SpaceX Wavers Near $2T Market Cap After 3-Day Rout

22:57Paid 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. It's time now for Talking Tech. I'm Yahaira Anand. First up, the ongoing debate over AI replacing human workers just got a reality check. Oracle's latest annual filing disclosed that it slashed 21 ,000 jobs over the past year with AI deployment across operations driving some of those cuts. This is Oracle is under financial pressure due to an expensive AI data center build out.

23:38Plus, SoftBank's Masayoshi Sun is choosing Earth over space. Sun publicly dismissed Elon Musk's grand vision for orbital data centers, calling the math behind them a losing bet. Instead, he says SoftBank will focus on building formidable data center capacity here on Earth. And Tencent is scaling back its global gaming empire. The Chinese tech titan is in negotiations to unwind its massive post-pandemic buying spree by offloading minority stakes in multiple international gaming studios like Japan's Marvelous, all to free up capital for none other than the global AI race. Ed?

24:17Ed Ludlow:Thank you very much, Yohaira. Now, Qualcomm is making a multi-billion dollar play to seize on technology and talent at the cutting edge of AI. Sources tell Bloomberg the company is in advance talks to acquire a software company Modula for about$4 billion. Bloomberg's Ryan Gould broke the story with the team and joins us. Let's start with the basics. What do we know about the deal? Yeah, so they're in advanced talks to acquire Modula for about$4 billion. It looks like that deal could be announced as soon as the coming weeks. I think, Ed, this is part very much of this wider AI race in AI for inference technology.

24:50Ed Ludlow:Basically, that's the process where you go from training models to actually putting them into production. And we've seen, I think, probably bookended by both the Grok NVIDIA licensing deal that announced just before Christmas. We all remember that on Christmas Eve. and maybe also the Samba Nova deal with Intel and Vista Equity Partners, the private equity firm. This is just really an arms race right now to see how quickly we can start to lower some of these inference costs for enterprise. What do we know about Modular in terms of who's already on the cap table, where they've been valued in their own private market activity?

25:23Ed Ludlow:Yeah, I mean, there's quite a few famous VC firms in there, really. I mean, Google Ventures, General Catalyst. General Catalyst is in there for quite a significant chunk of the money. They were valued at just over a billion dollars last September, I believe. So this would kind of be a fairly quick turnaround for those guys involved there. And I think this kind of also gets at something else, which is we've been hearing that Qualcomm has been looking at companies like Tenztorrent, again, another player that sort of sits in and around this inference AI sphere. Modular itself, though, I mean, really is that software layer.

25:56Ed Ludlow:It's putting those hardware chips and making them accessible across all different models. So that's Arm, Intel, NVIDIA, and in this case, soon to be Qualcomm should this all come to plan. Bloomberg Deals is Ryan Gould. Thank you very much indeed. Now coming up, Venki Ganesan from Menlo Ventures joins us. Talk about the firm's largest fundraiser in its history and how backing AI startups is forcing, frankly, a shift in strategy. A really big and extended conversation coming up alongside Bloomberg's Natasha Mascarenas. It's halftime here in San Francisco. This is what markets look like. We're off session lows, but technology's selling off.

26:36Ed Ludlow:This is Bloomberg Tech.

26:49Ed Ludlow:Welcome back to Bloomberg Tech. Tuesday, June 23rd, there's a lot going on. Our top stories, the AI sell-off and SpaceX's bumpy ride. Tech Equities reporter Carmen Reinecke standing by in New York with all of it. Carmen. Ed, yeah, so we're seeing a lot of red on the screen here today. The Nasdaq's down almost 3%. The biggest laggards here are memory names. So we know this was kicked off in South Korea when a local media report said that SK Hynix may be sort of pulling back on its AI chips, maybe shifting to DRAM a little bit. That sent the markets tumbling and it sort of gave some pause to the AI trade that we've seen.

27:26So we can see the biggest laggards here, Sandisk Corp, Micron Technology, and LAM. So these are all memory names that are dragging that market lower. Let's also take a look at SpaceX today. So shares actually seeing a little bit of dip buying, perhaps. Yesterday, we saw a pretty concentrated sell-off, the third day of declines. It wiped more than$400 billion in market value from the stock. That was the second largest one-day erasure of market cap in history, following only NVIDIA, and brought the three-day declined to more than$600 billion in value. So seeing more green on the screen here today, shares up about 2 % just off session highs.

