to now step it up. And I think it's something where, you know, I hear from shareholders around the world, right, on Tesla. And as one of the biggest supporters of Elon and Tesla, it was time to rip the band-aid off you got to now put a new structure and actually one of them you know that we talked about in terms of the three things that we suggested is actually something musk wants in terms of 25 voting rights and what i view is will ultimately be an xai merger potentially but second third the political gambles and this sideshow it can't continue You know, analysts were totally seemed totally fine with Elon Musk.

3:27And correct me if I'm wrong. They seemed totally fine with him when he was getting along well with President Trump. And it seemed like the president's policies would favor his companies. Is that fair to say? It's that's 100 percent. I mean, I view it as like and we talked about it. The best thing ever happened to Musk at that time was Trump getting into the White House. And obviously, you know, you could argue Trump doesn't get into the White House if it's not for Musk. but like a lot of things it took on a life its own doge bffs spending no time with tesla mario agar dc doge the brand issues that ultimately is why then musk had to take a step back and basically leave the trump administration but in your wildest nightmare no one expected hey, let's triple down, start a third political party, where now Trump actually becomes a foe, Republican Party becomes a foe.

4:24And that just becomes more of an overhang for Tesla. So the board as it exists now, is this the board that you think can bring about the necessary changes and set the ground rules as you are calling for Tesla? and Jack Hartung, who has been CFO of Starbucks, not Starbucks, of Chipotle, excuse me. Kimball Reeve Musk is on it. Jim Murdoch, of course, Elon. Robin Denholm, an Australian business executive, former accountant, chair of the Tesla board. So I'm just trying to think, is this the board that you think can execute the changes that need to be done? Well, they don't have a choice. Now, look, is this a - What do you mean they don't have a choice?

5:13Because they don't have a choice where the - Sometimes boards - Look, if you go back to the history of Tesla, what Elon does, what he do, you can never argue a bet against them. And that's been the MO, right? That's been the DNA. The problem is that essentially the clock strikes midnight when now it comes to these political ventures and endeavors, as well as the time spent at Tesla. The board, you're not going to have a major change or make up in a board that would take many years. The board now, as a public company, needs to, A, new pay package that we talked about in 25 % voting shares, but then establish the guardrails, because it's a public company and shareholders are demanding.

6:09And the stock reflects changes that need to be made. You know, the board certainly is part of it. But I think a bigger picture question that I have is an existential one about Tesla, Dan. And that's with regard to Chinese competition. And we've seen sales get hammered over the last year. And really, the narrative has been around Musk's and his association with politics, whether we're talking about that in the US or about that in Europe. But what about the China factor? Does Tesla have what it takes to compete around the world with Chinese EVs? They have what it takes with Musk. In other words, Musk is the biggest asset for Tesla.

6:50But they don't have the products, but they don't have products that compete at those price points and with that tech. So on that point, look, as someone has since time in China, like competition, BYD, NIO, X-Ping, everything we've seen, clearly it's become much more of a competitive market. I continue to view that Tesla is still a gold standard globally when it comes to EVs. I think when it comes to China, look, the big game right now that they're trying to win, it's not necessarily about deliveries. It's about can they win the autonomous and robotics future? That, look, that is, the way you get to$2 trillion, the way you get to a trillion dollar incremental valuation because of autonomous is that way.

7:36You know, it's interesting that you say that because one of our producers, Sebastian Escobar, said, hey, Waymos are coming to my town where I live in, which is just across from lower Manhattan. And I'm like, wait, what? And Waymo seemed to be expanding pretty aggressively. And so it does seem like folks are going after what could be ultimately the future, right, of Tesla, if really autonomous works. I mean, that's where the growth comes, right, going forward for Tesla, in your view? Sure. But to that point, like, look, Waymo's are$200 ,000 cars. Like, you're essentially in five, six cities. Yeah.

8:20When you think about the scale and scope, Tesla, we're talking about 20, 25 cities over the next year when it comes to RoboTag. I mean, that's the whole opportunity. Like when you think about 20 percent of what I view as like ride sharing over the next four or five years is going to be autonomous, no driver. So that's the opportunity that Tesla's going after. But then it goes back to politically, you can have Trump, Duffy, whoever else you want to talk about for an administration, not as a friend, but as a foe when you go into the most important chapter of growth and success, what I view, on the horizon for Tesla.

