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• 00:00> > IN SILICON VALLEY AND BEYOND, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. ♪ CAROLINE: LIVE FROM NEW YORK, I AM CAROLINE HYDE. JACKIE: I’M JACKIE IN WASHINGTON. CAROLINE: WE GET STRAIGHT TO THE MARKETS BECAUSE SEE A MARKET THAT BRACES FOR POSSIBLE CHANGES TO THE TARIFFS ON CHINA AND MEXICO. ALL OF THIS BEING SUGGESTED BY HOWARD LUTNICK IN A BLOOMBERG INTERVIEW. WE ARE SEEING NASDAQ 100 FLAT ON THE DAY ON THE DOWNSIDE, PULLING A SLOWER IN TERMS OF POINTS RESPECTIVE IS THE LIKES OF APPLE WHICH IS PULLING A SLOWER, NVIDIA PULLING A SLOWER. MICROSOFT, BROADCOM AND THE CHIP NAMES DOING RELATIVELY WELL. THE NASDAQ GOLDEN DRAGON UP 4.9%. WE ARE BASICALLY BEING BOUNCED AROUND BY THE LATEST HEADLINES. WE HAVE SO MUCH DEBATE WHEN IT COMES TO THE MARKET AND EARNINGS WITH CROWDSTRIKE LOOKING BURST IN THE MARKET HAD BRACED FOR. CROWDSTRIKE TRADING OFF SIGNIFICANTLY BY SOME 8%, OFF AS MUCH AS 12% AT ONE POINT AS THE HIT TO THE ENTIRE GLOBAL BREAKDOWN IN SOFTWARE WE SAW LAST SUMMER. SHARES STILL HAVING AN EFFECT AS WE SAW WORSE THAN EXPECTED EARNINGS OUTLOOK FOR THIS COMPANY. LET’S DIG WITH ALL OF THIS WITH ISABELLE LEE. WE HAVE WHIPLASH ON OUR HANDS. WHETHER IT IS ABOUT THE LATEST ANNOUNCEMENT FOR SEMICONDUCTOR SUPPORT IN THE U.S. OR WHETHER WE WILL HAVE TARIFFS REMAIN OR NOT. HOW DOES THE MARKET DIGEST THIS MOMENT? ISABELLE: THAT IS WHY THEY ARE CONFUSED. BEFORE I CAME HERE, I HAD A SCRIPT IN MY HEAD. NOW AS I AM SITTING HERE, THERE EDGING LOWER. OPTION TRADERS REALLY PREDICT MORE VOLATILITY TO COME AND ON FRIDAY WE HAVE THE BIG PAYROLLS DATA WHICH WILL ADD TO THE VOLATILITY. OPTIONS TRADERS PREDICTING A MOVE OF 1.3% AND THAT IS PRETTY SIGNIFICANT. IF YOU TAKE A STEP BACK, INVESTORS ARE ON EDGE, EVEN FOR US. HEADLINE AFTER HEADLINE. YOU DON’T KNOW WHAT TO EXPECT. SOME PEOPLE ARGUE IT IS TOO MUCH OF A DATA DRIVEN MARKET BUT IT REMAINS TO BE SEEN. JACKIE: WE ARE EXPECTING SOME KIND OF GUIDANCE FROM HOWARD LUTNICK LATER THIS AFTERNOON. WHAT SUBSECTORS WITHIN TAX SHOULD WE BE ON THE LOOKOUT FOR? ISABELLE: THERE’S AUTOMAKERS, CHIPMAKERS, BUT TARIFFS ITSELF IS NOT REALLY THAT BAD. IT IS TARIFFS PLUS LINGERING GROWTH FEARS AND THE PROSPECTS OF THE FED KEEPING INTEREST RATES HIGHER AND HIGHER STOCK VALUATIONS. THE QUESTION WHETHER THE MARKETS SHOULD BE THIS HIGH. OTHER THAN THAT, EVEN IN ASIA, WE HAVE ASIAN EQUITIES RALLYING. GERMAN STOCKS IN QUESTION AFTER THAT REALLY BIG STIMULUS THEY ARE INJECTING. ALL IN ALL, WE HAVE RECESSION PROBLEMS RISING. JP MORGAN PROBABILITY OF ECONOMIC DOWNTURN RISING TO 31% ON THURSDAY, UP FROM 17% AT THE END OF NOVEMBER. WE HAVE A LOT OF INVESTORS PREDICTING OF RECESSION BUT IT IS REALLY A TOUGH MARKET TODAY. CAROLINE: IT IS A