Crypto-Based Lender Figure Joins IPO Frenzy

21:35Caroline Hyde:Yeah, we do have some breaking news crossing the Bloomberg terminal. Hyundai has decided to delay the construction of a battery plant in Georgia following a raid by the United States, which was part of a broader effort, you'll remember, to crack down on undocumented workers. Hyundai has communicated its decision to delay the construction of that Georgia plant in an interview with Bloomberg, which was with the CEO Jose Munoz. He's basically saying that there is a plan still for the JV, which is between Hyundai and LG, to resume in two to three months, and that the plant will need new workers to resume construction.

22:12Caroline Hyde:But for now, that is the breaking news headline from Bloomberg, that Hyundai in a JV with LG has decided to delay construction in Georgia following that U.S. raid, which was on September the 8th. You'll remember, Karen. Such an important geopolitical story, Ed.

22:35Caroline Hyde:Apple getting hit with a pair of downgrades today at DA Davidson and Philips Securities. The latest sign, a bit of caution toward the iPhone maker, which has sharply underperformed its large cap tech peers this year. It's off the back of its new iPhone lineup launch earlier this week. Bloomberg's consumer tech managing editor, Mark Gurman, is back and joins us for more. There's so much analysis that needs to be done on the lineup of the iPhone 17, its technological capabilities, but also its price points. and in your latest you write simply that this might be Apple getting us ready for the idea of a$2 ,000 handset.

23:12Caroline Hyde:Would you just explain the reporting and argument you're making? Of course. So for the first time in the US, Apple's offering a$2 ,000 tier of the iPhone. It's a niche device. It's the iPhone 17 Pro Max with two terabytes of storage. But the point I'm really making beyond the fact that there is now a$2 ,000 tier is that we are getting towards the era of$2 ,000 phones anyways. Look at the pricing for this year's models. They did not raise the prices. I think two reasons. One, Samsung and Google didn't, so it would be really hard for Apple to do so in any meaningful way. Two, the tariffs really haven't kicked in for Apple yet, so it would be a bad look for them to raise prices due to tariffs when the tariffs haven't even started.

23:55The reality is these phone tariffs will kick in at some point. And so I'm not ruling out Apple raising prices later when the prices actually have to be adjusted for Apple to retain its margins. And that is probably going to bring the phone up a couple hundred bucks, right? And then you look at next year. Next year, they're going to release their first foldable. Samsung's foldable already costs over$2 ,000. The iPhone Air, which is essentially half the foldable, maybe less, that costs$1 ,000. So you can put pretty good money on the idea that Apple will be launching a base price$2 ,000 iPhone 12 months from now.

24:32And then you look beyond 2027, the 20-anniversary iPhone, the glass wing. It's all glass. It has translucency, much more advanced technologies. Very similar concept to the$1 ,000 iPhone X in 2017. You're going to see price increases there too. So maybe the$2 ,000 iPhone, because it's the highest tier two terabyte model this year may seem like a joke, but it will happen in the next 12 to 24 months regardless. And maybe, Mark, that's what analysts need to see to really start to get excited about the stock again from a profitability perspective. Because at the moment, with these two downgrades, looking at Gil Luria saying, basically, we were left uninspired.

25:12It feels as though they haven't managed to garner much excitement this time around. Yeah, you know I rarely agree with the Wall Street analysts, and I will hold to that. I actually think that this year's iPhones are going to sell incredibly well, as I've said many times on this program and elsewhere. What really sells new iPhones is the design. The orange color, I like it. Some may find it ridiculous, but don't discount it. Don't discount Apple's marketing around that device and how new it is, the aluminum unibody, you name it. The functionality may not be much different, but it looks different.

25:45and that's going to be good enough to spur sales. Don't forget, there are a lot of people who have held on to their iPhones the past four or five years because the design hasn't changed much. Now it's finally changed. There's probably going to be some pent-up demand. I'm all in on orange, particularly today. Mark Gurman, we appreciate it.

