Meta to Build Cloud Business to Sell Excess AI Compute

20:32Ed Ludlow:The IPO window showing even more signs of life. Uber-backed Lime raised$174 million in its public debut pricing. Right at the midpoint of its expected range, joining us from the NASDAQ is Lime CEO Wayne Ting. Right now, I'm seeing shares indicated opening around 27, having priced at 25. But this is an IPO that Bloomberg is saying is about six times oversubscribed right now. You joined Lime from Uber in 2018. It's been a long journey. Just reflect on what this moment means to you. For sure. I think it's a huge day for Lime. And I think to see our business validated in this way is wonderful. We operate in 230 cities around the world, 29 countries, five continents.

21:18And we have built a differentiated business model. I think a lot of other companies have tried and not succeeded, but we have great unit economics. We are free cash flow positive. We continue to expand our EBITDA margins. And I feel like with this IPO, we'll have more capital to invest back into the city to bring Lime's very important service to more markets around the world.

21:41Ed Ludlow:When you point out you're already in so many cities around the world, what then is the growth opportunity? Where can you go that you're not already in? The biggest growth opportunity is actually deepening in our existing markets. Because only in our existing markets do we have the reliability where people can use Lime every single day. So we often see the fastest growth rates in some of our biggest, most mature, quote-unquote mature markets. For example, like London last year grew faster than Lime as an overall company. So I think what you'll continue to see is to deepen deployment into our existing markets.

22:17We also still have lots of cities around the world who can benefit from Lime that doesn't have Lime. So I grew up in Lincoln, Nebraska, and I would have never expected Lime to work in Lincoln, Nebraska. But we have a great business there. During football games, during lots of major events, there are congestion, parking shortages. and Lime offers a great complement to their transportation system. And there are a lot of Lincoln, Nebraska's in this world that can, that still can benefit from Lime. So I feel very bullish about future growth.

22:47Ed Ludlow:When I came to San Francisco in 2018, scooters were the story, but it was so different. Scooters were everywhere. Bay Area residents were throwing them into the Bay. The relationship with the city from a sort of permitting perspective was pretty fractious. and then COVID came and that really impacted the business. Does any of that still remain? How different are things now? The world is very different today than back in 2018. One, I think the value proposition of micromobility is more clear to cities. Urban transportation is broken in lots of major cities around the world. Congestion is a challenge.

23:28Affordability is a challenge. Pollution is a challenge. and the impact of climate change. And the incredible thing is, Lyme is a solution to every one of those transportation problems. So I think when we show up in a way that is obviously in support of the city's transportation goals and we come with a commitment to compliance and safety and supporting the city's transportation goals, I think we've improved those relationships quite a bit. We are in hundreds of cities around the world. most of those relationships are multiple years and we feel very good about the future partnership with cities.

24:06Ed Ludlow:You went public because you needed to. You needed the capital. So the balance sheets kind of cleaned up now. But a story of this IPO moment is very quick return to the capital markets. So will you do that? Will you look at debt? How will you continue to fund that capex? I just want to challenge the idea that we have to. I think there's lots of different ways we could have dealt with any sort of debt maturity. The reason we're going public is because we think this is a great opportunity for new investors to come into line. We'll have great places to deploy that capital and it'll be a very fantastic returns to the investors who are coming in during this IPO.

24:45That excitement for the future growth opportunity and the business prospects is why we're going public today.

24:52Ed Ludlow:What about some M &A? Let's think a little bit about New York City, right? If you wanted to get deeper into cities like New York, would you look at other bike businesses? I think M &A is definitely one area we can look into now that we have public equity and more capital on the balance sheet. I would say our bar is very high because we get 50 % plus cash margins on the average trip, less than one year payback on the bikes and scooters. Our competitors are nowhere near those margins and returns. and many of them have been donating share to us very, very kindly. And I think we can just out execute them and get a lot of that market share from them.

25:34And so we have to believe there's something to buy that is accretive to our investors. But I'm certainly going to take a look at all the companies out there. And I think consolidating the long tail is one of the opportunities that I see.

25:48Ed Ludlow:Wayne Ting, Lime CEO, again, Bloomberg reporting that this IPO is 6x oversubscribed. shares indicated open, I think around 27. Let's see what happens. Thank you so much for your time here on Bloomberg Tech.

