Bloomberg Technology 11/08/2023

>> FROM THE HEART OVER INNOVATION AND MONEY COLLIDE. THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: LIVE FROM HEADQUARTERS WE I AM CAROLINE. ED: AND I AM ED. CAROLINE: FULL ORDINANCE COVERAGE, WE HEAR FROM THE CEO OF RIVIAN ON EARNINGS AND PUSH AHEAD TO IMPORTANT DISNEY RESULTS AFTER THE BELL INCLUDING A WHOLE HOST OF OTHER TECH NAMES. ED: WE WORK APPEARS THAT HE IN BANKRUPTCY COURT. DETAILS AHEAD. CAROLINE: SHARES OF TAKE-TWO INTERACTIVE AFTER REPORTS THAT THEY WILL RE

LEASE DETAILS ON GRAND THEFT AUTO SIX. ALL OF THAT AND SO MUCH MORE. LET US LOOK AT WHAT IS HAPPENING IN THE MARKETS. AFTER THE RUN-UP WE HAVE HAD, THE BEST SET OF GAINS BACK TO BACK SINCE NOVEMBER 2021, WE ARE TAKING A MOMENT OF CALM. MONEY IS STILL GOING INTO THE BOND MARKET AS WE SPEAK, AN ANTICIPATION OF SOME DOVISH HOMES COMING FROM ONE KEY, FED CHAIR POWELL IS LIKELY TO SPEAK OUT IN A PANEL. INFLATIONARY PRESSURE JUST DOES GO DOWN INTO THE COMMODITY SPACE, DOWN 2% AND IN FACT BELOW THE $80

LEVEL WE HAVE NOT SEEN THAT SINCE BACK IN THE HEYDAY OF THE SUMMER. GEOPOLITICAL ANGST EASING OFF A LITTLE BIT WHEN IT COMES TO THE QUANTITY SPACE. LOOK AT WHAT IS HAPPENING FOR THE COMMODITIES. WE HAVE THE TOYS OUT OF THE TECHNOLOGY SPACE AND WE ARE SEEING SOME VOLATILITY IN THE LAST FEW TRADING HOURS WHEN IT COMES TO BITCOIN. WE ARE SEEING SOME SIDEWAYS MOVEMENT IN THE U.S. DOLLAR, WE HAVE $35,000 LEVELS. ED: WE ARE FOCUSED ON EARNINGS, RIVIAN IS INTERESTING, AND SIGNIFICANTLY MORE THAN 3%, W

HEN THE EARNINGS DROP THERE WAS A BIG POP AND A BIG PREMARKET POP, THE NEWS IS THEY RAISED GUIDANCE FOR THIS YEAR IN TERMS OF THE NUMBER OF EV'S THEY WILL BUILD AND THEY HAVE ENDED EXCLUSIVITY WITH AMAZON SO THEY CAN SELL THEIR BATTERY ELECTRIC DELIVERY VAN TO OTHERS. THE STOCK IS DOWN, IT IS NOT CLEAR WHY, WE WILL HEAR FROM THE CEO VERY SHORTLY AND THEN THIS IS THE BIGGEST DROP ON RECORD, A SHORT RECORD, WE COVERED THE IPO AT THE END OF SEPTEMBER, PRETTY BELOW ITS IPO PRICE OF $36 AND CLOSE ON

ITS FIRST DAY OF TRADING IN SEPTEMBER. THE EARNINGS STORY NO HOLDING UP. AS A TREADING WATER, IT DOES AND THAT. THIS NEW RESULT AFTER THE BELL AND THIS IS BIG. THE STOCK IS DOWN .2% DURING THE STORY IS ABOUT BOB IGER'S TURNAROUND. ALL OF THOSE CUTS, THE COST SAVINGS, THINKING ABOUT REDUCING THE CONTENT SPEND. THAT IS HOW HE IS JUDGED ON THE BOTTOM LINE. THAT IS WHERE WE LOOK IN A FEW HOURS TIME. CAROLINE: RETURN TO GROWTH, WHETHER IT IS ON DISNEY'S SUBSCRIBER GROWTH OR A TURNAROUND IN THE OVERAL

L NUMBERS. LET US GET TO IT. ARE WE EXPECTING A BOUNCE BACK TO GROWTH? >> AT LEAST IN TERMS OF THE WALL STREET EXPECTATIONS, IT WILL BE A BUMP IN SALES AND HIGHER PROFIT IN THE BOTTOM LINE. LOWER LOSSES IN THE STREAMING BUSINESS. ALL OF THOSE THINGS YOU MENTION, THE COST-CUTTING APPEARS TO BE PAYING OFF. ED: THIS WILL BE BIG EARNINGS, YOU WILL EAT COVERAGE OF THE ENTERTAINMENT INDUSTRY. DO YOU GO INTO THIS THINKING ABOUT DISNEY AS A TECH COMPANY STREAMING, SUBSCRIBERS, CONTENT, OR DO YOU WAKE UP

ON EARNINGS MORNING AND THANK THEME PARKS, MERCHANDISE, TRADITIONAL TV? >> I THINK OF DISNEY AS A CONSUMER-PRODUCTS COMPANY. THIS IS BEEN A CHOPPY WEEK IN TERMS OF ENTERTAINMENT EARNINGS. PARAMOUNT STOCKS JUMPED ON BETTER RESULTS AND TODAY AT WARNER BROS. DIVES. SOME OF THE NUMBERS WERE NOT BAD, THEY SHOWED A PROFIT IN STREAMING WHICH DISNEY AND PARAMOUNT HAVE NOT. AND ARE UNLIKELY TO. YOU NEVER KNOW WHAT TO EXPECT. IT IS A DIFFICULT MARKET FOR ADVERTISING ON THE TRADITIONAL TV NETWORKS. I DO S

