US Pulls List of Tech Firms Linked to China’s Military

24:32Quite the contrary. I mean, the signals we're hearing from customers are that they want to go all in with Twilio. Again, not just communications and data, but to build their entire AI stack around a lot of our infrastructure, including a number of other companies, obviously, as well, who we'll end up partnering with. But I think this usage-based pricing model ideally positions us because it matches a customer's revenue events with our revenue events. And so our incentives are very, very tightly aligned. Because there's a lot of fear. There's a lot of anxiety, not just in investors, but in people writ large around AI at the moment.

25:11How are you thinking about that around your own labor force and about how you make your business as efficient as possible by adopting the tools with which you're currently building upon? Yeah, look, my personal view is that I don't think AI is per se coming for the workforce. I mean, I think, frankly, it's going to be tremendously additive to the workforce. Like, you know, I've got a kid in college, I've got one that's about to go. I actually think what's about to happen here is that over the next five to seven years, you're going to have a whole slew of college graduates who are AI natives, who are going to add so much more interesting and intellectual capacity to the workforce that I actually think workforces could potentially grow in many ways.

25:52I think what is probably a certainty is that those who don't retrain or reskill with different kinds of AI capabilities, they're probably more at risk. And we're working hard to make sure that our workforce is retrained, reskilled. We're adding a number of different capabilities to our own internal tech stack. There's a number of things that we're doing to use AI inside the company. You know, Ed, you pointed to customer service a moment ago. We're certainly using it there. Inbound sales, we're certainly using it there. And I think there'll be a lot more other things that we do going forward. Cosima, Ship Chandler, embracing it.

26:26We thank you so much, Twilio, CEO there. Coming up, we'll take a look at Airbnb and Instacart's earnings. Still coming thick and fast, folks. This is Bloomberg Tech.

26:56Welcome back to Bloomberg Tech. At the top of the show, our top story was US-listed shares of Chinese technology companies. The Pentagon briefly listed Alibaba, Baidu and BYD as being names that it considers as aiding the Chinese military, then that list was pulled from the internet, essentially. NVIDIA also down 2%. I'm not drawing a causal link, but remember that in Alibaba's case and Baidu as well, they are big potential buyers of NVIDIA GPUs if that is a transaction that's allowed to go through by the US government. Also, taking a look at shares of Amazon, Caro, we are teetering on the edge.

27:34They are flat as a pancake right now in the session, but had been headed for their ninth straight day of declines following that monster capex outlook for the year ninth straight day of declines would be the worst losing streak since 2006 which i guess if you look at the right hand side of that chart and the slide gives you a sense of anxiety right now with capital expenditures also looking at rivian so rivian really on a tear remember it was down 30 almost year to date it's now up 24 in the session doesn't really matter what they posted in the quarter gone, but they're basically on track for their next product, the R2.

28:09And that's all the market cares about. I mean, talk about the R2, because it's got to be able to inspire purchasing at a time where we've taken away some of the support from the government. And we are seeing just EVs on a downhill trajectory. Yeah. You know, Rivian to date had two premium consumer products, the R1S SUV, R1T pickup, and it didn't have a mass market product. The R2 is supposed to be that. It's still at a premium price point. And Rivian and its CEO, RJ Scarrange, have basically argued there isn't much out there below 70 ,000 US dollars for the everyday family, you know, in the SUV form factor.

28:45It's like the Toyota RAV4 of EVs. And all they're saying is that, you know, things are going as they said they would. And that chart there tells the story, that spike that you see around December, that's when they announced their AI plans, right, which we went deep on. And then it faded because there was a lot of anxiety that they'd fall behind on the actual product delivery. I mean, they have been cutting costs, right, per vehicle, more than$7 ,000, like in lockstep with the amount that you're now not getting in terms of subsidization. But it's interesting, the delivery numbers, are they optimistic?