28:03Few key levels we'll be watching. One is that$150 line. That was where the stock opened at its trading debut. And the other one that we'll be looking at is a$2 trillion valuation. We're just sort of flirting with that level right now. Back to you, Ed.

28:19Ed Ludlow:The most common Reineke on what's going on in tech in public markets, Let's get to private markets. Some of the big venture winners from the SpaceX IPO are cashing in by raising new funds. That includes Valor Equity Partners, founded by longtime Musk ally Antonio Gracias. According to sources, Valor's fund seven will have about$2.5 billion to invest in startups and more SpaceX shares. Bloomberg's Carmen Arroyo joins us with the details. Let's start with the SpaceX part. I find that so interesting. You know, one of the big winners from the biggest IPO in history, we went over that. But part of the strategy of new funds is to put them back into Elon Musk's company.

28:58So Valor is now out there raising$2.5 billion for this fund. But the quirk with it is that the fund has already allocated a portion of the funds into SpaceX shares, which is kind of interesting because SpaceX is already trading. But Valor has been fundraising for the past few months. It's been happening since late last year.

29:21Ed Ludlow:Where does$2.5 billion sit in the scope of Valor's broader assets that it manages? This is a big firm, right? And particularly, remind us the return or the payoff of the value of their stake in SpaceX post-float. Right. Yeah. Valor's said to have a massive one-fall of the 4 % stake in SpaceX. but they're mainly an operational firm, right? They like to lend resources to the companies they're investing. So they have very targeted investments. So they've been in all of or a lot of Elon Musk's ventures but they also have a lot of consumer companies as well that they're invested in. I think it kind of shows how much demand there is right now for kind of like being part of the winners.

30:12Ed Ludlow:Bloomberg's Carmen Arroyo, thank you very much. Let's take a look at today's big number, $50 billion. That's how much Abu Dhabi's MGX has raised from regional and global investors to accelerate spending on AI infrastructure and technology. That's according to sources who also say the firm has already deployed capital from the new fund, which closed in recent weeks, and that it ranks among the biggest ever dedicated AI investment vehicles. More on venture capital and private markets a little closer to home. Menlo Ventures has raised$3 billion for new AI investments, the biggest fundraise in the firm's 50-year history.

30:50Ed Ludlow:The move reflects just how dramatically venture capital is changing as investors race to back the next generation of AI winners. Bloomberg's venture capital reporter Natasha Mascarenas broke the story, and she joins us alongside Menlo Ventures partner Benke Ganesan. And here we are in San Francisco. Scott, let's start with a really basic question. Thank you. Why? Why raise the$3 billion? First of all, Ed, Natasha, thank you so much for having us here. It's a privilege to enjoy this special moment with you all, 50-year history. I think this moment, to me, really reminds me of the Renaissance. Like, I think when I look at the history of mankind and look at what happened in the Renaissance in the 1400s, AI is that moment where we actually have a new technology coming in.

31:34we have this incredible density of talent it was in Florence in the Renaissance it's in San Francisco with AI and you have these patrons and the medicis funding these incredible artists whether that's Da Vinci Donatello and the equivalent of that would be Dario and Dennis and so I think like that moment is here this is a new thesis to the show keep going and to me the our 50-year history meant that we have had this history of finding these moments. And for Menlo, it's a special moment to be able to have that capital to fund these incredible entrepreneurs. There is an amazing 18-year-old woman out there who's thinking about starting a company and I want her to know that we are ready with our capital to fund her.

32:18Speaking of history, I mean, this is not the first time we've seen Menlo Ventures raise record funds. I know in the past, in 2005, Menlo raised a$1.2 billion fund, And eventually to cut it back down to$400 million to get back to the roots. So what's different this time? What defends the choice to grow the fund size? Really also talk to me a little bit about strategy and sort of how you plan to invest such a big amount of capital. Great questions, Natasha. I mean, to me, it's all about making sure we have the right capital for the right moment. So I believe that we have a Goldilocks strategy. We are big enough to be able to fund all the companies that matter, yet small enough to drive venture rates of return.

33:00And that's really been our focus. We want to be driven by scarcity, so our strategy fits that. And we want to find the companies that really matter and then concentrate on them.