26:06Welcome back to Bloomberg Tech. Let's get to Adobe reporting its earnings after the closing bell today. Investors, while they have watched Adobe's shares get left behind in the AI craze. Maybe they've got little reason to be optimistic ahead of its results. Blue Mug's tech reporter, Matt Day, is here to discuss. We are down 21 % year to date. We're down 40 % in terms of the last 12 months, Matt. It's all about competition. Is there any way it can prove that actually it's still got it?

26:33Caroline Hyde:Well, I think a lot's going to depend on the forecast. You know, Adobe's been trying to put AI all over its products. It's got a Firefly product it's invested a whole lot into that kind of smatters AI across its creative, suite. But investors haven't seen the results that they would have hoped for. You know, the last few quarters has been disappointing guidance after disappointing guidance. Looks like they're looking at flattish profitability this go round. So they'd have to definitely do something to change the narrative. We focus a lot on the stock performance. So like it's down 40 % over the last year, 25 % year to date.

27:04Caroline Hyde:But if you park it to one moment, I feel like Adobe has not stopped talking about all of its AI stuff. Like, do we understand in the newsroom, Matt, the story about why Adobe's just not been able to convince anyone that all the AI attachments you talked about are actually paying off? Well, I think they've got to convince their buyers, you know, first off, that this is worth, you know, sometimes shelling out extra for, sometimes using. You know, it's largely a similar story to what we've seen with other AI tools in the enterprise, right? That, like, is it something people are piloting? Is it something they're taking wholesale?

27:38Caroline Hyde:And for now, you know, Adobe is facing a lot of inroads from, you know, not just the sort of freemium AI native upstarts, but also just chat GPT, right? Are the pure AI tools kind of taking some of that creative demand and illustrations and all the like that Adobe depends on. And it's a global story. We understand that, you know, the likes of DeepSeek and now ByteDance, they got great image generations that are taking the world by storm across the field. When you're looking at the fundamentals, revenue isn't that bad. We're likely to post 9 % growth, but the problem is it just keeps on shrinking in terms of growth.

28:12Caroline Hyde:Yeah, and the other problem, they've forecast something like$250 million in recurring revenue from AI. That's not a ton on their enormous user base. Folks would like to see more to move the stock. So they still have a whole lot to prove in terms of people actually willing to shell out and willing to use these tools at the expense of a Canva or a Figma or a ChatGPT. If anything, it demonstrates to us like earnings season continues. the next big tech name to go is Adobe. And that's why we're grateful for Bloomberg's Matt Day joining us here on Bloomberg Tech. After the bell, we'll go back to it tomorrow.

28:43Caroline Hyde:Okay, for the next episode of Bloomberg Tech Europe, Tom McKenzie speaks exclusively with Demis Hassabis, the Nobel Laureate responsible for all of Alphabet's core AI work and the co-founder and CEO of Google DeepMind. Hassabis is also on a mission to harness AI to quote, solve all disease through his work at the London-based Alphabet subsidiary, isomorphic labs. Here's a part of that conversation. Well, that was always the kind of holy grail in a way is to try and tackle cancer. But we've also done it for practical reasons as well, because, you know, the clinical aspects of that are favorable for new drugs, because obviously the disease is so serious.

29:25Caroline Hyde:And so there are a number of reasons we pick those two areas, also partly what we think is going, the platform is going to be able to do early on. There's the speed and efficiency that the platform brings to it. There's the quality as well, of course. When we're thinking about preclinical research and AI drug discovery, usually using the old methods, you were talking, what, three to six years? To what extent can you cut that time frame down? I think in the fullness of time when our platforms mature in the next couple of years, I'd like to see that cut down into a matter of months instead of years.