29:15Is it positive to be between$62 ,000 and$67 ,000? It's more than last year, but it still is low volume, right? and they're still going to lose$2 billion this year. And they're still one to watch, though, because of all the people that back them and the hype around their tech. Elsewhere in earnings, strong demand for travel helped boost shares of Airbnb. Bloomberg's Natalie Leung joins us now. Airbnb, what's the story here? What are they doing that's new, that's different, and that's giving them a boost? Last year, they wrote out a reserve now pay later option in the US, and that's really helped boost bookings, letting people book in advance without worrying about their budgets so much.

29:54And they're expecting to roll this out to more markets globally. And so that could continue to help the results. And this year, CEO Brian Chesky really put a big focus on launching new businesses. Yesterday, he talked about possibly testing airport pickup services. And we also know they're testing grocery delivery for guests. We're up 4%. At one point, we'd been up almost 10 % in the session. I know we're here to talk about tech, Natalie, but does Airbnb tell us anything about the kind of health of the travel industry right now and the consumer around the world to spend money on travel and experiences?

30:32Yes. So U.S. travel has been pretty strong, and especially strong in their international markets as well, which are growing at almost like twice as fast than their core markets. They called out Brazil, Japan, and India has also seen a lot of first-time bookers for them. Let's talk about the strength of groceries. Instacart, really impressing investors, Natalie. Yes. Yesterday, they provided first-quarter guidance that could be their strongest quarterly growth as a public company. So that was really positive news for investors. You know, Instacart has seen this sort of moderating growth in the last few years.

31:15And this has really seen them accelerating as they lowered the minimum basket size needed for free delivery. That's really helped. And their partnership with Uber, allowing people to order takeout, has also helped with demand. What about the underlying technology and how much AI is becoming a flywheel for them or not? Yes, they're continuing to push out new technology solutions for grocers, such as their white label website building and as well as other recommendation engines for grocery. And that has powered a third of the revenue and they continue to expect it to grow this year, including pushing internationally with Costco in Europe.

31:59In most, Natalie Leung, we thank you so much on the Mornings Roundup. We've got more of them. Coinbase. Well, it showed how quickly a cooling crypto market can pressure even one of the industry's most diversified exchanges. Revenue in the fourth quarter tumbling 20 % to$1.8 billion. That says falling token prices drain trading activity across digital assets. This is the company's stock. It's already down nearly 37 % year to date. But it's got to bounce today. Katie Greifeld, I'm pleased to say, joins us. Host of the crypto show. And what everyone is trying to get to grips with is, have we found a bottom here?

32:31Is it bad and as ugly as it gets? That seems to be the explanation for why you're seeing shares bounce and then some. Coinbase currently up about 16 % at the moment. That is its best day since June, which looks unintuitive when you consider some of the actual numbers that we got last night, which weren't great. Transaction revenue coming in soft. You also had trading volumes coming in lower than expectations. But as you mentioned, I mean, shares were down 37 % through yesterday's close. We also had Robinhood report a few days earlier, their crypto business drove a net revenue miss for that company.

33:04So it wasn't necessarily surprising to see these figures. And the idea here is now basically that exactly that we're looking for a bottom that maybe the worst is already priced into this stock. Katie, I'm a little ignorant here. you know, like crypto from a sort of asset perspective is not something that I spend a huge amount of time on. What I was trying to ask earlier in the week is I get when volumes are down. That's not great. Right. That's kind of logical. But there's been so much volatility. So I thought that in an environment where there's volatility, a name like this would do really well.

33:38Right. Because you're on one side of the trade or you're on the other. Well, you're not wrong for thinking that. I mean, volatility, that's typically good news for exchanges across any asset class. But consider the movements that you've been seeing in the price of Bitcoin. It hasn't necessarily been two-sided volatility. It's really been dropping like a stone over the past several weeks, which isn't a great environment when it's a one-sided trade here. But I mean, as Caroline mentioned, this is a fairly diversified business. They've been trying to move away from just that reliance on spot trading.