33:11Ed Ludlow:Is this what you call avoiding the middle, the venture capital middle? Exactly. To us, we want to be in the barbell. We want to be in the earliest stage where we can fund amazing entrepreneurs, pre-product market fit, but get high ownership. And then we want to back the clear winners, like we have done with an anthropic, a lovable, and open evidence. Companies are scaling and making a difference. How much does experimentation show up in check writing these days? I know Ed and I have spoken a lot about coconut seeds. Yeah, what's the point of a seed round, essentially? Exactly, exactly. Like, how do you think about that?

33:47Yeah, actually, it's funny you mention it. We actually came up with a new seed strategy where we wanted to be nimble. So we set aside a small group of dedicated partners, people like Tim Talley, the CTO of Splunk, Joff Redfern, the chief product officer of Atlassian, Matt Craning, Didi Das, very dedicated group of people and had a different focus. We could actually make an investment with a smaller group of people without going to investment committee. So I think experimentation has been a very core part of our 50-year history. we've always wanted to make sure that we are changing with the times, right?

34:18The most important things you've got to change with the times. We've also experimented by funding Neolabs. And so that's also been an area of focus for us.

34:25Ed Ludlow:Funding Neolabs, giving founders access to compute, moving away from certain areas, biology, for example, or not moving away, paring back the focus. Unpack all of that. Yeah, I think, when I think about it, we've probably moved away more from, like, fintech and SaaS. and more to AI-centric areas, right? And so to me, biology could be one of those areas in which AI makes a huge impact. I mean, look, the most important things we can do are to help lengthen human lifetime and improve the quality of life. I think AI is going to make a big impact in drug discovery, and it's going to have one of the most positive impacts on healthcare.

35:05You know, you said something to me during our interview. This didn't make the story, but you said, you know, in order to win in venture, you have to be contrarian. You have to be right, and you have to be alone. where in AI is Menlo right and alone right now? I'll tell you, we were right and alone in 2023 when we led that round in Anthropic. Kudos to my partner, Matt, who saw this opportunity. Matt, Tim, they saw that this was going to be a special company. If you remember at that time, everybody talked about OpenAI and Microsoft. They said the game was over. OpenAI was a great winner. Look, OpenAI is a great company, but we had the conviction to put$500 million in an$18 billion round when I think a lot of people didn't want to.

35:45And that's what I mean is you got to be concordant and right. It's not the first time. We did that with Siri. We did that with Uber. We did that with Roku.

35:53Ed Ludlow:The state of play is really different now. We're going to talk a bit more about the field. Yeah. You know, after we take a quick break. Something you said about the 18-year-old. Maybe it's not an 18-year-old, but what we're seeing is rounds where there are maybe a few founders, alumni of existing frontier labs or academics. They're raising hundreds of millions of dollars from the get-go. And the venture firm seems to be making a bet on those people, their expertise and their credentials in the field. Is that where you expect this to go? Yeah, I mean, to me, it's more about making sure it's not about 18 or 80.

36:30It's about finding the right person. I think what is different about this time is that a lot of the right people are researchers, which is different from what traditionally has been the focus. And so a thing we spend a lot of time at Menlo is thinking about how do we identify these people? What are the characteristics that make this? We've used a lot of data and AI internally. So I would say we are not all in on AI. We're also all in on AI internally to how we build the firm. And we use that to identify the people. And then when you find them, they act with conviction. I talked to the CEO of Axiom for my story today who's building a mathematics...

37:05Talk about a 21-year-old math genius. Yeah, I mean, and something she said that was interesting was that, you know, having technical debates with your VCs is actually a hugely valuable ad in this moment. A lot of people invest in AI, but a lot of people can't have those debates. Like, talk to me about how you personally are staying up to date on AI and how you're getting competitive intelligence right now. Where are you finding, you know, these founders between 18 and 80? Yeah, I mean, to me, first thing is to be able to do that, you've got to have the right technical people in the building. And so we spent the last four years making sure that we built the right technical team.

37:37We talked a little bit about Tim, our co-founder of Splunk, Didi, Matt Craning, Joff Redfern. And then we got to use the technology ourselves. One of the things we did was, and I think you mentioned this in your story, we put microphones in a lot of this so that we could use a new product called Whisper, another founder that you're familiar with. And so the idea is we got to use the technology. We got to eat, drink our own champagne, as I like to say, and then make sure that we are there ready to meet the founders where they are.

