Musk Says Grok To Make Tesla Debut

25:02And so the biggest oil and gas companies in the world will be unveiling things in the next couple quarters. Same with manufacturing facilities that are making steel or making copper. We go into these old sectors that Silicon Valley has very much forgotten about. And what that means for us is that the scale and the impact of pragmatic artificial intelligence for robotics is hitting this inflection point. And you think about physical intelligence, and Jensen talks a lot about this, physical intelligence in these built environments, whether it be in the defense sector that we work in or it's in the industrial, there is very little physical intelligence.

25:35And so we are the leading company as it relates to creating that, which enables a moat for our artificial intelligence to be exceptionally better than those that are coming with a software-only solution. Meaning, to the answer to your question, scaling and increasing the amount of fuel to that fire is something we're going to need to do the next nine months. Jake, we just have 15 seconds, but your relationship with NVIDIA, are you happy with them? Yeah, I'm really happy with them. They've been great. But looking at physical intelligence for these industrial sectors, there's a lot more to go, and so hopefully we can help out.

26:12Jake Lusararian is the Gecko Robotics co-founder and CEO out here in Sun Valley, and a lot of people are interested in talking to this guy, Caro. I bet. It really does feel like the year of the robot. Great conversation, Ed. Thank you. Coming up, analysts say Apple should consider replacing Tim Cook. More on that note next. This is Bloomberg Tech.

26:42Welcome back to Bloomberg Tech. Let's take a quick check on these markets as we are open for trade and the Nasdaq 100 has been flitting between gains and losses earlier in trade. We went down in the red. We're off of our lows. We're off about a quarter of a percent. But when you've got Nvidia in the red, of course, that pulls us a little bit lower. But more generally, we're waiting on a big bond auction. A lot of the yield movement has been dictating what's happening in the stock market right now. But we are still near all-time highs. Let's move on and think about what is very close to an all-time high.

27:10We hit in excess of$112 ,000 for Bitcoin yesterday. We're up 0.6 % on the intraday basis. $111 ,395 is where we trade. And it really does seem that amid the trade anxiety, there still is a risk asset of choice. Of course, apparently next week is Crypto Week, according to the House in terms of Washington. We'll see how those changes in rules and regulations continue to transpire. But let's get back to some of the big tech news here when it comes to AI. Google's Gemini AI gets a new feature. The company says its latest AI update can now produce eight-second videos out of ordinary still pictures if you're a paid user.

27:51From Wobbly Meg's, Dana Wallman is here to join us. This is really AI ultra, AI pro users of Google being able to keep up with what perhaps you're already getting on an open AI or with a runway, for example. Yes, this is a feature that will be available to paid Gemini users. And it is a technology that Google first launched at its IO developer conference back in May. But this makes it available to a much broader swath of users, allowing it, as you said, to better keep pace with rivals. And it does have many rivals in this space. It does have rivals. It does also have a stop-start feeling to Google because many would say, look, they were the reason, their underlying research is why we've got generative AI in the first place with a transformer perspective.

28:33but they had this sort of inevitable feeling that they were losing pace with rivals. Then they had the issue about whether or not there was some generative AI image features that changed people's race or there was a sort of concern there. This is being replicated again in the video or no? Yes, so Google had a while ago pause certain generative AI features just for that reason. But here, there are some guardrails in place. That said, we tested it ourselves, and the results were both fascinating and somewhat mixed. For instance, reporter Natalie Leung, who is Asian, she did include a photo of herself, and the AI did change her race in one of the videos without her asking it to.

29:19Other goofs, we did ask for a video of someone breakdancing. We did not see any breakdancing, sadly. The AI did follow other instructions we gave faithfully, but not that one. So the results were mixed, and we do expect the technology to improve. And people do seem to really love what's been coming out in terms of image generation coming from Google and Gemini writ large of late. But meanwhile, Apple, everyone still thinks, is behind the curve when it comes to AI. It's interesting we got a note out today with analysts really talking about how maybe it's time to replace Tim Cook even. We were hearing some view that really the AI focus is what needs to win here from a product perspective rather than having someone in charge who owns the supply chain.

30:02But the fierce talent for AI, the wall going on, is an amazing scoop that Mark Gurman's been bringing us all week. And now we understand$200 million might have been parted with to nab their head of AI. A pay package worth more than$200 million. And I should say that this package does include not just a base salary and a signing bonus, but stock options. And there are a few things tied to that. One, someone would have to stay with the company for a certain period of time, so they wouldn't get all that money if they left early. And it also is tied to the performance of the stock. So it does assume that the stock would reach certain levels.