34:11They have an interesting revenue sharing agreement with Circle. So they're exposed to stable coins, which is seen as much steadier. And another reason why you are seeing the shares pop today is there's some optimism that maybe we are going to see that market structure bill that's currently working its way through Congress actually get some action in the next few months, maybe actually make its way over the finish line. So that's why you're seeing maybe also the price of Bitcoin itself pop a little bit today. Clarity on the Clarity Act. Who'd have thought it? Katie Greifeld, thank you so much for joining us today.

34:42Meanwhile, let's stick with more earnings, I want to just take you to Applied Materials because this is the equipment maker of the US for the chip makers. We are up 9%, stellar set of numbers, managing to prove to the market that even though China is pulling away in terms of orders, we're actually seeing just the drumbeat of more and more investment in data centers. Of course, that means equipment manufacturing that is needed for chips to go into those data centers, Applied Materials benefiting off the back of it. We're up 8.9%. The CEO sounded pretty bullish, Ed. Etching and deposition gear, absolutely essential.

35:16Let's go to space. SpaceX capsule. Go Dragon and Godspeed Crew 12. And liftoff. Freedom flies bound for the International Space Station. 1.7 million pounds of thrust now propelling Falcon 9. Got ahead of myself there. SpaceX capsule carrying four crew members from the US, Europe, and Russia launched overnight to the International Space Station. The start of a planned eight-month stay in orbit that will include research on meditation in space. They'll be joining three other astronauts aboard the ISS, which has been operating with a skeleton crew since the first ever space medical evacuation, you'll remember, in January.

35:58Carol. Meditation. We need to do more of it on Earth, let alone in space. Brilliant. Thank you, Ed. Meanwhile, coming up, Ben Sun from Primary joins us to talk about the venture firm's latest mega fund. This is Bloomberg Tech.

36:39opportunities in private credit. Join the conversation and register today at bloomberglive.com slash invest.

36:52Early stage venture firm Primary has just closed a$625 million fund. That brings total assets under management to$1.65 billion. And it's at a time when investors are still really eager to back startups at the seed level. I speak to Ben Sun, I'm Primary's co-founder, general partner. Ben, the size and scale of the funds are getting bigger. Is that because we're seeing more opportunity to fund more companies or because each individual seed company needs more money? I think it's a combination of both, Caroline. If you look over the last decade, the seed market has grown from$5 billion 10 years ago.

37:29This is just what was invested seed in the U.S. 10 years ago in that year. to last year being about$20 billion. So we've seen 4x the amount of capital. In terms of round sizes, on top of that, round sizes have gone up from$1 billion to$4 billion as well. So again, a climb of about 4x. Are you seeing returns, though, that vindicate such bigger bets at the seed level? Where are you deciding to double down on companies? Do you just stay at seed? How do you think your own DNA changes in this moment? Oh, I think if you look at historically on the exits and the size of outcomes in both the median and the decile, you've seen that each kind of generation of startups just gets a step function higher and higher.

38:19And now with what's happening in AI, we think the outcomes are going to be that much greater. And so the amount of capital going in, it matches the quality of the talent, but also the quality of the opportunities. and with transformations like AI, we think, and the market thinks, those opportunities are going to become, and those outcomes are going to become bigger than we've ever seen before. Ben, some of the data you were just referencing, I wrote my column about this in January 26th. There's no point calling it a seed round anymore. Mango seed, coconut seed, avocado seed. But the scale is not just different.

38:58You're basically making a bet sometimes on just two or three people in the AI lab context, for example, is that more disconcerting in the moment when you do a seed round based on, you know, maybe an alumni of a bigger tech company or someone that's going it alone in this environment? Yeah, people look at historical data and they say, well, the round size has gotten bigger, so it hasn't become irrational. The reason why it's becoming bigger is because it's become more rational. Think about the founding talent alone. I started my career as a founder 30 years ago. What we knew about the internet and how to scale a technology company back then, I mean, it's night and day to where you see the market and the type of talent you have now.