38:06Ed Ludlow:Okay, Bloomberg's Natasha Mascheranis and Menlo Vengeance's Venki Ganesan are going to stay with us. We're going to take a quick break. Then we're going to get back to the competition in the field of Frontier Labs valuations and muscling in in a world where the mutual funds, the strategics, and everyone wants a piece of that pie. Stay with us. This is Bloomberg Tech.

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41:10Ed Ludlow:Menlo Ventures calls its early investment in Anthropic a bet-the-firm moment. At the time, all the way back in 2023-24, Anthropic was viewed as a distant challenger to OpenAI. Today, that wager stands as one of the most consequential investments of the AI era. But the field and world is different. Bloomberg's VC reporter Natasha Mascherin is still with us. There's been reporting on that along with Menlo Ventures partner, Venky Ganison. I say the field is different. When you did that anthropic round in the last block, we talked about how consequential that was. Everything happened very quickly thereafter.

41:48Ed Ludlow:after. Many frontier labs raised money regularly, and those joining the cap table were different. They weren't venture firms. They were mutual funds, legacy Wall Street institutions, hyperscalers, other strategics. How does that change impact a firm like Menlo? It changes because it brings in a whole set of new players, but I think they bring good perspective. We have looked at this as an opportunity to collaborate and find people who can. Look, when you have a gold rush, everybody rushes in. And I think it takes a lot of capital to build these companies. And these companies are special. You spoke to Karina of Axia Math.

42:32She has raised now over$150 million. And I think the way to make, you know, they say it takes a village to raise a child. It almost takes a country to raise one of these AI companies. That's the amount of capital. And I think we welcome the chance to collaborate with some of these folks, and they've been great partners. Bring me back into that moment of deciding to bet the firm really on Anthropic. I mean, my reporting says that Menlo has put around$1 billion into the company, a stake that is worth nearly$14 billion. That's according to sources familiar with the matter. I mean, that kind of return is exciting.

43:07It's also the kind of thing that I'm guessing you guys are looking to replicate. So, you know, what's the takeaway there and what are you looking, you know, how are you changing the way that you write checks? I think the formula is simple, right? And this has been the same formula that's worked for our last 50 years, which is go deep into an area, build a thesis, find the best company that you can, commit to that founder, and then partner with them to build that conviction. And every one of those things happened with Anthropic in the sense that we looked at the entire AI landscape. We zeroed in on this very, very special founding team of Daniela and Dario and the six other founders.

43:45And then my partner, Matt, said we got to lean with conviction. We all rallied around it, and we raised the biggest capital we ever have. And then we have committed to build the company with them. And to me, that's the same formula we did with Uber. We did with Roku. We did with Chime. And I think the same formula we'll do in the future. We will be selective. We will find we have a Goldilocks strategy to be the right size. And then when we find the right company, we will lead with conviction and concentrate on them. What do you make of the king making, you know, queen making strategy that's across Silicon Valley?

44:21The idea of sort of anointing a winner early on by putting a lot of capital into them. That is quite different than the anthropic bet that you guys made. It was definitely, you know, pre-revenue and pre-household name.

44:33Ed Ludlow:Although he did call Dario the Da Vinci of this age. So I don't know. Sorry. No, but yeah, I'm curious, I guess, the idea of, you know, trying to find that company, not when it's at, you know, a multi-billion valuation, but when it's at a 50 million valuation and helping it hit that, that, that, those user numbers. So first of all, I love the fact that you said queen making. I'm a family. We have three daughters and my wife is definitely the queen of our house. So I like that. And, you know, to us, you're right. The way I think we think about queen making is to really find those companies early.

45:05And we have found plenty of those. So while we love Anthropic, it's an amazing company. I literally talked to my investors about the 10 AI companies, not named Anthropic, we're excited about. A company like Axiom Math, where we found Karina, invested in her very early on. Open Evidence. Open Evidence. Logora. Whisper AI, which I know you have a connection with. All lovable. These are all companies we have found early. That's really been Menlo's focus. Find them early, partner with them, size up with conviction, and then build.