OMETHING DISNEY IS EXPOSED TO. THE BIG QUESTION IS ALWAYS AROUND DISNEY AND WHAT IS BOB IGER WANT TO SIT ON THE CALL? ABC, FINE HULU, IT ALWAYS SOMETHING TO WATCH. -- IT IS ALWAYS SOMETHING TO WATCH. CAROLINE: WE GET TO SPORTS TV, STRIPPED OUT, SHOWING WHAT THE NUMBERS REALLY LOOKS LIKE WHEN IT COMES TO ESPN. HOW MUCH WILL HE ANSWER QUESTIONS ABOUT WHAT HE SELLS OR BUYS? >> I HOPE HE GETS ASKED A LOT. ESPN IS ONE OF THE ONES THAT SAID THEY ARE LOOKING FOR A STRATEGIC PARTNER. WE HAVE REPORTED TH

AT THEY HAVE TALKED TO EVERYONE. TECH COMPANIES, SPORTS LEADS, IT IS NOT REALLY CLEAR TO A LOT OF PEOPLE WHAT DISNEY GETS OUT OF THE INVESTORS TO THE ESPN COMPANY. ONE OF THE TAKEAWAYS FROM THE NUMBERS IS THEY START POURING ON THE SPORTS BUSINESS, ALTHOUGH IT IS PROFITABLE, IT HAS REALLY HIGH CONTENT COSTS. NFL RIGHTS. THAT WILL COME INTO PLAY IN THIS QUARTER AS THEY REPORTED AS WELL. GETTING THAT PICTURE OF ESPN AND ECHOES WILL BE IMPORTANT. ED: YOU ARE THE EDITOR, IT IS A BUSY DAY FOR YOU OUT

IN THE WEST COAST. THANK YOU VERY MUCH. RIVIAN, IT IS CHAINED BY DESPERATE EARNINGS AND SHARES HAVE POPPED AGAIN IN PREMARKET BECAUSE OF TWO PIECES OF NEWS. THEY WILL BUILD MORE EV'S THAN EXPECTED AND ALSO AMAZON HAS FREED THEM FROM THEIR EXCLUSIVITY. THEY CAN GO AND SELL TO OTHERS. I HEARD FROM SOURCES THAT THEY WERE UNDERWAY WITH THAT. I ASKED THE CEO HOW TO LISTEN -- I ASKED THE CEO, HAVE A LISTEN. >> WE ASSIGNED EXCLUSIVITY AGREEMENTS WITH AMAZON. IT WAS A LONG PROCESS AND WE WERE ABLE TO US

E THAT TIME TO BUILD A PIPELINE OF OTHER CUSTOMERS AND DIVERSE CUSTOMERS. WE ARE NOT YET ANNOUNCING THOSE DEALS. THEY WILL START BY AND LARGE WITH PILATE EMPLOYMENTS WERE WE HAVE SORT OF SCALED VEHICLES GO OUT AND TEST THE SYSTEMS AND UNDERSTAND THE NETWORK, WHAT YOU WILL SEE IS IT IS VERY DIVERSE ACROSS EVERYTHING FROM LAST MILE TO RETAIL TO OF COURSE, JUST MORE GENERAL PURPOSE APPLICATIONS OF EVENTS. ED: YOU HAVE NOT ANNOUNCED THAT THERE ARE DEALS, DEALS THAT ARE DONE AND YOU HAVE VISIBILITY O

N NEW CUSTOMERS ON EV FROM THIS POINT ON? >> WE HAVE VERY HIGH VISIBILITY ON CUSTOMERS OUTSIDE OF AMAZON AND WE ARE EXCITED TO TALK ABOUT THOSE BUT WE ARE NOT YET TALKING ABOUT THOSE OTHER RELATIONSHIPS AND PARTNERSHIPS. ED: RIVIAN IS LOSING 31,000 DOLLARS ON EVERY EV THAT IT MAKES. WHEN WILL YOU STOP MAKING MONEY ON THEM -- START MAKING MONEY ON THEM? >> THIS HAS BEEN ABSOLUTELY A CORE FOCUS FOR US IN THE BUSINESS AND QUARTER OVER QUARTER WE HAVE SHOWN SIGNIFICANT PROGRESS. WE HAVE SHOWN THAT A

S WE WENT FROM Q2 TO Q3. THESE IMPROVEMENTS THAT ARE DRIVING US TOWARDS THE LONG-TERM 25% GROSS MARGIN WE HAVE TALKED ABOUT EXTENSIVELY ON OUR RUN, YOU THINK OF IT AS A STAIRCASE, A WHOLE HOST OF CHANGES THAT ARE HAPPENING IN OUR BUILDING MATERIALS AND THERE IS IMPROVEMENTS IN OUR PLANS, THE FIXED COST ABSORPTION FROM RUNNING A HIGHER BOND CENTER PLANT AND OF COURSE, THERE IS THE EVOLUTION OF OUR SELLING PRICE WHICH CONTINUES TO TREND UPWARDS AS WE MOVE INTO NEW ORDERS AND LAUNCH THINGS LIKE OUR

LARGEST BATTERY PACK. IMPORTANTLY, I WANT TO BE CLEAR HERE, THE STAIRCASE OF STEPS, THE BIGGEST STEP AMONGST THOSE IS WHAT WILL BE PUTTING IN PLACE IN THE PLANT IN THE SECOND QUARTER OF 2024. A SET OF CHANGES THAT GO INTO THE VEHICLE THAT REDUCE THE CEREALS AND RUNS THE PLANT MORE EFFICIENTLY, THAT IS NOT TO SAY THAT THERE ISN'T IMPROVEMENTS THAT ARE HAPPENING LEADING UP TO THAT. A SIMILAR SHUTDOWN THAT WE DID ON OUR COMMERCIAL VAN THE EARLY PART OF THIS YEAR AND COMING OUT OF THAT WE HAD A 35%

REDUCTION IN OUR MATERIAL COSTS. THAT IS THE SCALE OF CHANGE THAT WE WILL BE DRIVING WITH A SHUTDOWN FOR R1. THESE ARE CONTRACTUAL CHANGES. MATERIALS CHANGES ARE NOT IS HOPING SUPPLIERS WILL TARGETS LESS, THESE ARE HARD NEGOTIATIONS -- WILL CHARGE US LESS, THESE ARE HARD NEGOTIATIONS. THOSE ACTIVITY DATES, THEY DO NOT ALL APPLY IMMEDIATELY. THEY COME IN OVERTIME. ED: OUR AUDIENCE HAS ONE COMMON QUESTION, VERY STR AIGHTFORWARD. WHEN WILL THEY SEE AN R2 PROTOTYPE? >> WE WILL BE SHOWING THE R2 PRO