39:48A lot of the talent are coming from best-in-class tech companies that have gone from zero to a billion-dollar type outcomes, if not more. and that talent is coming out and starting new companies. And then on top of that, the scale and the quality of their ideas are just getting in better and better. So I think the capital going in, the valuations are climbing. These are just markets being efficient and saying, well, the talent and these potential outcomes look like they have much more upside and therefore kind of demand those type of premiums. The seed market is very broad. What are the corners of the technology industry or opportunities where the technology just doesn't exist yet?

40:34I mean, the big unlock, as you know, is around kind of AI. And this is at the infrastructure level all the way to the application level. And the opportunities that we're kind of seeing across all different types of sectors is becoming evident that really AI is being able to unlock what is a much larger TAM than historically you've seen before. Before, we used to talk about TAM as like software budgets. AI is replacing or augmenting human labor. And when you think about that type of replacement augmentation, we're talking about a market that's trillions of dollars, not hundreds of billions of dollars.

41:13and that's really kind of the opportunity that we see, and it's happening in all different sectors, whether it be fintech, healthcare, industrials, throughout the enterprise, all the way to SMBs and consumers. So across the board, we think there's going to be huge transformations, especially with AI. Ben Sun, general partner at Primary. Great to have you on Bloomberg Tech. Thank you very much. Caro, so many more news headlines to get to. There are. It's time now for Talking Tech, and first up, ByteDance is in talks to sell its Moonton video game business to Saudi Arabia-based Savvy Games for more than$6 billion.

41:46It's all according to reports from Reuters, which says the parties could finalize the deal as soon as this quarter. Bloomberg has reported that the company's revived sale talks late last year. Plus day one data centers. Well, it selected banks for a US IPO that could raise$5 billion, according to sources. They say the company, which is backed by Chinese data center operator GDS, is targeting a valuation as high as$20 billion, a listing that may take place as soon as this year. And also looking to go public in the United States is SoftBank's digital payments provider, PayPay. The company could list as early as March, according to the public filing.

42:19Now, PayPay is seeking a valuation of more than$10 billion, though SoftBank founder Masayoshi Son is pushing for as much as$20 billion, according to sources. OK, coming up, social media is having a rough start to the year. But is the bad press slowing the industry's growth? More on that next. This is Bloomberg Tech.

42:45Social media's impact on teens, well, it's never been more scrutinized than it is right now. With lawsuits in the U.S. over addiction allegations, Australia's ban on under-16s that could actually spread to Europe. But are these moves actually crimping the industry's growth? Bloomberg's Kurt Wagner, who covers social media, joins us on this. You wrote a piece, your tech in depth piece, that kind of shows that, no, it doesn't actually affect the business model thus far, it feels like. Yeah, and I think there's two elements here. The first is the volume of accounts that have been removed. And again, these bans right now, to be clear, this is only happening in Australia, Caroline, right?

43:20So there is potential that this could become a real global problem. But the number of accounts that are being removed are drops in the bucket for these companies. It's maybe even a rounding error in terms of who they are losing. And then on top of that, I think if you talk to people who study this industry from a business standpoint, a 15-year-old on Snap, a 15-year-old on Instagram, that is not a super valuable user for these companies in terms of revenue. They don't usually have a lot of disposable income. They're not making household purchasing decisions yet. And so the point of this story here was mostly to say right now, this is not a real threat to the business of these companies.

43:56It could be down the line, but I think that's something that might be years away if it ever comes. The extension of that last part is that many of these names still rely heavily on advertising as source of revenue. There's obviously subscription in some cases, which is a different model. That would suggest generally ads are healthy right now. What are you seeing? Yeah, I mean, all of these businesses continue to grow their ads business quite considerably. I think it was meta, it was more than 20 % year over year. I mean, this is a company that's been around more than 20 years at, as you know, and they still figure out, you know, how to grow that ads business.