TOUGH GLOBAL MARKET. COMPANIES TRY TO SELL AT THE MOMENT.I THINK OF TESLA ONCE AGAIN DROPPING LOWER. WE SAW CHINA WEAKNESS YESTERDAY IN TERMS OF THE DATA. YOU SAW IT IN FRANCE. THE LATEST DROP IS GERMANY. ELON MUSK, IS THIS HIS BRAND OR ULTIMATELY ABOUT WHAT IS HAPPENING ABOUT CURTAILING SOME OF THEIR PRODUCTION? ISABELLE: I THINK IT COULD BE BOTH BECAUSE TESLA REGISTRATION PLUMMETED IN GERMANY LAST MONTH AND A PART OF THAT IS ELON MUSK AND HIS POLITICKING. A PART OF THAT IS ALSO THE CARMAKER’S SUSPENDING PLANS OF ITS MODEL Y. THEY HAVE A FACTORY OUTSIDE BERLIN. I THINK IT IS A PERFECT STORM OR THE PERFECT COCKTAIL. EVERYTHING MOVING TOGETHER. YES, EVERY HEADLINE IN EVERY PART OF THE WORLD’S OF THE TO WATCH OUT FOR. JACKIE: PUBLIC INVESTORS ARE TRYING TO DISCERN IT, SO OUR PRIVATE INVESTORS. LET’S GET BACK TO WHAT LEADERS ARE TALKING ABOUT IN THE PRIVATE MARKETS. WE’VE HAD BLOOMBERG BUSINESS LEADERS ACROSS THE BOARD AT THE INVEST CONFERENCE WE ARE HOSTING IN NEW YORK. I SPOKE WITH ICONIC CAPITAL FOUNDER MICHAEL ANDERS AND WE TALKED ABOUT THE CHANGES IN CONSUMER SENTIMENT AND REACTION TO TERROR THREATS AND THE IMPACT ON AI — TARIFFS THREATS AND THE IMPACT ON AI. MICHAEL: THERE’S DEFINITELY AN AWARENESS THAT THERE IS A SENTIMENT SHIFT. I THINK THE CONSUMER IS BEGINNING TO PAY ATTENTION TO THE UNCERTAINTY IN TERMS OF, YOU KNOW, WHERE TARIFFS WILL TAKE US. I THINK THAT IS A PAUSE THAT PEOPLE ARE FEELING. FROM OUR STANDPOINT, THOUGH, WE ACTUALLY LIKE THIS ENVIRONMENT. IT MAKES YOU DO THE WORK. I THINK IF YOU’VE GOT THE TEAM, YOU’VE GOT THE RIGOR, YOU GOT THE DISCIPLINE, YOU’VE GOT THE FOCUS — GOING BACK TO WHAT I SAID EARLIER, THIS IS A MOMENT WHERE PICKING THE WINNERS IS SO CRITICALLY IMPORTANT. I THINK RIGHT NOW IN THIS AI JOURNEY WE ARE IN, IT HAS BEEN A LONG ROAD. AI HAS BEEN AROUND FOR DECADES. > > DOES GENERATIVE AI BECOME MORE RELEVANT AT THIS MOMENT, WHERE COMPANIES ARE WORRYING ABOUT PREDICTING THE FUTURE, MAKING SURE THEY ARE PROFITABLE? ARE THE EVEN MORE GALVANIZED TO LEAN INTO THIS GENERATIVE SHIFT? MICHAEL: I THINK IN THE LAST YEAR OR TWO, THE AWARENESS AROUND GEN AI HAS GOTTEN EVERYBODY TO THE POINT WHERE THEY KNOW IT IS CRITICALLY IMPORTANT BUT IT IS SUCH A COMPLICATED AND NUANCED SITUATION WE ARE IN RIGHT NOW THAT I THINK PEOPLE ARE STARTING TO REALLY KNOW THEY NEED TO PAY ATTENTION. I THINK IT IS LESS ABOUT THE PREDICTIVE NATURE BUT I THINK THAT IS WHERE WE HAVE COME FROM. NOW, WE HAVE GONE TO WHERE THESE MACHINES ARE ABLE TO THINK. THEY ARE ABLE TO REASON. AND PRETTY SOON, THEY WILL BE ABLE TO ACT. I THINK THE ACTING PIECE IS WHAT GETS US VERY CLOSE TO THIS AGI MOMENT, WHERE MACHINES ARE ALL-KNOWING. CAROLINE: THAT WAS MICHAEL ANDERS OF ICONIQ CAPITAL. THEY HAVE BET ON THE PAST WINNERS, THEY BET