30:34So if it doesn't, someone wouldn't receive that quite that large of a pay package in the end. And that is, of course, all as we see transfer of talent going from Apple to Meta or everyone to Meta as Mark Zuckerberg is all in on winning the super intelligence race. Where are we, though, with the feeling around Apple right now as to ultimately whether its business model is really necessary to be the generative AI developer of choice or whether it ultimately can just be the generative AI product user of choice? We just go to it to use other AI offerings. So just given its overall stock performance and its market cap, I really hesitate to call it struggling.

31:10But I think its struggles in AI specifically have been well documented. I think its efforts to have a new blockbuster hardware hit have been well documented. I think we know that Vision Pro has not been a great seller, even though reviewers and sort of tech enthusiasts have praised it for being innovative.

31:31And yes, the company does have a way to go, ways to go in AI. And certainly the poaching is yet another setback in that space. And maybe that's why hardware focusing with Apple's senior VP of hardware engineering, John Ternus, is why he's being singled out by the note coming from Lightshed analysts as to whether he'd be the right replacement for Tim Cook. Dana Wallman, fantastic to have her on all things Google and Apple. Now, let's return to that talent war that we were just talking of. Greylock's Reid Hoffman calls multimillion dollar offers for AI talent, quote, not crazy when such investments are expected to generate billions for a company.

32:08Now, he weighed in on the escalating AI talent war between Apple and Meta, their own Ed Ludlow, over in Sun Valley. Well, so essentially, one of the things that's good about having an open marketplace of anything, including labor, is that you essentially get multiple bidders, and that's what sets a price. And so the fact that someone goes, I'm willing to spend$100 million in order to get this talent, you think, that's crazy. Why would they possibly do that? It's higher than the vast majority of CEOs. Well, if that one, what you're judging is that one talent will potentially create billions of dollars of value for you, whether it's in a social network, whether it's in, you know, kind of, you know, a search engine, anything else as a way of doing it.

32:50And so if you think that, then that's just a bold bet. What Sam Altman, the CEO of OpenAI, said was that that particular figure, which he had accused Meta of offering to some OpenAI staff, what he claimed was it was crazy. But it sounds like it's not crazy, really. Well, I don't think it's crazy when we know that AI is going to transform all businesses and all industry and the entire tech industry. And these are trillion-dollar companies, et cetera, at the high end, and the whole stack all the way through and down into billions. Today, for a brief moment, one of them was a$4 trillion company. Yes, exactly.

33:23Please continue. Yes, NVIDIA. And so saying, hey, this piece of talent is a risk-adjusted bet, that that makes a difference in that, that's just a risk bet. You might say it's a dumb risk bet, but it's not dumb to do if those are the stakes you're playing for. Greylock partner and LinkedIn co-founder Reid Hoffman with Ed Ludlow. Coming up, we speak with the CEO and co-founders of Vada Space. for their latest Series C funding. Again, we're live from Sun Valley. Stick with us. This is Greenberg Tech.

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36:32Welcome back to Bloomberg Tech. Now, Vada Space Industries has announced it's raised$187 million in a Series C funding, bringing its total capital raise to$325 million. And the company aims to produce medicines in low Earth orbit. Ed Ludlow is standing by in Sun Valley with Delian Asparov, his co-founder of VADA. And we're also joined by Will Brewe, VADA CEO. And Will, I start with you. The money, what will you use it for? Oh, we have big plans. The Series C raise is great because it allows us to open up our biologics lab down the street. And the entire purpose of that is to prepare biologics formulation.

37:13So medicines for flight in outer space. And the entire purpose of this is microgravity allows us to create new drug formulations that otherwise would be impossible to create on Earth. That's the whole purpose of VARTA. And so with this Series C funding, we're able to build out a large lab space to vet those drug formulations before flying them and create an entire pipeline on the way to space. Delian, I just want to point something out, which is that you are also a partner of Founders Fund. and this has worked exactly the same way it always works you recuse yourself from the round and you represent vada but they participated as as did peter teal as an individual just expand a little bit on what will was saying you know one of the big changes that you guys have made uh over the last year is to start manufacturing yourself away from rocket lab who used to do that as kind of the third party for you why is that significant and how does that ramp look yeah i mean they were you know sort of phenomenal partner and we're deeply grateful you know to them and that they got us off the ground very quickly, but as we were looking to scale up our cadence of flights and ability to truly control our supply chain, we had to go more full stack.

38:19You see this in a variety of different aerospace companies where as they scale up, they tend to go more full stack over time. So that's going to allow us to fly four times next year, and then after that, ideally start doubling basically every single year and be able to control that doubling entirely in-house. And then it just expands the capabilities that we have on the spacecraft in terms of biopharmaceutical production. By owning more of it, we're able to expand the capabilities of what we can have on board. Will, Dell's talking about all of the rampant launch, getting to orbit. The big beautiful benefit is zero gravity, right, in the pharmaceuticals context.