26:07Ed Ludlow:Welcome back to Bloomberg Tech. Our top story is Meta getting in the cloud computing game. Take a look at shares of Meta up 11 % on track for their best day in a year. Bloomberg's reporting that they're looking at meta compute either just selling spare excess capacity as a hyperscaler and on the other side basically API access to models on meta infrastructure akin to AWS bedrock how's that playing out with some of meta's peers and rivals well core weave is down a lot 12 % on track for its worst day since February and then those established cloud computing players Amazon AWS, Microsoft, higher.

26:46Ed Ludlow:Why? Not clear on the logic. Maybe their market position is so strong, the markets just kind of chill about it. But we will get some more analysis on that. Bloomberg Intelligence Senior Analyst Mandeep Singh writes that Meta's planned cloud infrastructure business might signal that Meta's feeling pressure to show a return on the capital spending through compute rental while AI agent offerings take longer to scale up. BI's Mandeep Singh's with us right now. So interesting because like for quite a long time, Mark Zuckerberg has been getting questions about this. Well, what happens if you guys build too much compute and CapEx is too high?

27:21Ed Ludlow:Like what would you do? Well, Bloomberg's reporting citing sources and you're reacting to a pretty crystallized business plan. Give me the rest of your thesis. Yeah. I mean, look, I think when they formed the super intelligence lab, they hired a lot of people to train and improve their llama model, and they have talked about MuseSpark being on frontier with Anthropic and OpenAI's models across the benchmarks that they measure upon. But it looks like there still isn't a product like a standalone meta AI app that they expect to take off or an agentic AI offering that they want to roll across their family of apps.

28:03If it's about compute rental, then they could have done this 12 to 24 months back when everyone started really doubling down on inferencing. I feel they are late to this inferencing party. And obviously, SpaceX had that big deal with Google where Google was renting for$12 an hour of GPU capacity. And that was quite attractive. Maybe that is what swayed them to get into this cloud infrastructure business. But to my mind, I would have really been more excited if they talked about some agentic AI offering here.

28:40Ed Ludlow:So that's so interesting because they could have looked at the success XAI had on our SpaceX AI and said, oh, we want a little bit of that market. You also talk about, well, Meta is trying to get its act together on how it monetizes its AI work, right? agentic or literally just subscription for meta AI. And you seem to think that's going to take time to yield, at least on the top and bottom line. Yeah, look, I think they do have a model, but it seems like the adoption of that model, when I measure it in the context of coding agent, where Anthropic has clearly gotten a lead over everyone else, Cursor is something that XAI will look to scale up on the coding agent side.

29:25Meta AI doesn't have a big use case. I mean, obviously, they don't have coding agent functionality. And when it comes to other use cases, yes, they could do basic summaries and document analysis. But to my mind, they're still missing that big use case around AI, where they would want to dedicate all their compute on the application side. And that, for me, is critical in terms of maintaining those margins. The compute rental is a crowded space. And for a company like Meta, which is 50 percent, you know, operating margins, this is not going to be a very high margin business in the long run.

30:03Ed Ludlow:Bloomberg Intelligence Analyst Mandeep Singh so fast with the react on this big story. Thank you very much. We've got other tech headlines to go through. Bloomberg's Yahaira Anand is standing by. Hi, Yahaira. Hi, Ed. It's time now for Talking Tech. First up, a massive wall of Capital is flooding into AI infrastructure. Abu Dhabi's MGX has secured nearly$15 billion for one of the largest dedicated tech funds in history. At the same time, Starwood Capital has raised$10.2 billion, specifically targeting high-powered data center property build-outs. Plus, TikTok parent Bydance is taking its AI ambitions to Brazil.

30:41The company plans to build its largest data center outside of China in the$39 billion project with the first facility expected to open by late 2027. The move gives ByteDance access to Brazil's abundant renewable energy. And staying with TikTok, the company is trying to avoid a courtroom showdown. It's close to a confidential settlement that would help it avoid a jury trial in Los Angeles this July over claims the app is addictive to minors. But thousands of similar lawsuits are still pending against TikTok and other social media companies. Ed.