ON THE SNOWFLAKES, THE DATA DOCS. NOW MAKING BIG BETS ON THE LIKES OF DATA BREAKS BUT THEY CONTINUE TO INVEST IN THIS MOMENT EVEN THOUGH WE HAVE THIS TIPPING POINT. THEY LIKE THIS ENVIRONMENT WHERE YOU HAVE TO DO MORE WORK AND I THINK MIKE PUTTING MONEY WHERE YOUR MOUTH IS, INSURANCE TECHNOLOGY THAT COMMITTED MORE MONEY TO THAT PARTICULAR GEN AI BUSINESS JUST YESTERDAY. JACKIE: THAT IS RIGHT. NOT ALWAYS THE COVERED NAMES, ALWAYS A LITTLE UNDERAPPRECIATED, BUT CRUCIAL SECTORS. LET’S GO TO THE BLOOMBERG BEST CONFERENCE FOR A CONVERSATION WITH KKR CO-CEO ALONG WITH BLOOMBERG’S SONALI BASAK. SONALI: WE WILL GET TO SOME OF THE THINGS UNDERPINNING THOSE GOALS BUT WE WILL START WITH THE BIG VIEW ON WHERE THE WORLD STANDS TODAY. AS WE HAVE BEEN TALKING ABOUT, IN THE U.S. COME INVESTORS ARE TRYING TO SHAKE OFF THAT TERROR OF THAT EXISTS RIGHT NOW. THE MARKETS HAVE BEEN VERY JITTERY. INVESTORS ARE DIGESTING HOW THESE TRADE POLICIES COULD BE IN THE FUTURE. HOW DO YOU VIEW THE IMPACT FROM YOUR SEAT? JOE: I THINK IT IS OBVIOUS TO EVERYBODY THAT WE ARE IN AN ENVIRONMENT RIGHT NOW WITH IS A LOT OF UNCERTAINTY AROUND TRADE TARIFFS, BUT IT IS NOT NECESSARILY NEW. EVEN WITH THE FIRST TRUMP ADMINISTRATION, HE WAS FOCUSED ON TARIFFS AND TRADE. BIDEN KEPT MOST OF THOSE TARIFFS IN PLACE. I THINK IT OUR BUSINESS, WE ARE LONG-TERM INVESTORS. WE NEED TO BE THINKING ABOUT THESE ISSUES OVER TIME, NOT JUST ONE ADMINISTRATION. WHAT I WOULD SAY IS WE HAVE TEAMS AT KKR THAT FOCUS AT ALL THESE AREAS OF MACRO RISK. WHETHER THAT IS CURRENCY RISK, TARIFFS AND TRADE, GEOPOLITICAL RISK, REVELATORY RISK IN EACH OF THE DIFFERENT MARKETS WE ARE INVESTING IN. I THINK THIS ISSUE AROUND SUPPLY-CHAIN SECURITY AND RESILIENCY WHICH RELATES TO TARIFFS IS FRONT AND CENTER FOR ALL LONG-TERM INVESTORS. BUT, PEOPLE ARE TRYING TO PARSE THROUGH WHAT THIS MEANS. THE FINAL POLICIES ARE NOT IN PLACE. THE ACTIONS OF OTHER COUNTRIES AND GOVERNMENTS AND REACTION TO WHAT TRUMP MAY OR MAY NOT DO IS STILL UNKNOWN. IT IS VERY FLUID AT THE MOMENT BUT I THINK THAT IS CREATING SOME UNCERTAINTY AND VOLATILITY. SONALI: YOU HAD MENTIONED THIS WAS A RISK YOU SHOULD HAVE SEEN COMPANY — YOU SHOULD HAVE SEEN COMING IN A LOT OF WAYS. IT LOOKS LIKE KKR HAS BEEN PREPARING FOR THIS IN A WAY THAT MANY INVESTORS HAVE VERY OBVIOUSLY NOT BEEN. SO, WHAT HAVE YOU BEEN DOING TO PREPARE FOR ALL OF THIS UNCERTAINTY KNOWING THERE’S EVEN MORE OF IT AHEAD? JOE: I THINK WE HAVE OVER 150 COMPANIES IN OUR PRIVATE EQUITY PORTFOLIO AROUND THE WORLD. AGAI,N SUPPLY CHAIN —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’T THINK THIS WILL BE A BIG PROBLEM. SONALI: WHEN YOU THINK ABOUT THE RIPPLE EFFECTS YOU MIGHT SEE FROM THE TARIFF STRATEGY, THERE’S A LOT OF CONCERNS ABOUT INFLATION, GROWTH. HOW