GRAM FIRST QUARTER OF THIS COMING YEAR, EARLY PART OF NEXT YEAR. THIS IS ABSOLUTELY VITAL PART OF THIS AS A BUSINESS AND IT ALLOWS US TO TAKE OUR BRAND AND WHAT WE BUILT AS A COMPANY AND PUT IT INTO A SMALLER PACKAGE BUT IMPORTANTLY, A MUCH LOWER PRICE VEHICLE. I'VE NEVER BEEN THIS EXCITED ABOUT A PRODUCT AS I AM ABOUT R2. IT ISN'T THAT EXCITING AND I WOULD SAY IT IS THAT GOOD. WE THINK IT IS EXCEPTIONAL. ED: YOU LIFT THE CANVAS OFF ON STAGE IN THE FIRST QUARTER OF 2024 ON AN R2 PROTOTYPE? >> WE

ARE SHOWING IT IN NEXT YEAR, THAT IS RIGHT. ED: THAT WAS MY INTERVIEW WITH THE RIVIAN CEO, SOME SAY, DOPPELGANGER! CAROLINE: SOME SAY! ED: CAROLINE SAYS! WE TALK ABOUT SAFEGUARDS FOR ARTIFICIAL INTELLIGENCE WITH THE CEO OF CREDO AI. THE AI SUMMIT IN NEW YORK TODAY. CAROLINE: THERE ARE A WHOLE HOST OF EARNINGS COMING UP, SOME OF THEM ARE NEW TO PUBLICLY CREATING LIFE, KEY AMONG THEM IS DONE ON THE DAY, MOST OF THE SPECTRUM IS IN TERMS OF TECH. OFF BY 3%, LOOKING FOR NUMBERS OFF OF THE BELL. OUTP

ERFORM INCOME INSTACART, KEY AS IT STANDS ON 4% AND BOTH OF THESE RECENTLY LISTED COMPANIES HAVE BEEN UNDER PRESSURE SINCE GOING PUBLIC. WE WILL KEEP A CLOSE EYE ON ALL OF THAT. FROM NEW YORK, BOTH OF US, THIS IS BLOOMBERG TECHNOLOGY. ED: SOME NEWS IN THE SOCIAL MEDIA SPACE, IN AN EFFORT TO COMBAT MISINFORMATION MEANT IT WILL REQUIRE ADVERTISER TO DISCLOSE WHEN POLITICAL OR SOCIAL ISSUE ADS HAVE BEEN CREATED OR ALTERED BY ARTIFICIAL INTELLIGENCE. THIS WILL REQUIRE ADVERTISERS TO DISCLOSE WHEN AI

IS USED IN FACEBOOK OR INSTAGRAM ADS ON SOCIAL ISSUES, LECTURES, OR POLITICS ACCORDING TO THE VICE PRESIDENT OF GLOBAL AFFAIRS, NICK CLAVE. CAROLINE: THAT IS SURROUNDING SAFEGUARDS, WAYS YOU CAN IDENTIFY ARTIFICIAL INTELLIGENCE. HAVE A PRODUCTION FROM AI MORE BROADLY? TODAY IN NEW YORK, CREDO AI KICKS OFF ITS LEADERSHIP SUMMIT. PUTTING TOGETHER INDUSTRY PIONEERS ARE LEADING THE CHARGE IN THE ADOPTION OF AI GOVERNANCE GLOBALLY. PLEASE WELCOME TO THE SHOW THE CREDO AI CEO. WONDERFUL TO HAVE YOU W

ITH US. ULTIMATELY, ARE THE RIGHT PEOPLE, THE RIGHT VOICES EXERTING THEIR VOICES AND HAVING CHANGE MADE AT THE MOMENT? EVERYBODY IS TRYING TO ADOPT AI AND THE GOVERNMENT AND THE RULES ARE NOT IN PLACE QUICKLY ENOUGH? >> WHAT A GREAT QUESTION, THE PAST 10 DAYS HAVE SHOWN THE URGENCY IN ADOPTING ARTIFICIAL INTELLIGENCE. WE SAW FROM PRESIDENT BIDEN ALL THE WAY TO THE SUMMITS TO A LOT OF DISCUSSION AROUND HOW DO WE MAKE THIS REAL? THIS IS WHY WE ARE HERE IN NEW YORK TODAY, BECAUSE WE ARE HOSTING IND

USTRIES FOR RESPONSIBLE AI, PREMIER EVENT WHERE WE ARE BRINGING IN PARTNERS, CUSTOMERS, FROM AMAZON, MICROSOFT, GOOGLE, MASTERCARD AND MANY OTHERS, OPERATIONALIZING A LOT OF THE GUARDRAILS WITHIN THEIR ORGANIZATIONS TODAY. I THINK WE HAVE MOVED BEYOND THE TALK AND NOW IT IS TIME FOR ACTION. WE ARE SEEING THAT WITH IT ENTERPRISES -- WITHIN ENTERPRISES. ED: IT MIGHT SEEM LIKE A STRANGE QUESTION, BUT ARE THERE ANY STAKEHOLDERS IN THE WORLD OF AI THAT DECLINED YOUR INVITATION THAT YOU WISH HAD SIT D

OWN WITH US AND TALKED BECAUSE YOU ARE A BIG PART OF THIS? >> GOOD NEWS IS NO. EVERYONE WHO WAS INVITED IS SHOWING UP. THERE ARE CERTAIN POLICYMAKERS AS WELL AS START UPS COMPANIES IN EUROPE THAT OUR HEADS DOWN WITH THE EU. THEY WERE NOT ABLE TO JOIN US IN PERSON BUT THEY ARE JOINING US VIRTUALLY. CAROLINE: IS THERE FRUSTRATION THAT ULTIMATELY LAWS ARE NOT MADE QUICKLY ENOUGH? EVERYONE WANTS TO SAVE THAT IT IS DIFFERENT. ED: IT IS A REGIONAL THING. WHAT IS HAPPENING IN CHINA? CAROLINE: THEY ARE