9:02Has Elon reached out to you? Have you reached out to him? I mean, I won't comment there. I would just say that the message has definitely been received by Elon. It's been received by the board. And that was my goal, right? My goal is that sometimes it's tough love, right? Yeah. The point is it comes down to if you don't reprimand or whatever. It's like there's good times and bad times. But this is a time, and the stock reflects it, that the board, the adults in the room, whatever you want to talk about, they need to lay the guardrails out from Musk, especially around the political ambition. That is the key.

9:50Dan, how does it feel to have Elon Musk tell you to – in all seriousness, what did it feel like to have him tell you to shut up on his platform? He's got, I don't even know how many followers he has. It has to be over 100 million, hundreds of millions at this point. Yeah, I think he's like 220 million. 220 million followers. How did that feel? I mean, I imagine, too, his sort of army came after you as well. Yeah, but I don't, you know, we know each other well. It's like, I don't worry about that. I mean, to me, I just actually view it more as like, he has his right to an opinion. I disagree. I'm a huge supporter of him and Tesla.

10:29But I'm more focused on like it creating dialogue. Like he'll say, shut up, Dan. And I have a hundred memes sent to me about different shut up, Dan stuff. And actually a guy in the street yesterday yelled from New York City across streets, like shut up, Dan. So that's, that's, that's, that's cool. But to me, it's about creating the dialogue because now it's like, okay, what, what is the community? What is shit? I'm here from shareholders all day. Right. that's the important thing what it means for the Tesla story that's the whole goal I wonder has the board reached out to you and said hey thanks Stan for that assist yeah the good thing is I definitely feel like this message has been received by the board I think everyone's seen it and at least now now it comes down to like okay are there actions?

11:27Like, what does the board do with the next pay package? Remember, the other$56 billion pay package is still in the legal sort of limbo because of Delaware. Proxies still hasn't been, you know, ultimately sent. That's been delayed. So this is a key period of time for the board for Musk. Another message that was received for the world of Elon Musk was from the CEO of X. Linda Yaccarino stepping down as CEO after two years. Post on X, decided to step down as CEO. I'll be cheering you all as you continue to change the world. What's your view on that? How do we read that? I have a very positive view of her, right?

12:14Besides the fact that she's a Penn Stater, we are. All right, pull back. Let's, you know. but my no but my view is she turned around x she navigated massive political storm right i think very few people could have done the advertising i think a lot of it has rebound there's still obviously clear headwinds but i think like this is like look it's huge shoes to fill like it is a big big hole her leaving because she has a unique background because of advertising because of her personality i think she got along very well with musk so it is it is a huge you know what i view it's a negative but now it comes down to like who fills that role yeah interesting stuff listen we're so glad we could catch up with you thanks for taking the time to be here yeah we really We really appreciate it.

13:11I'm so glad to be here and talk. And this is a, you know, get the popcorn out. A lot of soap operas ahead. Well, you know, if you want to, if you want to not be yelled on the street, Dan, you're going to have to tone down the wardrobe a little bit and go incognito and not wear the signature Dan Ives clothes. I don't know. If you need to go incognito, but you know, I love it. We love it. Dan Ives, Global Head of Technology Research at Wedbush Securities, joining us from New York. Bloomberg Business Week Daily is brought to you by HPE. bringing you the self-driving network, a network that's self-optimizing, self-healing, and self-protecting, and only continues to get smarter.

13:48Learn more at hpe.com slash networking. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects.

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16:03new tariffs and trade deals, or at least progress too. We did have the president unveiling a new round of tariff demand letters earlier today with levy set to hit in August on imported goods from partners who fail to reach agreements with the U.S. So he said he would levy different rates on various countries. That includes a 30 % rate on Algeria, Libya, Iraq, and Sri Lanka, and a 20 % rate on goods from the Philippines. So there's a lot going on. And Tim, we've got a great voice to really talk about what is a really important trade relationship. And that has to do with the relationship between United States and Asia overall.

16:40Wendy Cutler is vice president at the Asia Society Policy Institute. She spent nearly three decades as a diplomat and negotiator in the office of the U.S. Trade Representative. She also served there as acting deputy at USTR. She joins us from Washington, D.C., where she's managing director of the D.C. office. Wendy, thanks for joining us this afternoon. the president postponed the imposition of those April 2nd tariffs to August 1st. We did learn that earlier this week. What is your read on that? My read is that they weren't ready to announce more deals. And so here we are. Remember, we were expecting 90 deals in 90 days.