ARE YOU THINKING ABOUT THE ECONOMIC HEADWINDS THAT THE U.S. IS FACING? JOE: I THINK THAT IS ONE OF THE BIG UNCERTAINTIES THAT PEOPLE ARE TRYING TO FIGURE OUT. TARIFFS ARE INFLATIONARY BY DESIGN. I THINK OF THAT LEADS TO AN ESCALATED LEVEL OF INFLATION IN THE U.S. ECONOMY, THAT WILL SLOW GDP GROWTH. IT MAY PUT SOME PRESSURE ON THE FED IN A MORE TOUGH ECONOMIC ENVIRONMENT TO LOWER RATES FASTER OVER TIME. WE’VE ALWAYS FELT THE BIGGER TREND HAPPENING IN THE WORLD, WHETHER IT IS ENERGY TRANSITION, THE BEST OF INVESTMENTS INTO DATA, A LOT OF THESE THINGS ARE INFLATIONARY BY ITS NATURE. WE HAVE A HIGHER RESTING HEART RATE FOR INFLATION GLOBALLY TODAY THAN WE’VE HAD THE LAST DECADE. SONALI: YOU EXPECT THAT TO CONTINUE? JOE: AT POTENTIALLY GET HIGHER INFLATION. IF THESE TARIFF AND TRADE WAR CONTINUE, IT IS NOT UNREASONABLE TO EXPECT IN THE NEAR TERM YOU CAN SEE HIGHER INFLATION. SONALI: DOESN’T THAT MEAN HIGHER RATES OR DO YOU THINK THE FED WILL HAVE TO LOWER RATES INTO THE FACE OF THAT? PEOPLE ARE STARTING TO USE THE WORD STAGFLATION A LOT THESE DAYS. JOE: I THINK IT WILL BE DIFFERENT IN DIFFERENT MARKETS THAT I THINK THE FED WILL HAVE TO BE VERY NIMBLE AND HOW THEY NAVIGATE THIS RISK. IF THE U.S. IS HEADED TOWARDS AN ECONOMIC DOWNTURN, CUTTING RATES WILL PROBABLY BE THE POLICY RESPONSE. IF RATES ARE HIGH AND ARE NOT HEADING DOWN THAT RECESSION PATH OR DECELERATION OF GROWTH PATH, THEN COULD GO A LITTLE HIGHER. SONALI: LET’S LOOK AT THIS FROM A GLOBAL PERSPECTIVE. I THINK ONE UNIQUE VIEW YOU CAN BRING FROM KKR’S YOU ARE VERY GLOBAL IN NATURE SO YOU SEE THE WAY THAT THE CHANGES ARE HAPPENING, THE TARIFF STRATEGY, THE WAY THAT NATIONS ARE SEPARATING THE RELATIONSHIP TO EACH OTHER. YOU SEE THAT ON THE GROUND FOR YOUR PORTFOLIO COMPANIES. WHAT ARE THAN OTHER AREAS OF THE WORLD THAT ARE MAYBE EVEN MORE ATTRACTIVE TO YOU THAT THE UNITED STATES RIGHT NOW? JOE: I THINK IT IS NOT A SECRET. WE ARE BIG FANS RIGHT NOW OF JAPAN. WE THINK THAT IS A REALLY, REALLY UNDERPENETRATED OPPORTUNITY, ESPECIALLY AMONG U.S. INVESTORS. THE REALLY HAVE NOT FIGURE OUT HOW TO GET THE EXPOSURE THEY WANT IN A MARKET LIKE JAPAN WHERE THEY ARE COMING OUT OF 2.5 DECADES OF DEFLATION. FINALLY, POSITIVE WAGE GROWTH, PRICING POWER. INFLATION IS VERY MODEST, BUT POSITIVE INFLATION RIGHT NOW. AND RATES ARE INCREASING MODESTLY IN JAPAN. THAT IS A COMPLETELY DIFFERENT MACRO PICTURE THAN WHAT WE’VE SEEN IN JAPAN FOR THE LAST THREE DECADES. A REALLY EXCITING TIME WHEN YOU MARRY THAT WITH SHAREHOLDER REFORM, ACTIVISM, CORPORATE GOVERNANCE REFORM IN THAT MARKET. OUTSIDE OF THE UNITED STATES TODAY, JAPAN IS THE LARGEST DESTINATION OF OUR CAPITAL. SONALI: IN ADDITION TO JAPAN, KKR HAS MAINTAINED A COMMITMENT TO CHINA AS WELL. IN FACT, THERE ARE BIG DEALS IN THE