Thoma Bravo to Pay $12.3 Billion for Dayforce, Nasdaq Fall Continues

25:46Late Space, which is separated computer storage for Postgres, that came through an acquisition that we did for, you know, billion dollars. So we're continuing to be very, very interested in these, you know, where there's talent. AI is very interesting because, you know, on one hand, we hear about these companies that have crazy valuations, right? 100 billion plus. Like you? Yeah. But on the other hand, there's a lot of startups that started three years ago, two years ago. And, you know, if the revenue is not there and the business isn't working out, but they have amazing talent and they have great ideas.

26:19Maybe they didn't just have channel distribution. Those are great. And you can actually get them for, you know, I guess in the big scheme of things, you could say cheap. Let's just talk about these so-called crazy valuations, Ali, because I know your phone have been running. off the hook in particularly the last few weeks, people wanting to allocate more towards you. Do you think that would happen right here, right now? We suddenly see a slight rectification in valuations in the public markets. Are things cooling down? Are you worried by MIT reports reporting of a lack of impact of AI pilots, for example?

26:53No, I've been pretty vocal about this as well. I'm very bullish on agents being able to do all kinds of tasks but we're like in the very early innings and some people are already declaring success as if we were done we're not we're at the very beginning when it comes to agents for instance one of the biggest challenges is that you know when you unleash these agents you know the hundreds in turns that go off they make errors and you know right out of the box you might have 30 errors would you hire a person that makes 30 percent of the time completely crazy mistakes no uh so we have to get the quality up that's what agent bricks is focused on how do we iterate and improve the quality.

27:31So I do think we have to pace the investments and the expectations on the ROI. What's timeline? If we're thinking that, you know, these agents are just going to work everywhere right now, that's not the case. It's going to take us years to be able to see the impact of AI across the board in organizations, you know, maybe even five years. It's still going to be very impactful. It's still something that we're investing in, but you have to get that timeline right. Always talking straight to us, Ali Godzi. We so appreciate it. Databricks, CEO. Congrats on the Series K. Coming up, Google bets on AI for its new devices.

28:04We'll have the details, what the company has just launched. This is Bloomberg Tech.

28:20Welcome back to Bloomberg Tech. We take a look at these markets because it's been a volatile day of trade. More broadly, we could be on track for three days of losses on the Nasdaq 100. Worst stretch of losses going back to March of this year. We're currently off by three tenths of a percent. Meta dragging us a little bit lower. Netflix from a points perspective on the downside. On the higher side is the likes of Nvidia. Let's look at a rebound for Palantir as well because it had had six straight days of losses running into today. We get a little bit of a reprieve but only a tenth of a percent.

28:50More than 70 billion dollars a market cap wiped off of this retail fan favorite as people question that valuation. When you're looking at profit to price, price to profit in the future, well, it's trading up almost 200 times. Looking at Intel on the downside, up by a quarter of percent, one and a quarter. That's as we question what dilution or discount the US government might get after the euphoria that SoftBank and the US are indeed putting in money. And we finish on Google having a rather nice day, up by four tenths percent, a couple of its highs. But all of this is following Google's introduction of new consuming gadgets, including phones, earbuds, and smartwatch, all with the company's latest Gemini AI really at the heart of it all.

29:27We spoke with Rick Osterloh. Here's Google's SVP for platforms and devices about the company's launch event. Gemini is a huge part of Google's strategy. We've made so much progress with it. We've got the best models around. We have the best AI assistant. We're just so excited about what we've talked about today. And I personally love using the VO video model. you saw a video of my dog talking in the show, which was really fun to put together. A cute poodle across something. Yeah, he was a Portuguese water dog who somehow speaks English. But it was really, really fun to put that together. And this is kind of the power of AI now.