17:18We have two deals that have been announced. And frankly, the deal with Vietnam seems to be still under negotiation. And so these letters have been sent out informing countries of their tariff rates that will come into effect on August 1. And I think we're going to see more letters, but we're certainly seeing more letters than deals. So a letter is not a deal, in other words. A letter is not a deal. You do not want to get a letter if you're a trading partner. It's an honor not to get a letter at this point. Because what? It's pressure? No, if you don't get a letter, that at least means that you're negotiating in good faith and that the administration thinks there's a way forward with you.

18:02I think with respect to the other countries, it demonstrates that there's a lot of frustration on part of the White House, and they're going to take action against these countries if things don't fall into place over the next three weeks. You know, Wendy, I keep thinking about, like, what's the big think piece? I don't know, is it two years from now, three years from now, five years, 10, 20? Will we look back at this era and say, wow, we had a president who was really thinking about agreements that maybe weren't in the best interests of the United States and really sent the U.S. on a greater trajectory?

18:35Or do we look back and possibly say, wow, this was a moment when the U.S. really just lost its place in the world? Like, how can we start to even think about that yet? Well, let me respond to your second point, because as someone who has worked closely with our Asian partners over decades, I'm very concerned about the message we are sending them now and its long-term implications. And particularly when a few days ago, the first letters went out to our two closest allies, Japan and Korea. Now, granted, they have high trade deficits with us, But they've been great partners, not only with respect to our security relationship, but on economic security matters, including supply chains and shipbuilding and semiconductors and export controls and just massive amounts of foreign direct investment in the United States.

19:29It almost looks like they're getting zero credit for any of that as long as they have a bilateral trade deficit. In your view, have any of these countries treated the U.S. unfairly? Look, many of these countries have unfair trading practices, and they have unfair barriers that they impose against U.S. exports. Guess what? We do, too. And that's why, through trade negotiations, you try and get rid of those barriers. But at least during my career, it was more on a mutual basis. It wasn't this kind of one sided negotiation where we're telling the other countries, this is what you need to do or else we are going to we are going to make it very difficult for you to access our market.

20:16What are the implications, you think, longer term in terms of the U.S. economy because of these deals? Well, I guess there is an optimistic note to this. I think people over time are going to recognize how important trade is and how trade has contributed to the to lower prices and to a greater assortment of goods and access to many goods that we would never have seen or have have been able to enjoy without trade. But putting that aside, I think that, you know, the economic fallout is going to be severe if indeed all these tariffs come into effect. But that said, as a former trade negotiator, three weeks is still a chunk of time for trade deals to come together.

21:05And so we may see deals coming together, you know, by next month. All right. And we hope we can lean on you again to make some sense out of those trade deals as they are done. Wendy, thank you so much. Wendy Cutler. She's vice president of the Asia Society Policy Institute. As we mentioned, she was also a former acting deputy for the U.S. Trade Representative and spent a long time as a diplomat, three decades in the office of the U.S. Trade Representative. This is the Bloomberg Businessweek Daily podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app.

21:44You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. NVIDIA making history today. The market cap topping$4 trillion. The chip maker becoming the first company in history to achieve this milestone. Ian King is Bloomberg News U.S. semiconductor and networking reporter. He joins us from our San Francisco Bureau. Ian, just remind everybody how long you've been covering the semiconductor space. Quite a long time, more than 20 years. More than 20 years. NVIDIA more than 20 years old as a company. It's gone through many different iterations.

22:20This iteration now is the one certainly that's getting the most attention. Is this company a cyclical company because it's in the semiconductor space? Is this part of the cycle right now? I mean, there are a couple of ways to read that. Every company in the semiconductor industry is a cyclical company because the semiconductor industry is by its nature cyclical. How long these cycles last, when they peak and trough, that's something that a lot brighter people than me try to pick and choose from. And that's how you make your money as an investor. What we can say is just by the numbers alone that it's in unprecedented territory, where its revenue is, not to mention its market cap, as you just pointed out.

23:06We've never seen anything like this. Does it make sense to you, someone who understands this industry and has followed it for so long? I think you have to just fall back on the numbers, Carol, and let investors decide whether it makes any sense. So on a price to earnings ratio, 52 times doesn't sound totally crazy. And that doesn't even get it into the top 10 list of semiconductor makers. So relatively, it's not that expensive. No other semiconductor company has ever had more than$100 billion of revenue ever, not even Intel at its peak. NVIDIA Blue passed 120 last year. This year, it's probably going to be closer to 200.