MARKET THAT KKR MAY BE INVOLVED WITH AT THIS MOMENT. SO, A LOT OF OTHER INVESTORS ARE VERY WORRIED ABOUT CHINA. THE INTERNAL ECONOMICS AND THE RELATIONSHIP THAT CHINA HAS TO THE UNITED STATES. HOW DO YOU VIEW THAT DYNAMIC? JOE: LISTEN, I THINK THE GEOPOLITICAL TENSIONS RIGHT NOW OBVIOUSLY OUR FRONT AND CENTER FOR US AS WE THINK ABOUT WHERE TO INVEST IN HOW TO INVEST. IN CHINA IN PARTICULAR, YOU HAVE TO AVOID THOSE SECTORS THAT HAVE SENSITIVITY ON BOTH SIDES OF THE OCEAN, BUT THE U.S. GOVERNMENT AND CHINESE GOVERNMENT. WE HAVE NOT INVESTED IN SOME OF THE SENSITIVE SECTORS, LIKE ELECTRIC VEHICLES FOR SEMICONDUCTORS OR AI. THAT IS NOT THE FOCUS OF OUR CHINA INVESTMENT STRATEGY. WE ARE REALLY FOCUSING ON SUPERHIGH QUALITY DOMESTIC BUSINESSES THAT ARE AROUND DOMESTIC CONSUMPTION AND SERVICES. IN OUR PORTFOLIO TODAY, WE HAVE ONE OF THE LARGEST, OR THE LARGEST CHINESE PET FOOD COMPANY. GEOPOLITICALLY NOT SENSITIVE. WE OWN ONE OF THE LARGEST PHARMACY CHAINS IN CHINA. WE OWN THE LARGEST MUSHROOM GROWER IN CHINA, ALL GEARED TOWARDS THE DOMESTIC MARKET AND WANTS HIGHER QUALITY SERVICES AND FOOD. THAT IS THE SWEET SPOT OF WHERE WE ARE FOCUSED. SONALI: THAT IS INTERESTING BECAUSE EVEN IF YOU ARE FOCUSED ON THE CHINESE CONSUMER, THAT MIGHT BE A LITTLE MORE INSULATED TO THE GLOBAL MACRO CHALLENGES, THERE ARE A LOT OF CONCERNS ABOUT THE CHINESE ECONOMY. WHY ARE YOU SEEING THROUGH THEM? JOE: I THINK THE OVERALL LONG-TERM TREND IN CHINA IS THE MIDDLE CLASS IS GROWING. AND THE EXPECTATIONS OF THE MIDDLE CLASS ARE REALLY FOR HIGHER QUALITY GOODS AND SERVICES. SAFER FOOD, SAFER SERVICES. THAT IS WHAT THESE COMPANIES THAT WE ARE INVESTING BEHIND ARE REALLY CATERING TOWARDS. NO DOUBT THE MACRO GROWTH IN CHINA HAS SLOWED FROM A DECADE AGO. YOU WERE TALKING ABOUT A COUNTRY GROWING AT DOUBLE DIGITS GDP. THEY ARE TARGETING 4% TO 5% GROWTH TODAY. THERE HAS BEEN A SLOW DOWN. THERE’S CLEARLY CHALLENGES IN TERMS OF THE REAL ESTATE MARKET. YOU HAVE TO FACTOR ALL THAT IN, IN TERMS OF THE GROWTH RATE YOU ARE UNDERWRITING AND THE ENTRY MULTIPLE. THE CHINESE STOCK MARKET TODAY IS ONE OF THE MOST INTERESTING VALUE MARKETS OF THE WORLD IN TERMS OF MULTIPLES. IF YOU KNOW WHAT YOU ARE LOOKING FOR, THE TYPE OF RISK YOU ARE TRYING TO MITIGATE AGAINST, YOU CAN FIND SOME INTERESTING OPPORTUNITIES. SONALI: YESTERDAY, I ASKED THE QUESTION IS AMERICAN EXCEPTIONALISM DEAD? IN ADDITION, I ASK YOU IS GLOBALIZATION A DIVERSIFICATION PLAY, A SAFETY TRADE? HOW DO YOU THINK ABOUT IT? JOE: WE ARE A VERY GLOBAL FIRM AND WE HAVE A LOT OF DIFFERENT WAYS TO PARTICIPATE IN THOSE OPPORTUNITIES. PRIVATE EQUITY, REAL ESTATE, PRIVATE CREDIT, INFRASTRUCTURE. SO, IN REALLY VOLATILE PERIODS WE ARE NOW, HAVING THAT FLEXIBILITY OF CAPITAL, WE CAN PARTNER WITH COMPANIES, MANAGEMENT