SpaceX Could File an IPO By End of the Week

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23:15Stryker, when it says a March 11th cyber attack that stalled global operations is likely contained. But disruptions persist more than 10 days after the event. Look, that's according to the 8K filing from the company just yesterday. Bloomberg Cyber Editor Jeff Stone joins us with more. What is keeping it so long from being able to really ascertain operations again? This is a really complicated, intense, complex attack carried out by a nation state against a company that just wasn't expecting this kind of thing. You know, these hackers exploited an old vulnerability to get in. They somehow had access to pretty deep confines within the corporate systems.

23:52And then they wiped data from their kind of perch in there. So it just takes a lot of investigation.

23:58Caroline Hyde:It takes a lot of cleanup. You know, we started this segment talking about how, you know, 10 days after the initial attack, this is still causing an issue. We've also talked a lot on the show this past week with experts in the industry about the sophistication and competence of Iran's cyber threat. Right. Where does this rank, Jeff, in sort of historic attacks at the nation state level against the United States of America? This is not the kind of threat that national security officials have warned about from the likes of Russia or China. Iran is a little more specialized. They are a little more opportunistic.

24:38What they do is they try to inflict pain and project power in any way they can. So they saw an opportunity here to go against the U.S. health care sector and cause some economic pain for this company. They've disrupted some surgeries. We know that some facilities around the country have pushed back procedures as a result of this. It is not the level of a big kind of blackout or electrical failure like you see in the movies. Jeff, we are seeing hopes, maybe dashed for many, but hopes that maybe there's a de-escalation in the current conflict with Iran. But are you feeling that the ongoing conflict from a cyber perspective is still happening?

25:20What are companies currently being affected by briefly? We know that companies have to have their defenses up against things like phishing attacks. I don't expect that to subside. U.S. national security officials, European officials have said, don't rest on this because this is a reliable means for Iran to try to even the playing field.

25:43Caroline Hyde:Jeff Stone with the reporting. Thank you very much. So coming up on the show, we speak with Rachel Hoff, policy director at the Ronald Reagan Institute, on key takeaways from the Hill and Valley Forum where we were yesterday, but also the growing prominence of the defense tech sector and its relationship with the administration and government here in Washington, D.C. It is halftime in the program. This is Bloomberg Tech.

26:16Caroline Hyde:Welcome back to Bloomberg Tech. This is what financial markets look like. Technology stocks in particular pushing higher, oil coming down a little bit. The market is weighing up the prospects of a ceasefire, of a plan towards peace in the context of the war in Iran. America has put out some proposals. What we've seen throughout the morning is lines principally via Iran's state television pushing back actually on their interest in engaging with the US. But at least in the technology sector, we haven't seen the NASDAQ 100 or the Philadelphia Semiconductor Index change directory. You still see Brent crude.

26:52Caroline Hyde:That's the global benchmark for oil. Hold above$100 a barrel and a lot of focus on supply chain, particularly the passage of ships through the Strait of Hormuz in the context of energy, but other things as well. That's what we've been talking about for 24 hours straight. It is because we've been talking about how technology intertwines with defense and how it all aligns here in Washington. We were at the Hill and Valley Forum, Ed, and it held a spotlight really on defense tech in the age of AI. But NSIB data shows just how early that shift still is. While Pentagon spending on defense tech has more than doubled from about$1.8 billion in fiscal year 2023 to$4.3 billion for fiscal year 2025, it still makes up, get this, less than 1 % of total contract dollars.

27:35Here to discuss more on this is Rachel Hoff, policy director at the Ronald Reagan Institute, which issued the report, and it's stark warnings, basically. you not only highlight how little in the grand scheme of things money is going to defense tech for all the amount that we talk about it, but you also try and outline ways in which it could be adopted faster. First and foremost, why do we get so much excitement about defense tech? Why is the VC community pouring in money when the end client isn't putting money in as much? Well, it's a great question. And I think you got to look at, you know, not just the end client, but the threat environment, the world that you were just speaking about in which that client is operating.