45:37Ed Ludlow:I don't want to put you in a position where you can't speak freely. And I get that Anthropics filed confidentially, et cetera. But it seems like there are two stories that are both true at the same time. Companies are staying private for longer, and yet we are on the cusp of a very big IPO window. though. How do you interpret that moment? And also, the thing is, it's not just that private companies are staying private longer. The private markets seem very willing to support that duration and the level of funding that they need. It is very much true that the private markets are probably the biggest I've seen in my lifetime, right?

46:18I've been doing venture capital now for my 30th year, and they're deeper, and this allows companies to stay private. Though I think eventually my feeling is a lot of these companies should go public for a couple of reasons. One, we do want the public to participate. I think it's very important that in this AI revolution... You see it as democratic. Yes, and I think it's good for society to be able to participate as a wider group. I also think that going public creates discipline for all these private companies. Ultimately, sunlight is the best disinfected and there's no better sunlight than going public.

46:52Ed Ludlow:Menlo Ventures partner Venki Ganison and Bloomberg's Natasha Mascarenis, who has detailed the firm's history and its latest fundraise,$3 billion in funds to back AI startups on the Bloomberg this morning. Thank you very much. Coming up, Meta is joining the wearables game with its own smart glasses, launching three models that are cheaper and fashion forward, my producers tell me. We'll discuss. This is Bloomberg Tech.

47:27Ed Ludlow:Metha is launching its own smart glasses under its own brand for the first time after popularizing wearables through Ray-Ban and Oakley partnerships. The tech giant's glasses are cheaper and even they keep writing this, the team. Fashion forward with one model made in collaboration with Kylie Jenner. Bloomberg's consumer tech editor, Mark Gurman, has the details. That's the distinction, right? This is meta all the way through, still manufactured by SL Luxottica. But for you in your reporting, what is this as a moment for the wearables category and the smart glasses category? You know, it's interesting.

48:02At the end of 2027, Apple is going to introduce N50. That's what it's called within Apple. But that is the Apple smart glasses. And of course, the way Apple is vertically integrated, they are going to be designing and branding the glasses under the Apple name using their own design team. Meta has been licensing designs or working with Estor Luxottica and basically taking Ray-Bans, Oakleys, and they're planning other brands like Prada and making those smart. And for the first time, what Meta is doing is they're launching their own meta-branded glasses, right? These are not Ray-Bans. These are not Oakleys.

48:36These are meta design glasses by the meta industrial and hardware design team within the social networking giant. And so that is a big change for them. And by going internal, going in-house, that allows them to come out with a low end, an entry level tier for their smart glasses. If you remember at the end of last year, meta raised the prices of their smart glasses with the second generation model. And so the entry level of the Ray-Bans, the smart Ray-Bans, costs about$380. These ones that I'm wearing, these are the new Meta branded ones. You are wearing them. I am wearing them, yes. Normally, I wouldn't be wearing glasses on here, but I had to bring these out.

49:15I just got this pair last night from Meta. So, these are$300. So, that comes in at$800 less. So, that's the big play here, bringing something that is a bit more affordable to market by using their in-house brand and design.

49:28Ed Ludlow:Okay. So, we have definitively answered the question whether or not these are fashion forward. They're fashion forward. I look great. and modeling them now. You look great. Let's get into the technology part. We only have 30 seconds, but the capability of these relative to what Meta already had out there. Oh, they're identical. They're the same. But the cool anecdote I can give you is that Meta seems to be seriously considering launching versions of its glasses without cameras. Now, that creates a few interesting wrinkles here. One, that'll allow them to create new designs that are maybe slimmer and lighter with more battery life because fewer components needing to be dedicated to the camera system.

50:06Also more privacy conscious and no cameras, audio only experience also means cheaper.

50:13Ed Ludlow:Right, Bloomberg's Mark Gurman who leads our consumer technology team on the Metaglasses. Thank you so much. That does it for this edition of Bloomberg Tech. Really packed show, a lot going on in public markets and in private markets in the world of technology. Recap all of that on the podcast. You can find it on the Bloomberg Terminal, as well as online on Apple, Spotify, and iHeart. Have a great day. This is Bloomberg Tech. Dog grooming genius here. Most people see a busy dog salon, but I see operational excellence. Thanks to genius from Global Payments. Scheduling, personalized. Checkouts, instant.

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