TEAMS AS A PROVIDER OF ANYTHING FROM SENIOR INVESTMENT GRADE DEBT TO NONINVESTMENT GRADE DEBT TO STRUCTURED CREDIT SOLUTIONS, STRUCTURED EQUITY SOLUTIONS, GROWTH EQUITY CAPITAL, TO BUY-OUT CAPITAL. SO, TODAY, IT IS AN INTERESTING MARKET. WHEN VOLATILITY SPIKES, THAT USUALLY LEADS THE REALLY INTERESTING POINT OF OPPORTUNITIES FOR OUR FIRM. YOU NEED TO BE NIMBLE. YOU NEED TO HAVE THE LOCAL REACH THESE DIFFERENT MARKETS, BUT WE ARE EXCITED ABOUT 2025. THERE ARE GOING TO BE HICCUPS. THERE’S GOING TO BE SOME HEADWINDS IN TERMS OF SOME OF THESE MACRO POLICIES, BUT OUR ABILITY TO DEPLOY SCALED CAPITAL AROUND THE WORLD IS QUITE HIGH. SONALI: I WILL STILL ASK YOU, IF NOT DEAD, THAN IS AMERICAN EXCEPTIONALISM OVERBLOWN? JOE: I THINK THIS NOTION THAT THE U.S. IS GOING TO WIN A LOAN HAS NEVER BEEN THE CASE. I THINK THE STRENGTH OF THE UNITED STATES IS REALLY THE RESILIENCY OF THE ECONOMY, THE STRENGTH OF OUR CAPITAL MARKETS TO MOBILIZE CAPITAL TO SUPPORT COMPANIES IN THE PRIVATE SECTOR. AND LABOR PRODUCTIVITY. WHEN YOU THINK ABOUT WHY THE U.S. HAS GROWN FASTER THAN EUROPE OR FASTER THAN JAPAN, IT IS REALLY ABOUT LABOR PRODUCTIVITY THE UNITED STATES. A LOT OF THAT IS TECHNOLOGY DRIVEN AND INNOVATION DRIVEN, BUT A LOT OF THAT IS OUR UNIQUE MOBILITY OF LABOR IN THIS COUNTRY. YOU THINK ABOUT JAPAN IS GOING THROUGH THIS RESURGENCE. STRUCTURALLY, THEY HAVE BEEN THE BEST JOB OF ANY COUNTRY IN TERMS OF WOMEN PARTICIPATION IN THE WORKFORCE. PEOPLE WORKING LONGER IN JAPAN. THEY’VE GOT REAL DEMOGRAPHIC CHALLENGES. THEY’VE DONE AN EXCELLENT JOB AROUND AUTOMATION AND ROBOTICS IN THEIR INDUSTRIAL BASE. BUT, THEY ARE NOT GETTING THE LABOR PRODUCTIVITY BECAUSE THE MOBILITY OF LABOR IN JAPAN IS QUITE CONSTRAINED AND THEIR INVESTMENT IN SOFTWARE AND TECH IS A FRACTION OF THE U.S. THE REAL SUPERPOWER IN THE U.S. IS LABOR PRODUCTIVITY THE END OF THE DAY. SONALI: I WANT TO SPEND THE REMAINING TIME TALKING ABOUT THE FUTURE OF KKR BECAUSE IT HAS BEEN FASCINATING TO WATCH THE CHANGE FROM AN ICONIC PRIVATE EQUITY COMPANY’S WHAT YOU ARE TODAY. THERE WAS A FULL ACQUISITION OF YOUR INSURANCE COMPANY LAST YEAR, GLOBAL ATLANTIC, AND IT HAS MADE KKR LOOK MORE AND MORE LIKE BERKSHIRE HATHAWAY. THERE’S ONE PART OF YOUR BUSINESS THAT IS FAR LESS UNDERSTOOD THAT I THINK MAKES YOU LOOK LIKE THE MOST LIKE BERKSHIRE HATHAWAY AND THAT IS YOUR STRATEGIC HOLDINGS BUSINESS. MOST PEOPLE DON’T KNOW THAT KKR OWNS 18 COMPANIES ON YOUR OWN BALANCE SHEET. WHAT IS THIS BUSINESS GOING TO BE IN MAYBE 10 YEARS, AND WHY IS IT VALUABLE TO YOU? JOE: SURE. WHEN YOU THINK ABOUT KKR AS A BUSINESS, WE REALLY HAVE THREE CORE STRATEGIC PARTS OF OUR BUSINESS STRATEGY. ASSET MANAGEMENT IS WELL UNDERSTOOD, IT IS WHAT WE ARE KNOWN FOR FOR THE LAST 50 YEARS. THAT IS OUR THIRD-PARTY