28:10And simply put, It's a dangerous world. It's getting more complex and complicated as we see tension on the rise, as we see conflicts erupting in different corners of the world. And that means that protecting American national security is good business and it's important business. And so we're seeing those private dollars flow, that private capital from the venture capital community. But those investors are going to need to see the public dollars line up in terms of Pentagon spending if it's going to continue and if they're going to continue to take that risk. I mean, the reporting that Ed and team and women continue doing, Andrill now looking at an overall market cap of$61 billion, raising another$4 billion, and yet we're just talking that less than that is how much has been directed towards defense tech from the Pentagon.

28:53What are your policy prescriptives to get the government even more comfortable with aligning that money? There's a lot of work that we've done at the Reagan Institute with regard to this national security innovation-based, kind of thinking about how public investments, but public policy can help tackle this problem that we're seeing the private sector stand up to solve. Right now, they're operating at two different speeds, where the private sector's in the lead. We're really seeing innovation. We're seeing progress. And the government is struggling to keep up. It's improving. You mentioned at the top, defense tech spending has doubled.

29:27That's great. And yet, it's still less than 1%. And so I think continuing to improve the demand signal that government and that's not just the Pentagon, that's also Congress, political leaders at the White House level and beyond are sending to private sector partners the clarity with which they're communicating their policy priorities, their technology priorities, and then the spending to back up those acquisition pathways.

29:51Caroline Hyde:I want to define what that spending is. What we've looked at on the show historically, Rachel, is unclassified or declassified missile spending. And to hammer home the point, largely it goes to Lockheed Martin and others of that legacy prime ilk. The question, I suppose, at this juncture is, does what's happened with the war in Iran change that? You know, we've done a lot of covering the use of drones, lower cost, autonomous technology. The question for your report is, is the trajectory different now? It's becoming different. It is changing. I think what we're seeing with the conflict in Iran and Operation Epic Fury is really driving home the point that defense tech matters, that these low-cost systems are going to be an important part of ensuring America's national security.

30:39But the fact remains that most of the platforms, the weapon systems and platforms that we've used in Operation Epic Fury, are from the Reagan administration or before, 40-, 60-, 80-year-old systems. And those are important platforms, right? Aircraft carriers moving into the region are an important part of projecting American strength. But the fact that only one weapon system, the Lucas drone, is being used in Operation Epic Fury that's been developed in the last 15 years. Only one system in this operation that's less than 15 years old really shows how we need to keep up to meet those challenges that you're speaking to.

31:15Caroline Hyde:The word procurement comes up quite a lot when you're at somewhere like Hill and Valley Forum and there's a bit of an exasperation from industry about how that works. PowerPoint presentations is something that they stress over. is this administration better than prior administrations and this Pentagon better than prior iterations of it at dealing with more nimble, smaller technology companies? Well, politics aside, at the Reagan Institute, we've developed a report card to look at exactly this. And we've seen improvements in some grades that matter in this defense innovation ecosystem over time.

31:49And we've seen some grades moving in the other direction. But the biggest year-on-year jump that we've ever seen, biggest improvement in grade, is something we call customer clarity, that demand signal that the government's signaling to private sector partners. And we see that not just through spending and acquisition pathways, but some of the reforms that this administration has pursued, the acquisition transformation strategy, streamlining technology priorities. They've said a fewer number of technologies are important, and then sent that signal to private sector partners in terms of what the administration wants to focus on.

32:24And from what we hear from those private sector partners, that's helping them align to national security priorities. I want to talk about talent for a minute, because Chris Power Hadrian joined us yesterday from the Hinner Valley Forum. And his point was, talent is a real issue. And that's why, in many ways, they've got this novel way of training people up, because there's a huge retirement block that's about to come.