29:58Caroline Hyde:That's what I think is possible, perhaps even faster than that. So kind of order of magnitude speed up. But we'll see if that's possible. There's a lot of work we've got to do first. But our initial work, our initial signs are very promising. Back in March, you raised your first external funding,$600 million, and you're putting that to play in different parts to build out the platform. But also talent seems to be part of that. When you think about talent, when you think about people like Mark Zuckerberg signing checks for$200 million, what does that signal to you? Well, Lena, that's a slightly different market, which is the pure sort of AGI market, let's say.

30:31Caroline Hyde:And whether or not that's rational or not, I think organizations need to think through themselves. But I do think AI is going to be one of the biggest technologies, if not the biggest, that humanity will ever invent. So, in some sense, that is rational. But on the other hand, specifically with isomorphic, we have such a compelling mission of applying AI to improve human health. I mean, what better use of AI is there than that? And that's a really compelling proposition for both our investors and our staff. You've got to catch the full conversation and it's in the next edition of Bloomberg Tech Europe.

31:03It's quite early though, Eastern time, 1.30 a.m., 6.30 a.m. in London, but you can catch it online too. Now coming up, we speak with Replit CEO. I'm Jan Massad about the startup's latest funding round and the excitement surrounding the vibe coding space. This is Bloomberg Tech.

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33:15Caroline Hyde:Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.

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34:06Caroline Hyde:AI coding startup Replit has a new valuation,$3 billion, nearly tripling its previous value. We broke the story yesterday. It closed a$250 million funding round led by Prism Capital with American Express Ventures, Google's AI Futures Fund, and existing backers like Andreessen Horowitz and Y Combinator. I'm Jabh Massad, Replit CEO and founder, joins us now. Something is happening in AI and coding in particular. There is a lot of momentum behind you and a number of your peers. Why? You know, like the valuation is the headline, but what's the thing underneath that that's driving it? You know, since the dawn of computing, the holy grail, the vision of using computers is the ability to program them.

34:53And there's been many attempts across the years. And most recently with the no code and low code movement. but it really never achieved the potential. And today with AI, you can conjure up software by merely speaking them. And that's really a magical feeling. And it's transforming all sorts of jobs, not just programming, but others as well.

35:14Caroline Hyde:Jack, can we do a vibe check and talk about vibe coding? Are you in the camp of people that accept that vibe coding was coined by Andre Carpathie earlier in the year? Yeah. And now it's a big thing? I think our audience would really appreciate understanding what is Vibe coding and why do people say things like that. Yeah, yeah. I mean, looking again at the history of computing, Grace Hopper in the 1950s, the inventor of the compiler, talked about what we need to do is get to a position where we're coding in English. And that was always the vision. And so Karpathy last year, in his experience coding, said, I'm starting to trust AI more.

35:55and as I'm coding, the AI is presenting the code. I'm just typing natural language and I just accept it. So that was sort of the coinage of the term, but obviously that's something that people have been doing since ChatGPT. We started seeing it at Replit. We released Replit agents in September 2024, and it was the first coding agent on the market where you don't even have to look at the code. So you just type your prompt. You say, I want to build a storefront for my pet store, and in a few minutes, you'll start to see the website. You can say, I want to add login. I want to add my Stripe integration.

36:38And boom, you have a website that's being built. So Vibe Coding initially was coined by Karpathy for professionals, saying that you can move a lot faster. You can iterate very quickly. But our take on it is really anyone can program. and that's transforming, not just software engineering. We have people, designers, product managers, finance people, operations people. Everyone is automating their jobs, building tools around their jobs and that's what Vibe Coding is doing. And so now with the progress in your agents from agent one, Amdad, of just doing two minutes of work and now we're up to 200 minutes with your agent three, are you doing engineers and software designers out of a job?

37:21well i don't think so i think we're empowering them so if you look at some of our customers what they're saying for example we have duolingo and zillow some of the are exciting customers in the enterprise what they're telling us is they're cutting product development life cycle by up to 50 so previously when you want to produce a new feature new product what you would do a product manager will sit down, write a very long document that we call a PRD, we'll pass it to the designer, designer takes that. Typically, they misunderstand some aspect of it because it's a lot, and they produce a mock, and then a mock goes to the engineer.