PRIVATE EQUITY, REAL ESTATE, AND FOR STRUCTURE BUSINESS. THAT IS THE $650 BILLION BUSINESS YOU MENTIONED AT THE START. THE SECOND BIG PILLAR OF OUR BUSINESS TODAY IS GLOBAL ATLANTIC. IT IS 100% OWNED INSURANCE COMPANY. ROUGHLY $190 BILLION OF AUM THERE. PLAYING INTO ALL THESE TRENDS AROUND RETIREMENT SAVINGS, RETIREMENT SECURITY, AND BEING ABLE TO OFFER INDIVIDUALS COMPELLING PRODUCTS FOR THEIR LONG-TERM SAVINGS. THE THIRD PIECE OF IT IS A SEGMENT THAT WE INTRODUCED LAST YEAR AT OUR INVESTOR DAY, BUT IT HAS BEEN A SEGMENT WE HAVE BEEN INCUBATING FOR WELL OVER A DECADE. THAT IS STRATEGIC HOLDINGS. WHAT WE ARE TRYING TO BUILD IN STRATEGIC HOLDINGS IS IN SOME WAYS A MINI BERKSHIRE HATHAWAY. THESE ARE COMPANIES WHERE WE OWN LARGE STAKES, BUT BUSINESS IS WE THINK WE CAN OWN LITERALLY FOREVER. BUSINESSES THAT HAVE THE POTENTIAL TO COMPOUND OVER A VERY LONG TIME. VERY DEFENSIVE IN NATURE. WE HAVE 18 COMPANIES IN THE PORTFOLIO TODAY. WE WILL CONTINUE TO REDEPLOY OUR FREE CASH FLOW AT KKR TO INVEST IN MORE OF THESE TYPES OF BUSINESSES. AND IT IS NOT JUST PRIVATE EQUITY. OVER TIME, IT WILL INCLUDE CERTAIN PLATFORMS, PROBABLY GET INFRASTRUCTURE AND REAL ASSETS. MAYBE CERTAIN BUILDUPS WE WILL DO IN DIFFERENT SECTORS. WHENS SCOTT AND I JOINED KKR BACK IN 1996, BERKSHIRE HATHAWAY HAD A MARKET CAP OF $40 BILLION AND A BALANCE SHEET OF $40 BILLION. YOU FAST FORWARD 28 YEARS, THEY HAVE $1 TRILLION MARKET CAP ON THE BACK OF LONG-TERM COMPOUNDING OF THE BALANCE SHEET AND INVESTMENTS. SOME VERSION OF THAT IS WHAT WE WILL BE DOING. THE STRATEGIC HOLDINGS, BY LEVERAGING ALL THE SKILLS AND EXPERTISE WE HAVE AROUND THE WORLD. SONALI: IF YOU THINK ABOUT BERKSHIRE HATHAWAY, IS IT ALMOST LIKE GLOBAL ATLANTIC IS YOUR OWN GEICO, AND THE FUTURE INFRASTRUCTURE HOLDINGS WILL BE YOUR BNSF, AND YOUR PRIVATE EQUITY HOLDINGS WOULD BE KIND OF LIKE YOUR STOCK PORTFOLIO? JOE: YES, IT IS AN IMPERFECT ANALOGY, BUT DIRECTIONALLY, YOU ARE RIGHT. STRATEGIC HOLDINGS FOR US, YOU HAVE TO THINK ABOUT IT AS A WAY OF HOW DO WE THINK ABOUT REDEPLOYING OUR FREE CASH FLOW AS A BUSINESS BACK INTO THE MOST ATTRACTIVE AREAS? SOME OF THAT MIGHT BE IN OUR TRADITIONAL THIRD-PARTY ASSET MANAGEMENT BUSINESS. WE FIND GREAT WAYS TO DEPLOY CAPITAL ACROSS THOSE INVESTMENTS, WE WILL DEPLOY THAT CAPITAL. A LOT OF CAPITAL IS REINVESTED BACK INTO GLOBAL ATLANTIC. WE ACQUIRED OUR FIRST CONTROLLING STAKE IN 2020. GA AT THAT TIME HAD AROUND A $70 BILLION OF AMU. FOUR YEARS LATER IT HAS $90 BILLION. WE’VE SUPPORTED THAT GROWTH WITH MORE INVESTMENT. THEN, THE THIRD SEGMENT OF STRATEGIC HOLDINGS, OBVIOUSLY, WHICH IS WHAT WE ARE SUPER EXCITED ABOUT IS ONE WHERE WE WE CONTINUING TO INVEST A LOT MORE OF OUR FREE CASH FLOW AS A BUSINESS. OUR GUIDANCE TODAY IS BY 2026, THAT PORTFOLIO WOULD