32:44Caroline Hyde:You said the average age of working in that industry was 65, or something like that. And not everyone works until the present age. thing in the school. Sorry, Karen. No, but what's so great about your national security basically innovation-based report card is it reads like a school report. And you're saying talent-based D-plus in America. Do we need more? Look, I said as a British person who luckily enough works in America. Also a British person working in America. Do we need more immigration? What is it that's needed to boost the D-plus? It's all of the above. We need to attract foreign born talent here to the United States to work on some of our hardest problems with appropriate controls, of course, in place for national security.

33:23But we also have to be channeling our domestic talent toward STEM careers, toward not just high skill, but also skilled trades. Companies like Hadrian are doing some very interesting and innovative things in that regard. And also thinking about how technology itself, AI and beyond, can make our workforce more productive even in smaller numbers. that it's not just about maintaining the workforce of the past, but preparing for the workforce of the future. And our low grade, I think, in the talent and workforce domain shows that there's a lot to be done, both with private sector and public sector collaboration here to really get that challenge.

34:02Rachel Hoff, Ronald Reagan Institute.

34:05Caroline Hyde:It's great to have you on Bloomberg Tech. Thank you very much. Now, coming up, 54-year-old VC firm, Kleiner Perkins, makes its largest raise ever. $3.5 billion, we'll discuss next. with partner Ilya Frushman. This is Bloomberg Tech. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? One for sales, another for inventory, a separate one for accounting. Before you know it, you're drowning in software instead of growing your business. This is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all-in-one, fully integrated platform that handles everything.

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35:27At Oppenheimer, we put the full strength of our longstanding expertise to work, understanding your life and your ambitions, and designing the precise strategies that build and protect your wealth with confidence across this generation and the next. Put the power of Oppenheimer thinking to work for you. Wealth Management, Capital Markets, Investment Banking.

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36:31Kleiner Perkins, the half-century-old venture capital institution, has raised$3.5 billion to make bets on AI startups and current portfolio stars innovating across autonomy, transportation, professional services, and space, for example. Kynna Perkins' partner, Ilya Fushman, I'm pleased to say, joins us for more. And look, you've got$1 billion dedicated to what is your 22nd early stage fund? You've got$2.5 billion going in the growth areas. Just tell us about what excites you. Why this amount of money? Why now? Well, we're really at the early innings of probably the biggest transformation of technology that any of us have witnessed.

37:08We see companies growing at big scale faster than ever before. We see AI penetrate all facets of our lives, whether it's on the consumer side with search, media. We have video models that are still on the come. And then on the work side, we see companies fully transform how they operate, whether it's across legal and professional services with Harvey, healthcare with open evidence, transportation and autonomy with Waymo. And we're still very much in the early innings of all of this. If we look at how some of the leading AI-forward companies operate and we compare that to the more traditional companies, the opportunity to penetrate the enterprise with AI is just infinite from where we sit.

37:52And that's reflected in the funds. Where excites you the most? Is it putting the money into fresh new startups that haven't even been designed now? Or is it backing, say, a star performer, Anthropic, we know is looking to be IPO-ing? You've got standout names like SpaceX on the books as well. But where are you thinking about where you can follow on your capital? So our model is pretty simple. We try to back companies as early as possible out of our venture funds. And as they hit inflection, as they hit escape velocity, to really concentrate and double down with our growth funds. Sometimes we see things a little bit later.

38:28And so we come in with a very high conviction, big check out of our growth funds straight away. But the really exciting thing we're seeing in the market today is that as companies hit really large scale, like in the case of Anthropic, that we've really never seen before, the opportunity to back these as they progress to escape velocity is near infinite. And so that really is reflected in the fund structure. So the venture fund, we're looking for application layer companies. We're looking for infrastructure companies. We're looking for autonomy as models, cheaper and more performant. The physical economy becomes an opportunity.

39:04But as these companies then hit scale, hit growth, we really concentrate with our growth funds.

39:10Caroline Hyde:Ilya, we see extremes at both ends of the spectrum. I wrote a few weeks ago about the seed round now being more like the coconut round, the avocado seed round, where you are putting huge checks into a collective of a few individuals. And you're basically betting on their intellectual power. What are you seeing in that early stage? I'm really interested you've dedicated those funds to that part of the market. Well, what we're really seeing is just the opportunity, again, to transform industries with AI business models is, again, near infinite. I mean, everything is really up for grabs. We're kind of past what I would call the hype buying part of the cycle where folks just wanted AI.