38:53But then you've got to get back down to earth. And that's been one of the really exciting parts to track with VADA, the video in particular. Explain how that process works and also how it's going to go going forward. Yeah, so you hit the nail on the head. The entire reason for going to space is for microgravity. It's just a fundamental force of physics that you can't change on Earth. You know, we don't want to go to space to have to make these new drugs. You just have to because of the laws of physics. And so our spacecraft allows us to do that quickly and cheaply. And a part of that is once we make those drugs in orbit, in microgravity, so that they're different than they would be made if they were on Earth, we have to bring them back.

39:31And that's certainly the most exciting part for the aerospace engineers here. You know, my background is also aerospace engineering. Like you said, the video is phenomenal. We hit the atmosphere going Mach 25. So that's 25 times the speed of sound, 27 times the speed that you go on a commercial airliner. And so you rip apart the atmosphere and you create this beautiful plasma of a shooting star for over a minute across the sky. It's beautiful on the way back. The passion is real, Delian. And the demand is real as well. I'm interested in the DOD and the government perspective here because we have seen so much more focus coming on space and defense more broadly.

40:10Yeah, the new Secretary of Defense in the early days of the Trump administration came out with what his national security priorities were going to be. And amongst the top three were nuclear weapons modernization, the development of next-generation hypersonic capabilities, and shipbuilding. And while Varda doesn't really build ships, We do help the DOD with the other two and have a variety of different collaborations across groups from the Air Force, Navy, and NASA. What they're primarily interested in is, as Will mentioned, as we come into the atmosphere, we're going Mach 25. It's a regime that typically is very difficult to study on the ground and really understand what the flight dynamics will be like.

40:49And so you can think about the value proposition for VARDA to the Defense Department as effectively like a hypersonic wind tunnel. They can attach net new materials, wing shapes, sensors onto the vehicle as we're coming in as a way to validate the subsystem's performance before they go and take that and integrate that into the ultimate production system. And so by enabling faster testing, more frequent testing, cheaper testing, it allows us to expand on our capabilities and ideally both catch up to and surpass some of our near-peer adversaries like China and Russia that have demonstrated some pretty phenomenal hypersonic boost glide capabilities.

41:23I also think that the competition is somewhat closer to home or maybe it's a frenemy situation, Will. You have got such a broad experience. You've been flying the Dragon yourself when you were working at SpaceX. You've also worked in banking. You've founded your own venture fund in many ways. But, Will, I ask you now, what is your biggest headache? Is it talent? Is it the race for talent? How do you expand? Well, believe it or not, there's not that much competition in reentry because we're so much different than other commercial reentry vehicles like SpaceX's Dragon or Boeing Starliner. We are much smaller.

42:01We're off axis in almost every way. We're much smaller. We're higher cadence. We're not human rated and we're lower cost. So it's more of a complementary situation. As far as headaches go, you know, a lot of them are gone now thanks to a working spacecraft and funding to grow. It's more about enthusiasm and excitement here. I would say the challenge over the next couple of years is really to scale up that cadence. Because as we scale cadence, we begin to look more and more just like a zero-gravity oven to the pharmaceutical industry. They, quite frankly, don't care that we're going to outer space.

42:36They only care that we can deliver new drug formulations. And we just happen to have to do that by going to space and back. So the more often and the more frequent we can do that, the more easily it is for us to integrate into the pharmaceutical supply chain. And so that's the big challenge over the next couple of years is increase cadence, fly more spacecraft and develop more drugs on board. Delian, the misconception maybe or misunderstanding about what Will's talking about ramping the cadence is the cost consideration flying SpaceX on transport emissions. Actually, my understanding is it's not that great a cost.

43:12But would you talk a bit about the relationship and how it works hitching a ride on Falcon 9? Yeah, I mean, to give you a sense, like, of our total all-in mission costs, the, like, SpaceX, like, launch costs represent about 20%, 25 % of our costs. So it's not, like, the, you know, majority or anything. It's also, you know, definitely one of the larger line items. But there's a lot of other things that go into operating, you know, sort of our business. Our business could not exist without the, you know, sort of Falcon 9 being reusable and that, you know, sort of transporter program. If you think about even, you know, sort of five, six years ago, your only real option to get up to orbit was having to buy a full dedicated rocket or find some way to squeeze yourself onto a large geosats, you know, sort of launch and, you know, be on board, but, you know, find your own way to orbit.