31:17Ed Ludlow:Thank you, Yoharis. Some breaking news on the Bloomberg Terminal. The United States has decided against renewing its trade deal with Canada and Mexico. Instead, it's going to conduct annual reviews of that pack. This is all according to U.S. Trade Representative Jameson Greer. The U.S.-Mexico-Canada agreement remains in force for another decade, provided that no one country decides to exit it. But the annual reviews, instead of a longer term renewal process, mean that the United States essentially can avoid years of contentious negotiations over the rules that govern continent wide supply chain.

31:58Ed Ludlow:So we'll continue tracking that. But that's some breaking news from the U.S. trade representative. Another big story. In the latest twist in Apple's long-running legal battle with Epic Games, the Supreme Court has agreed to hear an appeal by the iPhone maker. Justices will review a lower court content ruling that penalized Apple over how it handles payment options outside of its own app store. For more, Bloomberg's managing editor for Consumer Tech, Mark Gurman, is with us. Another twist in what has been a multi-year saga, complicated story. Explain the basics of it to us, Mark. Well, the basics of this situation is come October, when the new year begins for the Supreme Court, they will hear Apple's appeal to reverse a contempt ruling that was issued by a judge in California related to its ongoing saga with Epic Games.

32:51Apple was held in contempt for the way that it addressed a ruling that they need to open up the App Store payment system to third parties. And this, as you know, all started several years ago when Epic Games started allowing consumers to buy V-Bucks or upgrades using outside credit cards, bypassing the 30 % Apple payment fees within the Fortnite app on the iPhone. So this is yet another installment in that saga. And it comes down to how Apple makes money on its platform.

33:26Ed Ludlow:How has Apple responded to the Supreme Court's decision to allow a review and appeal? And how has Epic responded to this development? Yeah, Apple's pleased. They say that this is an important moment. They call it an important question. And they're very much looking forward to making their case to the Supreme Court. Obviously, Apple's dealing with a lot of legal matters right now. I mean, this is just one drop in the bucket here. The bigger issue is what it's going through with the European Union, with the Digital Markets Act. That is a legal-related issue where the DMA is trying to upend the way Apple sells products, its software features, how it operates its app store.

34:08So this is a lot of stuff in the legal department that Apple is dealing with right now. Obviously, you have the DOJ lawsuit as well, all related to regulatory matters in addition to these app store issues.

34:20Ed Ludlow:Bloomberg's Mark Gurman, who leads our coverage of Apple and also the consumer technology team. Thank you very much. Coming up, investors' appetite for rebuilding and rearming the U.S. is still going strong. We're going to talk to the CEO of Marlin Spike Partners, Neil Keegan, about its latest oversubscribed fund that aims to do just that. That's next. This is Bloomberg Tech.

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36:47Ed Ludlow:Let's take a look at today's big number, 98 ,000. That's how many private sector jobs the US labor market added in June. That's pretty good. It caps the best three-month hiring run in more than a year. Job openings have risen. Layoff figures are low. But there are areas where the picture is different, and we're talking about it on this show. So I think where you know where I'm going to go with this, AI. It appears to be dragging down two sectors in particular, financials and tech. And you can see here the decline of jobs in those sectors and hiring in other sectors growing. Let's discuss with Bloomberg economics reporter Matthew Bozler.

37:26Ed Ludlow:It is so confusing to pass through the data, put the charts up and say, where is AI having the impact? How is it having an impact? I leave that job to you. What do we need to know? Well, yeah, Ed, I think it's getting clearer, as you just showed in that chart. You You know, we're seeing a real split now between the broader economy and really two sectors where we're seeing a lot of this weakness, finance and tech. And, you know, I think your viewers will probably be pretty familiar with the story that's been going on in tech the last several years. And, you know, been kind of continuing a pace this year with all of the big investments that those companies are making in AI.

38:03I think it's really interesting the story that we're seeing emerging on the finance side, because something to keep in mind is that the finance sector is three times the size of the information sector in terms of employment. And, you know, there are a lot more jobs in the finance sector that deal with kind of routine processing of various documents, insurance claims, loan applications, that sort of thing. And so that's the place where we should really be looking this year if we're expecting AI to have a bigger imprint on the workforce. And that's what we're seeing so far in the numbers.