TALKING A LOT ABOUT IT. ULTIMATELY IT TAKES TIME TO MAKE POLICY. HIS SELF-REGULATION -- IS SELF-REGULATION THE WAY THAT IT HAS TO BE FOR THE NEAR TERM? >> I THINK IN THE WORLD OF AI AND IF YOU THINK ABOUT WHAT REALLY POWERS THE ENTIRE ECOSYSTEM IT IS TRUST. REGULATIONS AND UPCOMING COMPLIANCE NEEDS ARE DRIVING FORCES BUT I KNOW WE ARE SEEING IS A REASON ORGANIZATIONS AND POLICYMAKERS AND DIFFERENT STAKEHOLDERS CARE ABOUT GOVERNMENTS IS BECAUSE YOU WANT TO ENGENDER TRUST IN THE TECHNOLOGY WHICH I

S SHAPING OUR LIVES THEY IN AND DAY OUT. HOW DO WE MAKE TRUST HAPPEN? IT IS THROUGH TRANSPARENCY AND OVERSIGHT AND ACTUAL GUARDRAILS. ED: TRANSPARENCY ISSUES, HE HEARD THE STORY WE COVERED ON META-. IF IT IS A POLITICAL OR SOCIAL ISSUE AD AND IT HAS BEEN ALTERED OR CREATED BY AI, YOU HAVE TO DISCLOSE IT AS AN ADVERTISER. DOES THAT WORK? IS THAT A POWERFUL TOOL? >> I THINK IT IS A STARTING POINT. ONE OF THE THINGS THAT IS NERVE-RACKING FOR ME AS WELL AS THE TECHNOLOGIES IS THERE ARE SO MUCH INFOR

MATION OUT THERE. REENTERING THIS SPACE, WE DO NOT KNOW WHAT IS MADE BY HUMAN VERSUS AI VERSUS HUMANS AND COMBINATIONS. WE ARE ENTERING A SPACE WHERE THE NEED FOR WATERMARKING AND PROVIDENCE FOR UNDERSTANDING THE ENTIRE LINEAGE WILL BE CRITICAL AND WE HAVE THE STARTING POINT, IT IS A COMPLEX ISSUE AND A LOT OF INNOVATION AND POLICY INNOVATION IS NEEDED. CAROLINE: CAN YOU WALK US THROUGH HOW YOU AT CREDO ULTIMATELY HELP A COMPANY GET THE RIGHT GUARDRAILS IN PLACE? HOW HAVE YOU THOUGHT ABOUT RIGHT

ING THE RULEBOOK AHEAD OF ANYBODY -- WRITING THE RULEBOOK AHEAD OF ANYBODY OR ILLITERATE A REGULATORY PERSPECTIVE? >> WHAT WE DID WAS BUILD STRONG PARTNERSHIPS WITHIN THE ECOSYSTEM WITH THE REGULATORS AND POLICYMAKERS AND STANDARD SETTING BODIES AND OTHERS. REALLY BRINGING ALL OF THE KNOWLEDGE IN. PUTTING THAT THROUGH TECHNOLOGY. MOST OF OUR TEAM IS AI EXPERTS, RISK EXPERTS. WE ARE BRINGING IN BEST PRACTICES FROM CREDO AI TO REALLY HELP TRANSFORM. A QUICK EXAMPLE, TODAY IS A BIG DAY, WE ARE LAUN

CHING OUR PRESS REPORTS AND PRESS SCORECARDS BECAUSE OF YOU HAVE BEEN FOLLOWING THE OPENAI DEV DAY, THEY HAVE INTRODUCED THE MARKETPLACE. HOW DO YOU ACTUALLY MAKE SURE THAT ALL OF THESE NEW APPLICATIONS THAT ARE SHOWING UP IN THE MARKETPLACE ARE ACTUALLY TRUSTED AND ARE SEEING A TRUST LAYER COME IN. WE HAVE LEARNED A LOT IN THE ENTERPRISE WORLD THAT WE ARE BRINGING TO STARTUPS SO THAT THEY CAN COMPLETE AND -- COMPETE AND WIN IN THIS STAGE OF AI. ED: GOOD TO BE HERE IN PERSON WITH YOU! >> THANK Y

OU FOR HAVING ME! ED: WE WILL KEEP IN TOUCH WITH WHAT ACTUALLY HAPPENS IN YOUR SUMMIT. WE BREAK IT ALL DOWN AND DISCUSS, WE WORK'S IMPACT ON SOFTBANK. AN EXPERT WHO KNOWS EVERYTHING ABOUT THIS COMPANY. CAROLINE: KEEP A CLOSE EYE ON ELI LILLY, IS FROM THE FDA, DRUG AUTHORITIES SAYING THAT THE DIABETES DRUG HAS BEEN APPROVED FOR WEIGHT LOSS. THERE HAS BEEN A WH WHOLE ONE OF EXCITEMENT AROUND ED: TIME FOR TALKING TECH, NEWS OUT BEFORE THE SHOW, AI STOCKS PHILANTHROPIC IS USING NEW CHIPS FROM GOOGLE

, DEEPENING THEIR PARTNERSHIP AFTER A RECENT $3 BILLION CLOUD COMPUTING AGREEMENT. ANTHROPIC WILL USE IT TO POWER ITS LARGE LANGUAGE MODEL CALUDE. -- CLAUDE. AMAZON PRIME WILL CUT MEDICAL MEMBERSHIPS, IT IS A CENTERPIECE OF AMAZON'S HEALTH CORPORATION AND MICROSOFT IS OFFERING U.S. POLITICIANS AND CAMPAIGN GROUPS A TOOL AIMED TO HELP FIGHT THE RISE OF DEEPFAKES AHEAD OF THE 2024 PRESIDENTIAL ELECTION. THE NEW TOOL ALLOWS PARTIES TO AUTHENTICATE THEIR VIDEOS AND PHOTOS WITH WATERMARK CREDENTIALS