39:53And we've seen companies like Harvey, for example, in market with customers with data around engagement and growth and performance to inform how we should think about these opportunities at the early stage. There is a novel case of structure of companies where you have sort of the formation of next generation labs, which could be the next inflection in itself. And those are very interesting. but then you have really runaway successes that are helping people do their work better, that are helping consumers get answers around healthcare. And so we try to balance our investing across all of those because there is another frontier to be unlocked here.

40:34And those are the model companies of the future. But then you have the model companies of today like Anthropic, which are growing faster at a scale that's never been seen before. And I think that's still early in their trajectory.

40:47Caroline Hyde:At the other end of the spectrum, Bloomberg also reporting today that SpaceX could seek to raise$75 billion in an IPO, confidential filing this week, targeting June, the valuation,$1.75 trillion to$2 trillion. Kleiner Perkins has participated in some prior SpaceX rounds. What's going to happen? How is that going to impact the world? Space is a domain that you want to go after in the new funds that you've raised. I think we want to go after many domains. Space is a really good example of bringing communication to the world. And that's incredible connectivity that lifts everything if you think about technology.

41:28The Internet was the big unlock and getting more of connectivity throughout the world is important. But it's also a testament to the fact that you now can build companies that are truly transformational when it comes to both the physical world and the digital world. And that's something that we will focus on quite a bit. And that's autonomy. That's autonomy maybe in the defense tech sector. That's also autonomy on the consumer side. We have a position in Waymo as well. And so we just see a really, really large-scale opportunity across everything. Ilya, according to people familiar, I'm told that you managed to raise this amount of money pretty fast.

42:06And it was oversubscribed. And I imagine LPs were excited because of the opportunity and the delivery of liquidity, unlike a lot of other funds that you've delivered when it comes to the Figma IPO. We saw the WindSurf acquisition. We might see enormous returns if SpaceX and indeed Anthropic and maybe even a Databricks or a Wayme do go public. Is that what locked in the LP base? How do you think about the need for the markets to open in 2026? We're very fortunate to have an incredibly supportive LP base. So we're very thankful for that. And ultimately, it's all a testament to the entrepreneurs that we back because they're the ones building these incredible companies.

42:44But if you look at the public markets and if you look at what's really driving value, it's technology companies. And if you look at the private markets, you know, there's a public market mag seven and there's probably a future private market mag seven that's on the come. And that's really the interest that we're seeing from limited partners because these companies are getting to, again, revenue scales that we've never seen before faster and compounding at those scales faster than ever before. And there's probably a next level of the future, future Mac 7. And these could be the application companies like a Harvey, like an Open Evidence, which are then going to be the next generation.

43:19It's really just a testament to the fact that tech is driving pretty much most of the value you see today. LPs recognize that, we recognize that, and we think that's a really big opportunity here. Ilya, we've talked about this, but public market sentiment might be at an all-time high for tech. Public sentiment is not, certainly when it comes to AI. They're fearful, they're worried about jobs, they're worried about energy prices. And from your portfolio companies, are you trying to get across the opportunity here? You talk about the infinite possibilities, but for many listening at home, it feels like infinite worries and concerns.

43:56I think one byproduct which will be pretty straightforward is quality of life will improve for everyone, right? We will have better access to information, better access to health care, better access to services, better, more performant world around us, really. I mean, think about Waymo, the ability to have very safe transportation on demand is incredible. On the flip side, there is a very clear worry because these changes are happening on a timescale that's faster than ever before. And one of the things we do think about quite a bit is how do we help folks upskill? How do we help folks learn and transition into this world?

44:33It's going to be a world of abundance. But what we have to be thoughtful of is I think the industry is making sure that the abundance is accessible and distributed. so.