38:35Ed Ludlow:Outside of the numbers, there's just like communication. And so tech companies are saying more and more AI is a factor. And the bankers are saying that the technology will eliminate some roles. Summarize that part of it for us. Yeah. So, I mean, you know, they're really being pretty open and upfront about this. You know, you listen to the bank CEOs and they're, you know, outright talking about job cuts, the potential for automation. in a lot of these roles. And so I think you're hearing a pretty clear signal from them. And one of the other interesting differences, too, is that if you look at the information sector, the tech sector, your kind of canonical role as a software developer.

39:19And these are people who are pretty highly paid, making more than$100 ,000 a year. And there's a real question there as to how much AI is going to replace those jobs versus augment those jobs and make them more productive, right? and therefore maybe even make some of those software developers more valuable to those companies. Whereas in finance, you've got, again, a lot of low-paying jobs, a lot of customer service representatives, a lot of bank tellers still, hundreds of thousands of bank tellers working in the U.S. that are expected to be especially vulnerable to automation over the next decade.

39:51And so that's really where we're starting to see the job losses accelerate.

39:57Ed Ludlow:Bloomberg's Matthew Bozer, thank you very much indeed. Let's move from hiring to financing and some private markets news. Marlin Spike Partners has just raised a$127 million fund to, in its words, rearm America. The oversubscribed fund is the latest sign that investors are still piling into defense tech startups. Last year was a record year for venture investment in that sector. And this year we are on track to surpass that. Joining us now is Marlin Spike, co-founder and CEO Neil Keegan. and also served six years as a U.S. Navy Surface Warfare Officer. Neil, welcome back to the program, to Bloomberg Tech.

40:35Ed Ludlow:There was a lot of interest in the fund. I want to kind of start with mechanics. So you raise your next fund. We say it's oversubscribed. Clearly, LPs are increasingly interested in exposure to defense tech. How did you raise the fund? What was the process like? How did you settle on the amount? Sure. Thanks, Ed. Well, it's great to be back here. It was on about a year ago. when we were discussing Operation Midnight Hammer. So it's terrific to be back here on your show. Well, and before I dig into those questions, I'd like to just say, you know, we're very thrilled to be here, particularly ahead of America's 250th anniversary.

41:10This is a great country. Each generation inherited a stronger country from the last. So our central question is, what are we going to do to build for the next generation? And, you know, that's why we set out to start Marlinspike. That's why we just went after Fund 2. And we don't see the Fund 2 closing as the end of the road. We really see it as the beginning of Marlinspike as an enduring investment institution. And so to get to the fund mechanics, we set out to raise$75 million. This was a continuation of our Fund 1, which was raised in 2022. Very, very challenging capital raising times, but we feel really good about the team and our portfolio companies and our strategy and mission for that fund.

41:49So Fund 2 is really a continuation of that. We're pleased that we more than tripled assets. We wanted to have a fund size that was modestly sized relative to some of the big multibillion dollar funds and firms out there. So we could stick to our knitting, be leaders in our companies, take concentrated conviction positions. And really help and guide our companies to put up uncap returns for our investors.

42:16Ed Ludlow:We just showed some of the existing portfolio. And, you know, Anderil jumps out. Anduril now is a, let's call it, late stage growth name. What is the rest of the market in the field like? What else is out there to find? Well, I mean, clearly Anduril is a special company. You know, when I ran a family office, I invested in SpaceX 12 years ago. We invested in Pounce here before they went public, before we launched Fund One. Anduril is one of our key names in Fund One, along with Armada. And so we've got a history of looking at these interesting opportunities. And in many cases, investing before becomes obvious.

42:55I mean, now, obviously, Andrew is obvious. They've absolutely executed and killed it. And we think there's still a lot more room to grow. And what's important about the leading companies in our space is that they have broken through and they have shown that they can execute, operate, and scale. And so what we're really looking for is who are the next batch of leaders that are coming up? and I saw in your logos there for Fund 2, we have a number of these already in the fund. We actually launched the fund in 24. So we like to say building the plane while flying it, which is a neat trick, where you're raising money and investing along the way.