USING CRYPTOGRAPHY. CAROLINE: WE MOVE AWAY FROM THE FUTURE OF AI TO WHAT IS HAPPENING IN THE DOWNFALL OF WEWORK, MAKING HIS FIRST BANKRUPTCY COURT APPEARANCE TODAY TO ADVANCE THE RESTRUCTURING PROPOSAL THAT COULD CUT $3 BILLION IN DEBT. ONCE REALLY HIGHFLYING REAL ESTATE BUSINESS FELL AFTER GOING PUBLIC. ELLEN WAS THEREFORE THE HIGHS AND THE CRASH, AND ULTIMATELY WE SEE THE REPERCUSSIONS FOR THOSE LEFT HOLDING WHAT IS THE ASSETS, WHO IS REALLY IMPLICATED BY THIS BANKRUPTCY FILING? >> THE PEOPLE

WHO ARE BEING AFFECTED, IT SEEMS LIKE REPUTATIONAL HE, SOFTBANK IS REALLY BEING HURT BY THIS. -- REPUTATIONAL LY, SOFTBANK IS THE ONE BEING HURT BY THIS. THEY MADE A BAD CALL, THAT WAS NOT A GOOD BET. I THINK THAT ALTHOUGH THERE IS A FUTURE FOR WEWORK, DEPENDING ON HOW THIS PROCESS GOES, I THINK THAT REPUTA IT HAS BEEN HARD. ED: YOU CHRONICLE EVERY STEP OF WEWORK, YOU PLEASE. A LOOK AT THE END DEFINING MOMENTS AND WE DO NOT HAVE TIME FOR ALL 10 BUT WHAT ARE THE TOP TWO TO YOUR MIND? >> PEOPLE FO

RGET HOW FUN WE WORK WAS! IN THE PERIOD BETWEEN 2014 OUT OF 2019, IT WAS FIRST THIS EXTREMELY ENERGETIC, SUPERFUND COMPANY THAT WAS TRYING TO MAKE WORK FUN. IF YOU CAN PICTURE IT, GOING TO SUMMER CAMP WHICH WAS THEIR BIG ANNUAL BLOW OUT BOTH FOR ALL OF THEIR AND A BUNCH OF MEMBERS. THEY WOULD COME AND GATHER FOR A WEEK IN THESE BEAUTIFUL SETTINGS AND HAVE BASICALLY A MUSIC FESTIVAL. THERE SPEAKERS, ALCOHOL EVERYWHERE! IF YOU TALK TO PEOPLE USED TO WORK AT WEWORK THEY SAID IT WAS REALLY FUN! IMAG

INE GOING TO COACHELLA BUT IT IS THROWN BY YOUR BOSS! ONE OF THESE WEIRD THINGS WHICH IS WHAT WE WORK WITH TRYING TO DO WHICH WAS BLUR THE LINE BETWEEN WORK AND PERSONAL LIFE. CAROLINE: THEY TOOK ON SOME OF THE BLAME OVER ITEM NEWMAN -- ADAM NEWMAN, BY THRUSTING SO MUCH MONEY AND BUILDING AND BE AMBITIOUS, IT PUSHED AT THEM TOO FAR. DO YOU THINK THAT HAS CREDENCE TO IT? >> I THINK IT DOES. IN SOME WAYS, ONE WAY TO LOOK AT ADAM'S HE WAS GOOD AT TAKING ADVANTAGE OF THE VENTURE FINANCIAL ECOSYSTEM

OF THE MID TO LATE 2010S. HE REALIZED THAT THERE WERE PEOPLE OUT THERE LIKE MSASA WHO WOULD GIVE MONEY TO PEOPLE WHO WENT GROW ENERGY AS FAST AS ADAM GREW WEWORK. HE WANTS TO GO BIG AND CRAZY AND SOMEONE LIKE MASA AND ENABLED THAT WITH ENORMOUS AMOUNTS OF MONEY. IT DOES SEEM LIKE BOTH OF THEM, CERTAINLY THEY WILL HAVE FUTURE CITY BUSINESS, ADAM'S FUTURE IN BUSINESS LOOKS PRETTY STRONG, HE HAS NEW VENTURES AND HIS REPUTATION OF COURSE, THIS WILL ALWAYS BE PART OF HIS STORY BUT I THINK HE HAS EMER

GED UNSCATHED. ED: ALL OVER WE WORK FOR YEARS, TODAY IS DAY ONE BANKRUPTCY. MORE TO COME. THANK YOU. EARNINGS, TOP ESTIMATES, WE ARE JOINED BY THE CEO TO DISCUSS HIS VISION OF THE COMPANY MOVING FORWARD. >> WELCOME BACK. >>'S TIME FOR A CHECK ON MARKETS. AFTER EIGHT STRAIGHT DAYS OF GAINS ON THE NASDAQ 100, THE LONGEST STREAK SINCE NOVEMBER, 2021, AS IT STANDS, DOWN AND A HOT STREAK IS OVER. WE TALKED ABOUT HOW MUCH HEAVY LIFTING THE MEGA CAPS HAVE DONE. NVIDIA STILL TO REPORT. HIGHER NAMES IN T

HE RED. THE VAST MAJORITY IN THE NASDAQ 100 HAVE BEEN IN THE RED IN ANY GIVEN SESSION WHILE MEGA CAPS KEEP THE INDEX BUOYANT. THE FOCUS IS SWITCHING MACRO AND GEOPOLITICS AND WHAT THE FED WILL OR WON'T DO AT THE START OF '24. I'M EVER THE OPTIMIST. CAROLINE: YOU HAVE TO BE. KYNDRYL HAD BETTER-THAN-EXPECTED EARNINGS. COMPANY BOOSTED ITS EARNINGS OUTLOOK AND ADJUSTED AHEAD OF CONSENSUS. MARTIN SCHROEDER IS WITH US, JUST DOWN MIDTOWN. GOOD TO HAVE TIME WITH YOU. TURNAROUND STORY QUICKER THAN EXPECT

ED. REVENUE STILL FOLLOWING. ANTICIPATE YOU CAN GET THAT INTO POSITIVE NEXT YEAR? >> WE DO. WE HAVE SAID FOR TWO YEARS NOW WE WILL GET THIS BUSINESS TO GROW AGAIN IN CALENDAR 2025. WE FEEL BETTER ABOUT THAT THAN EVER BEFORE. THIS YEAR AND NEXT YEAR, CONTINUED FOCUS ON ENGINEERING DECLINE AROUND THINGS THAT DON'T MAKE SENSE. WE SEE THE BENEFIT IN PROFIT PROGRESS WE'VE MADE. SAME TIME, WE SEE GROWTH IN AREAS WE WANT TO CONTINUE AND EXPECT TO OVER THE LONG HAUL. OUR CONSULT BUSINESS IS GROWING WELL