44:41Caroline Hyde:Kleiner Perkins partner, Elia Fishman, great to have you on Bloomberg Tech. Thank you very much. Now, coming up on the program, OpenAI nears an$850 billion valuation, as it's also close on a deal to raise$10 billion more in its latest funding round. We have the details next. This is Bloomberg Tech.

45:09Caroline Hyde:OpenAI is nearing a deal to raise about$10 billion from venture investors, including Andreessen Horowitz, Abu Dhabi's MGX and Microsoft. That's according to sources. That would bring its total haul from its latest funding rounds to$120 billion, boosting its valuation to$850 billion. Bloomberg's Shereen Ghaffari is with us, part of the team that broke the story. Okay, so let's just be very clear about what this is. It's basically an extension or expansion of the round they were already doing. So they did$110 billion from corporates, basically, and now they're adding a little bit more, but it's the VCs that are getting in.

45:45Caroline Hyde:What else do we need to know? That's right. So this is sort of the second part of the round. We're heading into the final close, you know, as soon as end of month, which could be next week. And we're seeing some, you know, big names, traditional VCs, as well as others, other funds like D.E. Shaw, Co2. And we are seeing one more company investor jump in on this part of the round, which is Microsoft. And that maybe raised a few eyebrows, Shireen, because there's been much questioning of that relationship. What does their participation look like? What does it signal? Yeah, I think there's been a lot written about OpenAI and Microsoft's ups and downs.

46:26Of course, Microsoft being the biggest sort of early corporate backer of OpenAI, critical to their expansion into this GPT era. However, in recent times, we've seen OpenAI diversify its cloud, its compute base, diversify its corporate partner base. And so I think this signifies that Microsoft's still in OpenAI. Now, how much and how deep? And are they the kind of sole corporate partner is in early days? no, but we are seeing a continuation, at least on the funding side here.

46:54Caroline Hyde:Shereen, another big headline on OpenAI is it's discontinuing support for Sora and winding down a deal that it had with Disney. I remember when that deal hit, we broke it on the show and made a pretty big deal of it. Pardon the expression. Why are they winding down Sora and why did Disney and that relationship fall apart? That's right. It was sort of an abrupt ending. So if you remember, Sora launched an app not so long ago, and it sort of had a viral beginning and was topping charts. But as viral apps do sometimes, kind of user activity on that app seemed to die down in recent months. And remember that producing videos, especially AI videos, it's an expensive business.

47:36It can cost a lot more to produce even a 10-second video clip than it does a paragraph of text in a chatbot. So you have to think about the cost-benefit ratio for a company like OpenAI when it's facing stiff competition from Anthropic on Enterprise, when it's facing stronger Google Gemini models. Is it the right decision to go all in on video when there's limited compute, limited resources, I think is probably the question the company was thinking. Now, the dynamics with Disney, I think there's going to probably be more about this story. We're going to look into exactly what happened there more.

48:13But I think that, you know, we're seeing this pushback on video front from a major lab is very significant. And it really does seem part of this broader strategy shift, honing in on where to win that Fujisimo is really bringing over open AI as well. Blue Moist, Shereen Gafari, great reporting as always. Thanks so much for bringing it to us. And look, we've got to talk a little bit more, Ed, about what all this means for Disney. Because what a first week for Josh DeMar at the moment. like the unravelling of the Sora deal that many people thought would be the next experience where we're going to get in with Disney Plus and the like.

48:46And now also there's issues with Epic Games.

48:48Caroline Hyde:So Josh DiMario became CEO last Wednesday, the 18th, at the annual shareholder meeting. He's seven days in. And Disney put money into this open AI relationship. It was supposed to yield things. They also have an investment in Epic Games, video game maker, a company that's doing big layoffs. So hard start to that tenure. Welcome to the role of CEO. It would feel like. Well, that does it for this extraordinary edition of Bloomberg Tech right here from the heart of Washington. Yeah, lots to recap on tech and politics. Do it on the podcast. You know where to find it. Online, Apple, Spotify, and iHeart.

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