43:52Now, these transporter missions, they're doing them, I think, on the order of three times a year. They've started to add on, you know, different inclinations in orbit. They have these bandwagon missions that go to, you know, sort of polar orbit. And so it's been a really, you know, sort of critical, you know, sort of part of our ability to actually succeed as a business. I think there's this interesting pattern in technological history where when certain infrastructure layers get built up, it enables these net new business opportunities. In some ways, for a business like Uber or Airbnb to get built, you kind of needed mobile to become very distributed and have the app store.

44:21And that's what really enabled those business models. We think of the access to space and what SpaceX provides us is the same way. It's a fundamental infrastructure layer that enables our business. And it wouldn't have been possible without them. And so we're thrilled to have them, you know, sort of as, you know, sort of partners and, you know, have lots and lots of, you know, rockets, you know, sort of both with SpaceX. I think, you know, we've booked out all the way through, I think, like Q327 or something like that. You know, Will, we recognize here on Bloomberg Tech, there are many in the space industry who have looked to the defense apparatus of this country and the defense use case to kind of start to get off the ground because of grants and because of the availability of freedom to move.

44:59But long term, what is the business model? Who will your customers be when you're able to bring payload back down to Earth? Pharmaceuticals developed in that zero gravity environment. Yeah, it's it is a new technology. And what's cool going to the defense aspect and Delian hinted towards this is that because reusable and commercial launch is a unique American asset. Varda is also a unique American asset on top of that. So it's almost a leapfrog above everyone else. And so we have this cool armada of small, low-cost, high-cadence reentry vehicles that can provide a service continuously for the Department of Defense as a hypersonic wind tunnel, like Dahlia mentioned.

45:41So to answer your question, what that means is now the Department of Defense can test things like sensors, new materials for heat shields. They can test flight computers and RF or radio frequency systems, navigation systems. So very similar to like a wind tunnel where it's axing as infrastructure so that the Department of Defense can advance new technologies faster and cheaper. Fascinating conversation. Thank you for all joining us. Will Brewey, Delian Aswarov of VADA, and of course, Ed, stick with us out there in Sun Valley. We thank you. Now coming up, we're going to hear from Steve Paliukha of Bain Capital and his outlook for the AI sector.

46:20This is Bloomberg Tech.

46:35Let's head back to Sun Valley, where the future of AI is one of the hot topics among tech leaders. Steve Paliuca of Bain Capital sat down with Ed Ludlow to discuss why the AI revolution reminds him of the early days of the Internet and actually talk about the potential for AI to transform productivity. It reminds me a lot of the period of 98, 99, 2000, 2001 in the internet. That's worrying. Well, no, no, no, no. There were some fits and starts, and there'll be some fits and starts in AI. But I think we're almost past the fits and starts stage. You've got kind of nine global foundation model companies, the internet out there, Perplexity, OpenAI, we actually funded a startup from MIT that has modeled a new AI system on a worm's brain, believe it or not.

47:25Do you know how many neurons a worm's brain has in it? Educate me. 305. Okay. How many neurons do you think a human brain has in it? Many, many more. 86 billion. Right. And you're smarter than most of them. Maybe you have 87 billion. That's kind of you to say. But these wonderful scientists at MIT came up with this model called the neural network model. and of those nine companies, they're one of those nine companies out there that are state-of-the-art. They actually, because they've used the neural network model, they use 80 % less GPUs to build the model and therefore they'll be perfect for edge devices like phones because you don't need the power.

48:01And so a chat GPT model costs about$500 million of GPU to load it. You can do that for 85 % or 90 % less and this model can sit on phones and they're signing deals with edge device companies as we speak. So it's very exciting. And all the costs are going down for the chips, for the model loading. And as opposed to the Internet, which there were some very few big winners, I think there will be a lot of winners here because there's going to be vertical models and foundational models. And the vertical models will have the chock full of expertise. The first example, a medical diagnosis model that focuses on disease states and giving you a diagnosis.

48:37and some of these models are proving much better than humans because it's a game of elimination. Once you put the right data in, it gives you the diagnosis. Same thing, reading x-rays. The models, AI models reading x-rays are now beating the top humans in the field. So really, we're only still in the early stages. It's going to revolutionize productivity. It's going to have the same impact the Internet had 20 years ago and it's going to be a 20-year run. and that's why NVIDIA's value is so high because they're in the catbird seat of the chips needed to power that revolution. Steve Pagliuca of Bain Capital and the Boston Celtics.

49:13Now that does it for this edition of Bloomberg Tech. Next week, Bloomberg Tech will be live from Panasonic's new EV battery plant in Kansas. Tune in for an exclusive interview with the Panasonic North America CEO on Monday. And meanwhile, don't forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify and iHeart. From the Sun Valley, Idaho, and from New York, this is Bloomberg Tech.

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