. ELEMENTS OF OUR BUSINESS, ALIGNED WITH OUR CUSTOMER, LONG TERM TRENDS AROUND INVESTING DATA AND AI, HYBRID CLOUD, ETC. ARE SHOWING GREAT GROWTH. WE ARE IN A POSITION WE SAID WE WOULD BE. WE ARE ENGINEERING DECLINES IN PARTS OF OUR BUSINESS THAT DID NOT MAKE SENSE FOR US, WHILE BUILDING BUSINESSES TO GET BACK TO LONG-TERM SUSTAINABLE GROWTH, CALENDAR '25. CAROLINE: WHEN I THINK ABOUT TECH INFRASTRUCTURE, DATA, AI, SECURITY -- THEY SOUND NECESSARY. ANY MACRO HEADWINDS? MARTIN: THE NATURE OF WHAT

WE DO IS RUNNING MISSION CRITICAL INFRASTRUCTURE OF COMPANIES THAT RUN THE WORLD. BANKING, AIRLINES, TELECOM, SUPPLY CHAINS. NATURE OF THAT WORK, REGARDLESS OF THE MACRO, YOU NEED TO RUN INFRASTRUCTURE. AS YOU WOULD EXPECT, WE ARE ALSO HELPING CUSTOMERS MAKE SURE INFRASTRUCTURE STAYS SECURE/RESILIENT, WE ARE ALSO HELPING THEM POSITION FOR LONG-TERM SECULAR TRENDS THEY WANT TO CONTINUE TO INVEST IN REGARDLESS OF THE MACRO, SO THEY ARE READY FOR WHAT COMES. WE SPENT TIME HELPING THEM WITH AI , GE

TTING DATA ARCHITECTURES RIGHT TO TAKE ADVANTAGE OF THAT INNOVATION. WE SPEND TIME WITH CUSTOMERS HELPING THEM MOVE ON TO CLOUDS TO TAKE ADVANTAGE OF THE INNOVATION TO RUN BUSINESS. WHILE THE NATURE REMAINS RESILIENT TO THE MACRO BECAUSE WE ARE NOT SOMETHING YOU DECIDE YOU NEED OR DON'T NEED -- YOU HAVE TO HAVE INFRASTRUCTURE. THE NATURE OF THE WORK HELPS THEM POSITION FOR THE FUTURE. WE ARE NOT A DISCRETIONARY ITEM. THE NATURE OF WORK IS NOT DISCRETIONARY EITHER. ED: WHAT PUT YOU ON THE MAP AT

THE BEGINNING OF THE YEAR WAS YOU CONFIRMED YOU WOULD CUT A SMALL AMOUNT OF HEADCOUNT. 90,000 PEOPLE. HOW IS THE PROGRESS OF REDUCTIONS? THAT IS A LOT OF PEOPLE. MARTIN: WE ARE A BIG COMPANY, THE LARGER INFRASTRUCTURE SERVICES PROVIDER. OUR CUSTOMERS RELY ON US TO RUN MISSION-CRITICAL, PARTS AND A LONGS. -- HEARTS AND LUNGS. THAT NUMBER SPUN OUT OF IBM. YOU DON'T GET TO PACK YOUR SUITCASE. THAT'S WHAT WE HAD. TWO THIRDS OF THOSE PEOPLE ARE DELIVERING EVERY DAY TO CUSTOMERS. THAT IS IMPORTANT, TH

AT THEY HAVE PEOPLE THEY TRUST DELIVERING EVERYDAY. WE SPEND TIME MAKING SURE THEY HAVE THE RIGHT SKILLS, DELIVERING EVERYDAY. EARLIER THIS YEAR, OUT OF IBM, THE ONE UNIVERSE RE-, WE WERE ABLE TO START TO SIMPLIFY PROCESSES INHERITED. LAST WEEKEND, THE TWO-YEAR ANNIVERSARY DATE, WE TOOK A BIG STEP BY MOVING OFF THE TRANSITION SERVICE AGREEMENTS IBM CREATED. WE ARE NOW ON ALL CLOUD, WE REDUCED THE APPLICATION COUNT, FROM WHAT WE INHERITED, WHICH WAS OVER 1800, TO NOW IN THE DOZENS AND THAT ALLOWS

US TO RETHINK THE PROCESSES, HOW CAN THEY REALLY BE CHANGED TO SUPPORT SERVICES? WE WERE DEALT A HAND. WE BEEN ABLE TO USE AI, AUTOMATE WORKLOADS SO WE ARE NOT AS NEEDFUL TO BUILD SKILLS WITH EXTERNAL HIRES. WE CAN USE PEOPLE WE FREE UP AND PUT THEM INTO MORE IMPORTANT AND VALUABLE WORK YOU'RE DOING NOW. WE NOW HAVE AN OPPORTUNITY THROUGH THE TSA'S, TO REALLY THINK HOW WE RUN THE BUSINESS. HOW DO WE BUILD FIT FOR PURPOSE PROCESSES FOR THE SERVICES BUSINESS AS OPPOSED TO THE PRODUCT ORIENTED BUS

INESS WE CAME FROM? ED: SHARES UP 11%, BIGGEST JUMP SINCE AUGUST. IN THE CLOUD SPACE, THERE IS EVIDENCE COMPANIES HAVE DIALED BACK AND REALLOCATED SPEND PER COMPUTE ON THE AI SIDE. DOES THAT SHOW UP IN INFRASTRUCTURE? MARTIN: THE WORK WE DO IS GETTING INFRASTRUCTURE READY TO UNDERTAKE SCIENCE PROJECTS THEY WANT TO, GENERATIVE AI, BUT WE'VE BEEN WORKING WITH CUSTOMERS FOR A WHILE HELPING THEM IMPLEMENT MACHINE LEARNING, ALL THE THINGS WE USED TO RUN. THEY TAKE ADVANTAGE OF OUR AI TODAY BY HELPING