30:05You can do things for fun. You can be a lot more productive with it. And Gemini is the thing that powers it all for us. I mean, Steph Curry is doing things with sports. You had Alex Cooper there, Call Her Daddy, doing things with Get Camera. I'm interested, though, how this sets you apart. What are you offering, do you think, versus the competition? How am I going to be able to use it in a wholly different way than currently I could with a competitive out there? Yeah, well, I mean, I think AI in general just transforms all of these products. On the phone, it's going to make it so much easier to interoperate with your phone.

30:35You just talk to the AI, and it'll do things for you. You can show your camera to the AI, and it'll give you hints about what to do, Like if you're trying to do a project at home, like fix some plumbing or fix some shelves, whatever it is, AI can help. And we're really excited about our partnership with Stephen Curry to apply this AI technology to personal coaching. And, you know, he's I can't think of a better person to work with. He has sleep coaches, nutrition coaches, fitness coaches. And he wanted to work with us to bring this kind of capability for personal coaching to everyone. And so that's what that partnership's all about.

31:13We're really excited to work with Steph. And in many ways, like you were helping oversee the purchase of Fitbit back in the day. It's now in the form factor of a watch that you've got on. Rick, though, what form factors are we yet to see? You've got the pods in your ears. You've got the watch. You've got the phones. Right. Where next? I think there might be a few coming next. Well, we're bringing Gemini to a bunch of surfaces you use every day, but probably be used very differently, like automotive. There'll be Gemini in your car, on your television, in your smart speakers and smart displays. But I think a really exciting thing that'll come in the future is Gemini and glasses.

31:50So we're working on smart glasses that'll run Gemini as the main way you interact with them. And for a year that you think that that'll be coming out? Is this going to be at Brooklyn 2027? Sometime next year will be pretty exciting to see. Google's SVP of platforms and devices. Let's talk a little bit more about all of this. Carolina Milanesi, she's the president and principal analyst at Creative Strategies. We were in Brooklyn together yesterday. We were. I loved reading your report on this. You said, look, Google avoided any risky moves, so we didn't get the glasses in the here and now. But the prowess you see is that Gemini is just full force within these devices.

32:25Absolutely. It's all about AI. It's about really getting consumers to understand the power that AI can bring. And as Rick was saying, it's different things to different people. So what was amazing for me yesterday was see the breadth of people that they were able to reach with all the guests that they had, both from an age demographic, but also from what is the hook that you want. It can be editing. It can be taking the best shot. It can be getting fitter. And it can be photography. Andre D. Wagner they had over there. They had, of course, sports when it came to Steph Curry, or indeed Lando Norris was there.

33:00We also thought about the way in which communities are going to use it for camera and for editing. Is that really that important? When do you think the camera is really going to be the standout feature for so many? Camera is already the standout feature for so many consumers. But the Pixels had a better camera than anyone for ages. That's what they kept on reminding us. But people are still buying apples instead. It is, but it's about what you can do from an editing perspective. Now it's not just about taking the best shot and taking the friction away that there is today in getting to the editing.

33:31So being able to tell an AI agent, Gemini or something else, how you want the picture to look like. And what it really compares and contrasts with is Apple's lacking, right? The fact that we're going to be so easily integrating Gemini AI from a spoken word perspective and that Siri is just so behind the curve. Do you think they're going to eat any market share there? I think it's always hard from a high-end perspective to see churn from Apple to anywhere else. because user-consumer have more device than just their phone. And so you're talking about a difficult choice to make. We also still have a very beginning of the AI shift.

34:12Consumers are not walking into a store asking for an AI phone. We talked about this for Apple in June. But I do think that time is ticking for Apple and we need to see something sooner rather than later. Instead, this almost helps Google show off the Android ecosystem. you might not get a Google Pixel, but you might get a Samsung. And probably through this demonstration, you can see how well integrated that's going to be as well. How do they navigate this sort of frenemy moment? Yeah, I think it's definitely first about the best of Google on Pixel. And then you started to see Samsung getting closer to that ecosystem and putting aside their aspirations with Bisbee and really building on the power of Gemini.