44:37And so I think there is a lot of money still pouring into these companies. And again, it's just where is that money being targeted? It doesn't feel that teens, while they're important, again, to create a vibe around a platform, to create buzz around a platform, they're not necessarily who advertisers are looking to get right now. And so I think that's where, again, there might be some delay in how these types of bands impact the business. Push us forward, though, Kurt, because we are going to see some key executives have to come up against arguments in court. Look, we all remember the pictures of Mark Zuckerberg being confronted by parents holding up signs.

45:17That moment resonates with a user base and a potential customer. It does. We're expected to hear Mark Zuckerberg testify next week in Los Angeles in a big trial that's all about whether these platforms are purposefully addicting teens to, you know, Instagram, Snap, TikTok, etc. And so, you know, there is a reputational element to this. And I think while I say that the business might not be impacted now, if you get a whole generation of teenagers who stop using these products, that is that is not good. Right. That is not good for meta that these people are now going to go spend time elsewhere. Bloomberg's Kurt Wagner, thank you very much.

45:57Some of the biggest players behind the AI boom are taking a page from the crypto industry's 2024 playbook, working to back congressional candidates who favor a lighter regulatory touch on AI. For more, Bloomberg's corporate lobbying reporter Emily Birnbaum joins us now. And these are names that are familiar, right, across the top tier of venture capital and the frontier labs. Explain this playbook they're trying to replicate. So the memory of Fair Shake, crypto's big pack, looms large over Democrats and Republicans in Washington. They spent huge sums, hundreds of millions of dollars, and were very successful.

46:39And so now the AI companies, including both Andreessen and Horowitz, who also gave to Fairshake, are pouring millions of dollars into congressional races across the country. Last time, the crypto industry won by not talking about crypto, instead boosting candidates based on issues that are popular in their district. And that's exactly what the AI industry is going to do this time with their pack. It's called Leading the Future. What can they do to dial in to where the electorate is at at the moment? Because when it comes to AI, there's a lot of anxiety, a lot of labor anxiety, for example. Where are they going to post the opportunity to them?

47:21Yes. So I think first, there is increasingly a lot of anxiety among constituents about AI, particularly about employment, particularly about data centers being built in their backyards. So I think for the AI industry, they're going to be making the argument that this is good for American dominance over China, that they are the innovators of the future. We'll see how that plays. But more than anything, I think they're working with strategists in each of these states. And you can see in their advertisements, they're focusing on ICE in New York. They're focusing on Trump ally, his MAGA accolades in Texas.

48:01we're going to see that play out over and over. And people in those states don't necessarily know that it's the AI industry behind these advertisements, mailers, texts coming to their phones. Fascinating. Bloomberg's Emily Ben Bam. We must get you back from that story. And do go read it. Meanwhile, that does it for this edition of Bloomberg Tech. What an extraordinary weekend. Yeah, and in the United States, at least, a holiday weekend for many. Recap the show and the week on the podcast. You know where to find it. All those places online and all of the Bloombergverse. Have a great weekend. This is Bloomberg Tech.

49:00If it's impacting trends and narratives that are out there, we are on it. We also have a lot of fun doing it. Bloomberg Business Week also brings you the analysis behind the headlines through conversations with our expert guests. And we are doing this all live each weekday. And then we bring you the best analysis in our daily podcast. Search for Bloomberg Business Week on YouTube, Apple, Spotify, or anywhere else you listen. Check it out on your way home from work to catch up on the conversations that you miss during the business day. And on the weekend, check it out for a complete wrap-up of your business week.

49:29That's the Bloomberg Businessweek Daily Podcast. I'm Carol Masser. And I'm Tim Stenevec. Subscribe today wherever you get your podcasts.