THEM STAY AT THE HIGH-END OF WORLD-CLASS BASED ON TECHNOLOGIES IMPLEMENTED AND WE AUTOMATE THAT FOR THEM, SO THEY HAVE THE BEST IN CLASS IMPLEMENTATIONS OF MICROSOFT, ALL THE OTHER TECHNOLOGIES. THEY BEEN RELYING ON US FOR INSIGHT ABOUT INFRASTRUCTURE. NOW THEY SEE WE ARE CUSTOMER ZERO FOR AI AND MACHINE LEARNING, WE ARE ALSO HELPING THEM NOW WITH PARTNERS, GET READY TO IMPLEMENT MACHINE LEARNING, GENERATIVE AI AND ALL THE WORK YOU NEED AROUND DATA ARCHITECTURE, SECURITY AND RESILIENCE. ED: SHA

RES ON TRACK FOR THE BIGGEST JUMP SINCE AUGUST. COMING UP, MORE ABOUT AI AND INVESTING WITH SEQUOIA CAPITAL PARTNERS. CAROLINE: SHARES ARE POPPING. REPORTER: 22% GROWTH WASN'T GOING TO CUT IT ANYMORE. THEY NEEDED TO CONVINCE INVESTORS TO BUY IN. TODAY IS INVESTOR DAY. THEY SEEM TO BE DOING THAT. THEY WILL BE AIMING FOR LOW 20'S TO HIGH 20'S PERCENTAGE, IMPROVING MARGIN LEVELS ABOVE 50%. THIS IS BLOOMBERG. ♪ CAROLINE: THE HILLHOUSE CHAIRMAN SAID THE NEXT FOR YEARS COULD PRODUCE THE BEST VINTAGES

FOR PRIVATE EQUITY IN ASIA. THEY ARE KNOWN FOR INVESTING IN TRADITIONAL COMPANIES. CAOTUE IS VALUED AT $1.2 BILLION OR LESS ON PAPER. MEANWHILE, SHERYL SANDBERG IS BACK, BACKING CERCLE, THROUGH HER NEW VENTURE CAPITAL FUND. THAT USES AI TO ANALYZE BIOMEDICAL DATA WITH THE GOAL OF IMPROVING WOMEN'S HEALTH CARE. ED: IT'S A GOOD TIME TO CATCH UP. WE THINK OF SEQUOIA AS THIS JUGGERNAUT. WE THINK ABOUT AI WITH YOU. YOU'VE BEEN BUSY SINCE WE LAST SPOKE. KONSTANTINE: IT'S WONDERFUL TO BE HERE. LAST TIM

E, YOU ASKED HOW WE WOULD LEAN INTO THIS MOMENT? SEQUOIA HAS BEEN IN THE AI SPACE FOR DECADES NOW. THERE IS AN AMAZING INFLECTION IN THE GENERATIVE AI REVOLUTION. WE LEANED IN BY BACKING EXCELLENT FOUNDERS SOLVING REAL PROBLEMS. THIS YEAR ALONE, WE'VE MADE 20 INVESTMENTS IN THE AI SPACE. THAT IS 60% OF OUR EARLY-STAGE NET NEW INVESTMENTS. ED: HOW DOES THAT DIFFER FROM LAST YEAR? HOW IS THAT A RAMP-UP? KONSTANTINE: IT IS MORE THAN LAST YEAR. WE'VE ALWAYS FOCUSED ON AI, BACK TO 1993 WITH NVIDIA, A

CORNERSTONE OF THE FIELD. THERE'S BEEN THIS EXCITING POINT THAT'S ALLOWED US TO LEAN INTO MORE COMPANIES IN '23. THIS HAS ALLOWED US TO SEE USERS LEANING INTO PRODUCTS, USING THEM ACTIVELY. LAWYERS LEVERAGE AI AND OUR PRODUCT, HARVEY, TO GENERATE CONTRACTS. RECEIPT TEAMS USING DUST IN ORDER TO MAKE PERSONAL ASSISTANTS AND HUGGING FACE MODERATES OPEN-SOURCE INTO THOUSANDS OF PRODUCTS. IT FEELS LIKE AI HAS LANDED. WE'VE MOVED OUT OF HYPE, INTO REALITY. CAROLINE: WHERE ANY OF THE VALUATIONS FEELIN

G HYPY? KONSTANTINE: VALUATIONS CAN BE HIGH. WE TRIED TO STICK WITH FUNDAMENTAL. A LOT OF AI BUILDERS APPRECIATE THE FACT BUILDING A COMPANY IS BUILDING A COMPANY. THEY LOOK TO SEQUOIA, THE TRACK RECORD, AND THEY REALIZE, A SEQUOIA BACKED COMPANY IS FOUR TIMES MORE LIKELY TO GO FROM SEED TO SERIES A. IT IS TWICE AS LIKELY TO GO FROM A TO SERIES C. FLY DO I SAY THIS? -- WHY DO I SAY THIS? AN AI-BASED COMPANY IS A COMPANY. THIS LEADS TO A LOT OF FOUNDERS REALIZING THE SEQUOIA ADVANTAGE. ED: INTERE

STING TRIANGLE. WE STARTED THE WEEK WITH THE DEVELOPERS CONFERENCE. YOU WERE AN O EARLY INVESTOR IN OPENAI. THEY WOULD OFFER STUFF AND HELP OTHERS BUILD. IS THAT YOUR ASSESSMENT? KONSTANTINE: WE BEEN INVESTORS IN OPENAI FOR A WHILE. 2021, BEFORE THIS AMAZING MOVEMENT STARTED TO INFLECT. WHAT THEY'VE DONE WELL IS LEAN INTO THE DEVELOPER. THEY UNDERSTAND THE CREATOR HAS POWER. THEY CAN AUGMENT WITH THIS TYPE OF STAFF. THEY STILL WANT TO PUT THAT IN THE HANDS OF THE CREATOR, WHICH IS ANOTHER DECADE