38:02They also misunderstand some aspect of it, so there's a lot of communication issues there. So what they're doing right now is the product manager, instead of going from text to design to program, they go straight to program. So they generate a prototype, they pass that prototype to the designer and the engineer, And the iteration loop just goes much faster. So companies are a lot more productive. They're shipping faster. And that's really how we're transforming software in the enterprise.

38:27Caroline Hyde:I think the Bloomberg Tech audience would love to learn a bit more about Replit as a company. Again, the headline is the tripling of the valuation. But how have you grown internally? What are the main priorities for you in terms of onboarding talent? We set up this really big vision when we started the company in 2016. We said we're going to empower a billion people to be able to create software. And people were, investors especially, were laughing us out of the room. It's like, no way a billion people would want to learn how to code. But we kept talking about how AI is going to change things.

38:59We built a platform that removes all the complexity from creating software. And that's not just the code. That's creating the development environment. That's creating a database and managing it. That's deploying it. And so we spent 10 years, 8 or 9 years before the company took off commercially, Last year, about this time, we're about$3 million in annual recurring revenue. We released Repl.Agent1 that sent us immediately to$9 million. By the end of the year, we were about$9 or$10 million. And then from there until July, we 15xed to$150 million ARR. Agent V2 made it so that you can go from the agent, you can give it an idea, will work for two minutes and come back to you with questions or a little struggle.

39:49V2 could work for 20 minutes. Now, V3 could work for 200 minutes. And it's really becoming like your own programmer. You don't have to go hire a programmer off the market. You can just go to Replit, put in your idea, and Replit will work like a teammate. But you are hiring. And in many ways, that's why you've raised the funds, Amjad. I'm going to make it personal, if you don't mind. But knowing your story of coming here to the United States back in, what was it, 2012, the fact that you came to New York, I just spoke with the governor, Kathy Hochul of New York, who's worried about the access of talent for building technology here in New York.

40:22And I'm sure it's something you think about on the West Coast. Can you get the talent you need, particularly from outside of the United States? I think there's a lot of talent here in the United States still. I think the salaries are getting quite absurd because of the funding that's going in AI. but I think we should do, obviously, immigration is still going to be very important to getting the best and the brightest people from all over the world to America, but also there's a lot of local talent here, and I think Replit's also mission is to teach people those skills. So, Replit's always been used in schools and universities, and it's the best time ever, if you're a student, to start learning how to make software.

41:03It's so easy. You can make your first piece of software in a matter of like 15 to 20 minutes. And so I think we're going to see an explosion of talent and people coming on the market, being able to not just code, but, you know, use ChatGPT, use, you know, MidJourney, be able to design, be able to create videos. I think it's an amazing time for a student to be building a broad set of skills. And I think, I don't think we're going to have a talent problem. Really appreciate that answer. Thank you, Amjad Massad. as Replit CEO and founder. Congratulations on the raise.

41:42File management company Box has unveiled a new set of agentic tools at its annual BlockWorks conference and includes a kind of operating system for AI agents and an AI cybersecurity tool. Let's get into it. Box CEO Aaron Levy, who joins us now. Aaron, what are you most excited about? Because there's a raft of things you're unveiling, whether it's about extracting data, whether it's about managing the raft of agents we're about to face. How are your consumers going to adopt it? Yeah, so I think the thing we're most excited about is at Box, we help companies manage their unstructured data. So if you think about 90 % of data in the enterprise are things like financial documents, contracts, invoices, research materials.