34:55So Motorola has been doing the same thing. So it's definitely about the ecosystem, but also feeling that, in my view, Pixel is the answer to Apple within the Android world. And they've got a foldable phone, which in any way goes head to head with the Doge-endorsed Samsung, but Apple has no foldable right now. I thought what was really interesting was when they put them out on the market. Next week, we get the phones, but the watch is a little bit later. I asked Rick about whether it was a supply chain issue. He said no. Are there any supply chain issues for these companies right now? It gets its chip, designed in-house, but made by TSMC.

35:30How does this whole come together? I think, to be honest with you, as a marketing strategy is more than a supply issue. It's about getting before Apple and after Apple, right? We know that the expectation is beginning of September, usually, for Apple. And so getting in with the mass market product before the iPhone is out, and then with something that is more appealing to still a niche market, but very powerful users with the foldable towards holiday season. I think what really resonated in your note was the confidence that Google had at this event. I mean, it was just celebrity filled. You felt like you were at a TV event.

36:11That was the whole idea and narrative of it. Have they got the right to be this confident right now, do you think? I think it's empowering for them instead of always focusing on chasing Apple to actually feel confidence in the product that they have, which are, you know, iterative from last year, but solid. And I think that finding the confidence in their branding is very important and broadening the addressable market that they're aiming for. It's not just tech buyers anymore. It's mass market consumers. Subway takes, Caller Daddy. They had a lot for the Gen Z and the younger millennials. Carolina Melanesi, loved having you here, president and principal analyst.

36:52and creative strategies. Coming up, Runway CEO, Cristobal Venezuela, is joining us to talk about the company's new tools for video and games creation. This is Bloomberg Tech.

37:18This is the Bloomberg Tech Minute, brought to you by ChachiPT. Now with ChatGPT Work. I'm Carol Masser. Globetrotters hunting for airfare bargains are in for a rude awakening, as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seed inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time.

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40:39AI startup Runway, which shook up Hollywood with its AI video generation tools, is entering the world of gaming. Announcing today its Runway Game Worlds beta, which takes a step towards real-time game creation. Runway CEO and co-founder Christabel Venezuela joins us now. And Christabel, how changeable or what a complete shift is this for the gaming industry? Because consumers are going to be able to use it, but what does it mean for the actual studios too? Yeah, it's massive. It's a big change in the same way that AI was a big change for Hollywood as well. And now it's important to understand and recognize the two parts of how AI is affecting games.

41:17On the one end, you have the real-time rendering component of it that we're working towards, which basically means you're going to be able to create pixels in a real-time manner. And the other one is the mechanics, right? So how do games manifest itself? What are the interactions that users would have with them from consumers to pretty much everyone. And so Game World for us is kind of an exploration and our first product and the mechanics of non-linear stories with AI, creating these worlds in real time and having players experiment with them. I mean, I think about the first time that we first started bringing you on the show and hearing from how much you were, well, disrupting Hollywood, but Hollywood has now come to embrace you, using Amazon, using it in the latest works that they're doing and creating, Cristobal.

42:00How has the gaming studio reaction been? Has it been bristling or has it been accepting? It's somehow very similar to what I think Hollywood went through a year and a half ago. I think it's totally new. It takes time. But now I think most of them have started to embrace it and understand it. It's a radical technology. It changes how you do your work. And you need to embrace it. You need to understand it. There's things that work really well. There's some things that don't really work really well. But really it's about like using it more. And so I would say that games and the gaming world is where I would say Hollywood was a year ago.

42:34And now as models progress, get better, become more usable, you start seeing most of those companies now starting to adopt it. I mean, you can see the impact because it's being used in features by big tech companies and big filmmakers, Cristobal. But how are you measuring impact for those that are about to take it on? Look, we're all talking about this MIT study about whether or not 95 % of these pilots for generative AI are failing. How do you prove out that your technology adds value? Yeah, well, you have to make sure it helps users somehow. And look, there's a challenge. And I think the challenge that I think media and Hollywood recognize over time is these are not tools that will make movies for you.