43:31So we see companies like Layup and Advanced Manufacturing, Kodiak and Autonomous Trucking, Jet Zero we think is going to be the next national champion for aerospace for our country. So these are the companies you might not know about now, but we think you're going to know about them pretty soon.

43:47Ed Ludlow:The general broad idea is that the government of today is more open to doing business with more nimble, largely Silicon Valley based technology companies right outside of the legacy primes. Do you see evidence of that? Like when you're modeling for the future growth of the portfolio companies, you have line of sight to them winning those awards through the Pentagon, Department of War, etc. Yes, correct. But that's not that's not all that we do. So this is really about a new area, a new era in American industrial renaissance. So we see the convergence of AI, autonomous systems, advanced manufacturing.

44:26Not only are they serving mission sets for national security, but also the commercial market. So we like that convergence of those sectors because we think that that can really be the highest growth and the biggest productivity increase for our country and our portfolio company. So that's why we're doing this, because it's going to make America and our economy and national security stronger.

44:48Ed Ludlow:Neil, would you call yourselves a venture capital firm or how would you describe the sort of mechanics of what you do? And the reason I ask that is I'm really interested in in this sector, specifically defense, what the exit strategy looks like. Traditional path to IPO or if actually more likely you see strategic investors come in, acquisitions happen by those bigger legacy primes. So, look, there's three classic ways to get an exit. One, company goes all the way to an IPO. Two, some type of M &A or three, the secondary markets are really building and expanding. So we often look at the secondary markets, both buying and selling, as ways to augment our portfolio.

45:31But I think what you'll see from us continually going forward is we're going to take more of a leadership role. You'll see us leading more seed rounds and series A's, leaning into series B companies where we can make a real impact with our team, our access and our insight. So that's really our sweet spot. And again, a lot of those companies, you know, these are ideas that might not be obvious for everybody, but they become very obvious to us. And we see these companies as potential not only national champions, but just inevitable companies that have to happen.

45:59Ed Ludlow:neil keegan ceo marlin spike just closing 170 million dollar fund two and back on blingberg tech thank you very much indeed kaoshi's coming off the sidelines or should i say on joining the lights of coca-cola and visa as a world cup sideline advertiser kaoshi secured the deal halfway through the tournament at 20 million dollars a deep discount from fifa's initial $150 million ask. News comes as USA is set to play Bosnia and Herzegovina tonight, 8 p.m. Eastern, 5 p.m. out here on the West Coast. Bloomberg's Cavalier Doherty has the story. Kaushy has done a good deal, but it's so interesting. Like, Kaushy is a big part of the culture of what's happening from a tech perspective in the background of the World Cup.

46:45Ed Ludlow:Just what are we reporting on the deal itself here? That's right. So Kaushy has been very active, but at the beginning of this tournament, They did not have a sponsorship deal with FIFA. ADI, this is a company with ties to the Abu Dhabi family. They were the official sponsor of the FIFA World Cup. And Calci, meanwhile, was very active, saw billions of trades a day on both the winners of the World Cup itself and individual games. So two weeks into the tournament, what we're reporting now is that CalShe is coming in as a co-sponsor with ADI. And they're coming in at a significant discount. So we've reported that ADI, as the official sponsor, paid around$150 million to become that official sponsor of the World Cup.

47:36Meanwhile, CalShe, coming in later, has paid ADI to be a co-sponsor at around$20 million. So this is giving them the official sponsorship title alongside ADI as a partner, but at a steep discount.

47:51Ed Ludlow:Wow. They're in big company. Coca-Cola, Adidas or Adidas, depending on where you come from, Visa. Let's go back to the basics of what Couchy is and does. We just have 30 seconds. That's right. Couchy prediction markets, you've probably seen them. This is a yes or no bet on who's going to win a specific game. and they've expanded not just in sports, but they're trying to grow economics alongside other political events as well. They're really coming up against some of the biggest exchanges, too. You have their biggest user, their biggest competition being Polymarket with a sponsorship that they have a deal with the New York Stock Exchange's ICE.

48:34And you've seen them today get very large with both the World Cup and other big sporting events.

48:40Ed Ludlow:Bloomberg is Catherine Doherty with a really top story on the Bloomberg today. Thank you. That does it for this edition of Bloomberg Tech recap on the pod. You know what the top story is. This is Bloomberg Tech.

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