42:22All of that data, traditionally, you've never been able to tap into its scale inside of an organization. You kind of create it, you store it, you may look at it again, but you never really are able to actually put it into a workflow or deeply understand what's inside that data. So we're announcing a set of capabilities with AI agents to let you actually finally tap into that data. The probably biggest part of the announcements are our new workflow automation capability, Box Automate, where you can design an end-to-end business process directly in Box and then drop in AI agents at any step or multiple steps in that business process to let you go and bring automation to your unstructured workflows.

43:00So think about client onboarding at a bank, reviewing a contract at a law firm, being able to work through healthcare data. These are what you're going to be able to automate now at scale. Aaron, you're in like two-thirds of the Fortune 500. I really want to get a sense check of how they're embracing these sorts of products, what effectiveness they're seeing, because with that MIT report blowing up all the vibes around whether or not this stuff is actually practically delivering on productivity. What are you seeing? Yeah, so we're seeing probably a different trend from what I think showed up in that MIT report.

43:35That's obviously a very broad-based survey across lots of different types of implementations of AI. And one thing actually in particular that was found in the MIT report was a very different success and failure rate based on if companies try and build out their own technology versus work with software vendors that have prebuilt capabilities to let them go and deploy against their data and workflows. So we're seeing a much higher success rate because within Box, customers already have their data. They already have security. Now we're introducing workflow capabilities that they can drop agents into, all of which provide the guardrails to make agents much more successful in their environment.

44:11So we're seeing very different results, but I think there are important lessons within that MIT survey that CIOs should be paying attention to as they go and deploy AI in their enterprise.

44:21Caroline Hyde:Aaron, Extract, Automate, and Shield Pro, this package expansion for you, you're a$1 billion revenue a year company. Do you just kind of see immediate acceleration of that because you think it's what your customers are wanting right now? Yeah, so we introduced a new plan called Enterprise Advanced. And what Enterprise Advanced does is it has our most advanced AI capabilities, our AI agent builder, now our new workflow capabilities with agents. And that's providing a really kind of great upgrade cycle from a revenue standpoint. But it's also making it very easy for our customers to actually get into these advanced capabilities in a seamless way.

45:01So we think it's a very good match for, again, driving a revenue sort of cycle for us that is driving a very healthy upgrade rate. We've seen some great results where we beat guidance and consensus on our recent numbers. And that's really driven by the enterprise advanced momentum that will only continue based on the announcements we're making today on our new set of features that we're launching.

45:22Caroline Hyde:Aaron, I've really enjoyed following your posts on X in recent months, your onstage appearances. I've been trying to think like, what is the Aaron Levy summary of what's happening in AI right now? And correct me if I'm wrong. I think your position is like, don't take your position in the world of software for granted. Everything is up for grabs. Would you say that's fair and that you apply that philosophy to Box as well? Yeah, I mean, I'm certainly a student of history. You know, Andy Grove, obviously, only the paranoid survive. I sort of grew up in the tech industry at a point when that was just locked in on everybody.

45:56You had this new wave of disruptors go after many incumbent industries. We were one of those. And so by living and breathing that ourselves, I think we know how tenuous these positions can be if you don't adapt and if you don't move quickly. So the way we run Box today is we have this mindset of what would our company do if we started from scratch in 2025? How would we work internally? How would we operate? And then most importantly, what value would we deliver for our customers? And for us, we're just sitting on this incredible amount of data that our customers have entrusted us with that we can now help them bring all new use cases to life with the power of AI.

46:33So we're incredibly excited. This is the most exciting I've ever been when we've been running Box. And this is more exciting than the founding days, just given how many things we can go and help customers with.

46:46Caroline Hyde:Aaron Levy, co-founder and CEO of Box. It's great to have you back here on Bloomberg Tech. Thank you so much. that does it for this edition of Bloomberg Tech. My goodness, September's been brutal and what a week it's been, Cara. Relentless, I feel it might be. There is so much you've got to digest and catch up on and revisit with our podcast. You can find it on the timeline and on the terminal with Apple, Spotify, and iHeart. This is Bloomberg Tech.

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