43:16And I think that was a big assumption at the time where many people thought you just came into runway, typed movie, and you get a movie out. Unfortunately, that's not yet what the technology is doing. It's much more about you being in control and you spending the right time. But also, you need to rewire your brain a little bit. You need to retrain the mental models of how this technology can help you. And that takes time. And so, how we manage through that change with our companies and customers and users is we help them. Sometimes we go and work alongside them. We have technical artists that you can think about them as like forward deploy engineers that sit together with our companies and users and enterprises and help them understand how Runway can fit in particular parts of our workflow.

43:59ALEF, for example, is our latest video generation model that allows you to edit video in ways that you just couldn't do before. And it works completely different from anything you've seen before. And so it's not going to work based on what you know. There's an adjustment period. And that adjustment period is critical. For me, it's very similar to perhaps how the cloud was a big change for companies. It requires you to redo and reorganize some of your teams to prepare for this. I'm talking about reorganizing teams. I mean, Mark Zuckerberg's been busy at that. And we understand that previously he'd perhaps eyed up Runway, wanting to be able to buy that to bring in for the AI prowess.

44:36You knocked it back. That's off the table. But how many offers are you getting for Runway? And how are you comforting your employees that you might not jump ship? Again, I've been working on this for almost seven, eight years, and I think we're now hitting an interesting inflection point. It's getting too exciting for us to think about not being independent. We want to remain independent. We have the resources we need. We have the best team in the world doing some of the best research in the world. Now it's an inflection point in both quality adoption, penetration. It's a really exciting time to build runway, and I think there's still a long way to go for us.

45:11First gaming product. We thank you for talking us through Game Worlds and so much more that you've been doing with the LF model and plenty more. Cristobal of Venezuela, CEO and co-founder of Runway. Always great to catch up. Now, sticking with AI, DeepSeek. It just unveiled an update to an older model that it says surpasses a seminal R1 on key benchmarks. Now, DeepSeek said in a WeChat post that the new version answers queries much faster and marks the startup's first step towards creating an AI agent. And closer to home in the US, OpenAI. CFO Sarah Fryer has just told Bloomberg that the company could take a page out of Amazon's playbook.

45:47Following an approach inspired by Amazon, which found success renting out its spare cloud computing capacity, OpenAI could, in the future, sell access to data centers and other physical infrastructure needed for AI. Bloomberg's Shereen Khafari was there for that conversation, bringing out, teasing out those pieces of information, because Sarah Fryer really does have to think about the profitability of this business in the longer term. That's right, if you think about it. So, you know, I was also recently at a media dinner with Sam Altman when he said, we plan to spend trillions on infrastructure in the near future, and that economists might call that crazy, but they are marching on.

46:22So as OpenAI starts to put this immense unprecedented amount of capital, right, toward data center expansion, they're building expertise in that. And I think the long-term play here as well, how could we in the future potentially market and capitalize on that expertise. And be able to drive up revenues to be getting better financing for the future of their own infrastructure spend. At the moment, they've been funding that spend by raising money in venture. Any nuance there? She really did talk about how they've been able to sort of raise more than they anticipated. Yes. They were planning on 10 billion and one piece of their kind of tranched funding round.

46:56She said that they have actually gotten to 11 billion because of excess investor interest. And more broadly, they're actually looking beyond just equity financing at this point. They're also, as Fryer told us, interested in debt and debt financing. And they have said that banks and private equity firms have approached them about this. So interesting as we see how Metra has been financing some of its data center needs, getting into the world of private credit with PIMCO and Blue Owl. What more about the growth of the business when we're just coming off the back of GPT-5 and some of the throws around that and they had to make some difficult choices, particularly when it came to, well, how nice the chatbot is to people and how they bring back other models and the like.