23:46So, again, the numbers say it's achieving more than any other chip maker has ever achieved. And it's still doing that at a relatively profitable rate. There's also a report out there. I think it's the FT today. And it's NVIDIA planning to launch a new AI chip design specifically for China as soon as September with Jensen expected to, Jensen Wong, of course, planning a visit to reassert the company's commitment to the country. Again, I'm just reporting what FT is saying. I'm just curious what you're hearing about that, or is it also just a sign of him trying to kind of continuing to figure out his next market move and where he needs to be and making sure he's kind of getting to all the possible customer audiences that are out there?

24:34I think the way to look at that kind of reporting and the reporting that we've done on this area is this is the one kind of cloud on the horizon for this company, which is China is the largest market in the world for semiconductors. That country and its companies want to spend a ton of money on AI infrastructure. They cannot spend money on NVIDIA chips because of the U.S. government. So Jensen is going to probably be in Washington soon, going to be in Beijing soon. He's doing lots of shuffling between the two because he has two masters to please, one that controls what he can do, the other that can arguably pay his wages to a large extent.

25:17They were already losing billions of dollars in revenue that they can't because they can't sell into China. So this is symptomatic of what he has to do. He has to find a way through this, and that will make their growth even better than it is right now. Long term, he's saying and arguing vehemently about this that, look, if we can't do business in China, they'll find another way to do this, and that will hurt us. Well, speaking of China, perhaps the perfect segue to talk about today's big take. It's a Bloomberg exclusive. It's an analysis that shows how China is building giant data centers in the desert to fuel its AI ambitions.

25:52and it's looking to buy 115 ,000 banned NVIDIA chips to power them. Ian, you were one of the reporters who worked on this piece. How is China going to get its hands on these chips? I mean, it's very important to point out, as we do in the story, that while there is some evidence or some belief that some of NVIDIA's banned products are making their way across the border, There's no evidence that enough to even constitute a sort of medium-sized data center are making it across the border. So obviously this is something we're monitoring, something that the government is monitoring, and something that certainly NVIDIA and its customers will be held accountable for.

26:33But there's a gap between the desire and what's actually possible right now, as far as at least the reporting in that story would indicate. I also do wonder, you know, it just is a reminder, too, of China's own AI ambitions and what it's looking to do. And if it's not with NVIDIA chips, it'll make its own or it'll figure another way. Yeah, I mean, there's been a lot of conversations, including by NVIDIA, and they're saying, look, Huawei, before all of the actions taken by the U.S. government against it, was a very competent company. Of course, we've slowed it down. Of course, we've made it more difficult.

27:11But it's still a very competent company forced into the situation that it's in. It's going to find its own way. It might take it a while, but guess what? It'll get there. Do not underestimate it is one of the big arguments that's being made there. And, you know, perhaps if we're not going to allow other countries, maybe they go to China. Yeah, this is sort of the age-old question about necessity is the mother of invention, right? If they can't get their hands on certain technology, then they can do it themselves. But a question that I ask you over and over again, Ian, when you're on with us, and I've been asking you this question for years, is about NVIDIA's mode and to what extent that the company can do something that other companies are far behind in their ability to do.

27:55Where does that mode stand right now? I mean, we're not seeing any filling in of that moat. We're not seeing anybody creating a bridgehead to use some horrible metaphors there. I mean, companies like AMD are saying, we have competitive chips and, you know, they're showing some growth there. And you say, oh, great. But then you just look at the sheer amount of spending and planned spending and projected growth. No sign of any slowdown in demand for NVIDIA's products. No sign of anybody catching it anytime soon. I think the longer terms, the China's situation, what's going on in terms of others trying to make their own chips, the big customers, these are all clouds that have been on the horizon for a long time, but NVIDIA keeps forging ahead.

28:40So that moat still exists. So, hmm, you know, and go back to a quick take you did or were part of at the end of June, you know, why world powers are sparring over computer chips. And we understand why, right? They go into everything. So is it, I don't know, it just seems like that's just going to continue to multiply, right? And so is it a case that there's just, you know, more chip production, more chip giants kind of everywhere? Or is it that we just continue to have just a few that dominate? Yeah, I mean, the first thing is that everybody agrees on one thing, which is underlying demand is great.