S LONG TREND. WE HAVE ALWAYS KNOWN THE DEVELOPER IS KEY. THIS GOES BACK TO STRIKE, MONGO DB OR UNITY, THE COMPANIES FOR GAME CREATION. OPENAI NAILED FOCUSING ON THE DEVELOPER AND HELPING THAT CREATOR WITH THE SERVICES. CAROLINE: YOU MENTIONED DUST, A WAY IN WHICH WE CAN BE AUGMENTED WITH OUR OWN HELPFUL CHAT BOT. HOW DO YOU DECIDE WHICH ONE TO BACK? KONSTANTINE: GPTS WILL BE A WONDERFUL ADDITION TO THE ECOSYSTEM. THE WORLD IS NOT GOING TO BE A ZERO-SUM GAME IN AI. ALL THE VO BOATS ARE RISING ON

THIS AMAZING WAVE. CAROLINE: NOT ALL OF THESE ARE GOING TO SURVIVE COMPETITION FROM THE JUGGERNAUTS. KONSTANTINE: NO DOUBT. WHAT WE'VE LEARNED IS IT IS SURVIVAL OF THE MOST NIMBLE. ED: THEY CAN STOMACH THE MEGA COMPUTE COST. THEY END UP BEING THE STRONGEST, AND ONLY GAME IN TOWN. KONSTANTINE: I DON'T THINK IT WILL PLAY OUT THAT WAY. WE LOVE OPENAI. WE WANT THEM TO SUCCEED. WE ARE IN THE MIDDLE OF A DECADES LONG REVOLUTION. THIS IS A POINT IN TIME. THINK BACK TO THE THREE THINGS THAT MAKE UP AI.

ALGORITHMS WRITTEN BY PEOPLE, COMPUTE AND DATA. EARLY 2000, THE FIRST SPARKS IN THE FORMS OF PREDICTIVE AI. THAT POWERS YOUR FACEBOOK NEWSFEED, YOUR NETFLIX RECOMMENDATIONS. THEN WERE COMPUTE, MORE DATA. THE PERCEPTIVE AI. COMPUTER VISION, SELF DRIVING CARS, WHICH ARE NOW COMMERCIALLY AVAILABLE ON THE STREETS OF SAN FRANCISCO, AND AMAZING. THIS WAVE IS MORE DATA, BETTER ALGORITHMS, MORE COMPUTE. WE CONTINUE TO GO FROM HERE. IT WILL BE VIDEO, MULTIMODAL AND AI CONTROLLING COMPLEX SYSTEMS. ANOTHER

POINT IN TIME IN OUR JOB IS TO FOCUS ON THE UNDERDOG, SO THEY CAN COME IN AND USHER IN THE NEXT WAVE IN MORE DECADES OF INNOVATION. CAROLINE: MANY WOULD SAY THE WORKER IS THE UNDERDOG NOW. WE WILL SEE. WE WILL HAVE TO HAVE YOU BACK. GREAT TO HAVE YOU HERE TO DISCUSS THESE THINGS. COMING UP, THE FUTURE OF AI. WE TALK ABOUT VIDEOGAMES HERE AND NOW. SHARES OF NINTENDO POPPING ON THE NEW LIVE-ACTION FILM. WE WILL BREAK IT DOWN. YOU ARE THE GAMER IN CHIEF. ED: THERE'S A LOT GOING ON. WARNER BROS. DI

SCOVERY, ON TRACK FOR THE BIGGEST DECLINE IN A YEAR. A BIG DROP IN SALES IN TRADITIONAL TV ADVERTISING. WE WILL DIG IN. THIS IS BLOOMBERG. ♪ ED: AFTER THE SUCCESS OF THE SUPER MARIO FILM, NINTENDO IS PLANNING A LIVE-ACTION MOVIE BASED ON ZELDA. THE PLAN IS TO RELEASE ONE MOVIE EVERY YEAR BUILDING ON THE SUCCESS MARIO GENERATED. NINTENDO SAID IT WOULD PRODUCE THE SALE. CAROLINE: STICKING WITH VIDEOGAMES. TAKE TWO SHARES SURGE BASED ON THE RELEASE OF THE NEW GRAND THEFT AUTO. LET'S GET TO JASON. W

E WERE ANTICIPATING, WE WERE EXCITED FOR DECEMBER. HOW IMPORTANT IS THIS FOR GAME LAND? JASON: HUMONGOUS. I DON'T THINK PEOPLE FATHOM HOW BIG A RELEASE THIS IS GOING TO BE. GRAND THEFT AUTO 5 SOLD 185 MILLION COPIES. ENTIRETY OF THE ASSASSINS CREED SERIES HAS SOLD 200 MILLION COPIES. GTA 5 IS THE SECOND BEST-SELLING GAME OF ALL TIME. IT'S PRETTY MIND-BOGGLING. ED: I THINK ABOUT THE FAN BASE. INTENSE GLOBAL FAN BASE. WHAT CAN YOU TELL THAT BASE TO EXPECT FROM SIX? JASON: WE'VE BEEN REPORTING ON I

T FOR A WHILE. IT IS SET IN FICTIONAL MIAMI. IT WILL HAVE ONE MALE AND ONE FEMALE PROTAGONISTS. IT IS THE FIRST TIME IN A LONG TIME ROCKSTAR HAS HAD A FEMALE PROTAGONIST. THEY WILL OFFER A DIFFERENT PERSPECTIVE THAN YOUR AVERAGE MALE CENTRIC ROCKSTAR GAME. I'M EXCITED TO CHECK IT OUT. I'M EXCITED ROCKSTAR HAS DONE A LOT OF WORK TO IMPROVE CULTURE. THEY CAME UNDER CONTROVERSY DURING THE RELEASE OF THEIR LAST GAME OVER THEIR WORK LIFE BALANCE AND THE VALLEYS THEY PUT THEIR WORKERS THROUGH. I'M HEA

RING THE COMPANY HAS BEEN GETTING BETTER. WE WILL SEE IF THAT REMAINS THE CASE THROUGHOUT THE FINAL YEAR OF GTA 6. ED: TERRIFIC REPORTING. 2023 HAS BEEN THE YEAR OF VIDEOGAMES. CAROLINE: 20 PLAYING? ED: SPIDER-MAN TWO. CAROLINE: WE LIKE IT WHEN HE IS A SUPERHERO. THAT'S IT. ED: CHECK OUT THE POD. THIS IS BLOOMBERG.