47:39That's right. So it was definitely a bumpy rollout. I think bumpier than they expected, right? Also at that dinner, Altman, you know, said, we know we messed up on the emotional attachment. I think they did not realize that people fully had to the older version of the chatbot. And they were all sort of, a lot of users were angry that OpenAI initially deprecated the older model. However, I think overall, the bigger picture is that ChatGPT is still the market leader on consumer usage, just on chatbot usage overall. And they still have this voracious demand, as Fryer put it, for the use of their products that requires intensive compute.

48:17And there's voracious demand to fund it, as we were talking about. And actually, eventually retail want to be owning a piece of this company, more people, democratization. Sam spoken about eventually the need to IPO, but as a CFO, how is she thinking about that, Sarah Fryer? I mean, for Sarah Fryer, her job is both to raise these funds, right, for OpenA, but also be able to allocate that compute for these customers. Oftentimes, they're having to decide in advance which customers are actually going to get the compute power they need to run all the ChatGPT products. So it's a mix of fundraising, of keeping customers happy, keeping consumers happy, and figuring out all the financing and money for it.

48:56And then leave us to Paul Shireen Ghafari, talking us through what was a fantastic conversation that she had with Sarah Fryer, CFO of OpenAI. Now coming up, SpaceX, another very highly valued private company, tapping into luxury travel as it expands its Starlink services. More on that next. This is Bloomberg Tech.

49:22SpaceX has steadily built up its Starlink in-flight Wi-Fi services with carriers like Air France, United, Virgin Atlantic signing up. Now the company is eyeing a Middle East expansion as it holds discussions with the likes of Dubai-based Emirates. Bloomberg's space reporter, Sana Pashanka, joins us now with the details. How big a coup could this be to get in with Middle Eastern flyers? Yeah, it would be a really big moment for Starlink. As you mentioned, these are luxury airlines and a lot of them are stopping points for really long-haul international flights. So it could bring in a lot of revenue for Starling, which is SpaceX's most profitable unit.

50:06Who's it been booting out of the way? Which have been the previous Wi-Fi offerers, which I say many would say they've been frustrated with in the past because Wi-Fi doesn't always feel that great on board. Yeah, so the previous, the legacy operators are Viasat, SCS, Intelsat, which was actually SCS-acquired, Intelsat, and also Hughes. And those legacy operators have historically relied on geostationary satellites, which are much further away from Earth, to provide that internet connectivity to airplanes. And what does the negotiation period look like? How does Elon or indeed just SpaceX more broadly and Gwyn over there win over these carriers?

50:52What is it that they have to prove out? So SpaceX, it's been shown by third parties that Starlink has delivered the fastest Wi-Fi speeds across industry and compared to those legacy operators. And that is in part because their satellites are much closer to Earth. So, you know, the Internet has less distance to travel to getting to those planes. But Starlink has a couple of negotiation tactics that they use. They don't really allow airlines to announce that they're using Starlink unless they'll equip on their whole fleet. They also have put in this request that airlines offer it to free for everyone on board, which, you know, some airlines have pushed back on because they just want to offer it to their customers in their loyalty program.

51:42So, you know, they have a couple of requests that they put in, but it seems like the negotiations are unique for every airline and every operator. Sana Pashanka bringing us the latest on that part of SpaceX. We appreciate it. Let's get back to the public markets right now because we're back under pressure. The Nasdaq 100, as you'll see, down now for three straight days, 2.5 % lower. We've been questioning above the board the frothy valuations. One of them we've really been keeping an eye out is on Palantir. Now, its valuation, its multiple is extraordinary. I mean, trades 200 times future profits.

52:16We're down 14 % in the last five days. In fact, it's been low for seven straight trading days. The longest sell-off we've seen since March of 2023. We'll see how Alex Karp is responding to some of those shorts, finally winning out some money. Made about a billion, 1.6 billion in the period of loss. Now, that does it for this edition of Bloomberg Tech. Don't forget to check out the podcast. This is Bloomberg Tech. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else.

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