BE GENERATING AROUND $350 PLUS MILLION DOLLARS OF AFTER-TAX DIVIDENDS FOR US. $1.1 BILLION BY 2030. IT IS A VERY VISIBLE, RECURRING, GROWN CASH FLOW AT KKR. SONALI: YOU HAVE A FUTURE UNICORN OF SWORDS BEING BUILT INSIDE KKR. IF YOU WOULD BRINGING IN $1 BILLION OVER TIME, YOU THINK IT IS BUILT INTO KKR’S STOCK, THAT ASSUMPTION? JOE: I THINK PEOPLE ARE STUNNING TO APPRECIATE WHAT WE ARE TRYING TO BUILD BUT THE BIGGER PICTURE IS WHEN YOU LOOK AT OUR SPACE FIVE YEARS FROM NOW, 10 YEARS FROM NOW, I THINK MANY OF THE PUBLIC PEERS IN THE SECTOR WILL TAKE DIFFERENT APPROACHES TO HOW THEY GROW THEIR FIRMS. I THINK THE APPROACH WE HAVE, WE HAVE THIRD-PARTY ASSET MANAGEMENT INSURANCE AND STRATEGIC HOLDINGS, IT IS QUITE DIFFERENTIATED AND DIFFERENT THAN THE WAY MOST OF OUR PEERS ARE TRYING TO GROW THEIR FIRMS TODAY. SONALI: I WANT TO SPEND A LITTLE TIME TALKING ABOUT NOT JUST INSTITUTIONAL CAPITAL AND HOW YOU ARE DEPLOY CAPITAL. WE HAVE BEEN TALKING SO MUCH ABOUT HOW THERE HAS BEEN A MASSIVE PUSH FOR RETAIL WHEN IT COMES TO THE WORLD’S PRIVATE ASSETS. EVERYONE IS DOING IT DIFFERENTLY. YOU HAVE A RELATIONSHIP WITH CAPITAL GROUP. IN ORDER TO MAKE THIS AVAILABLE IN A MUTUAL FUND FORM. SO, HOW AVAILABLE IS IT TO INVEST IN PRIVATE ASSETS FROM WHERE YOU ARE SITTING? WHAT IS THE MINIMUM AMOUNT YOU WOULD NEED TO PUT INTO A FUND TO START TO GET ACCESS TO WHAT YOU ARE OFFERING? JOE: THE WAY TO THINK ABOUT THE BIGGER PICTURE OPPORTUNITY IS, FOR MOST OF OUR HISTORY AT KKR, WE WERE FOUNDED IN 1976, OUR CORE CLIENT BASE WAS REALLY LARGE INSTITUTIONAL INVESTORS. PENSION FUNDS, INSURANCE COMPANIES, SOVEREIGN WEALTH FUNDS AROUND THE WORLD. THE INDIVIDUAL INVESTORS WHO PARTICIPATED WITH US WERE ULTRA HIGH NET WORTH FAMILIES AND FAMILY OFFICES WHO COULD ALLOCATE CAPITAL AS PART OF THEIR DIVERSIFICATION, AS REALLY LP’S IN OUR FUNDS. THEY WERE WILLING TO TAKE THAT 10 OR 12 YEAR ILLIQUIDITY RISK JUST LIKE A PENSION FUND WOULD. SO, THAT IS A VERY SMALL PERCENT OF HOUSEHOLDS IN THE UNITED STATES. THAT IS HOW THEY HAVE ACCESSED AND PARTNERED WITH US HISTORICALLY. WAS RELATIVELY NEW FOR US IN THE LAST TWO TO THREE YEARS IS WE’VE INTRODUCED A SERIES OF F PRIVATE WEALTH PRODUCTSOR INDIVIDUAL INVESTORS — OF PRODUCTS FOR INDIVIDUAL WEALTH INVESTORS. A NET WORTH OF $1 MILLION TO $5 MILLION. THESE OPEN-ENDED EVERGREEN PRODUCTS HAVE SIMILAR LIQUIDITY FEATURES, SO YOU ARE NOT LOCKING UP YOUR CAPITAL FOR 10 TO 12 YEARS. YOU HAVE THE ABILITY TO REDEEM A PORTION OF YOUR CAPITAL EVERY QUARTER. SO, IT IS A SLIGHTLY DIFFERENT FORMAT. BUT, IT IS INVESTING IN EXACTLY THE SAME DEALS THAT OUR FLAGSHIP FUNDS ARE INVESTING IN. WE ARE TRYING TO DELIVER THAT SAME IS THE ADDITIONAL QUALITY EXPERIENCE. THE SAME PORTFOLIO, THE SAME ACCESS THE DEAL FLOW. WHETHER THAT IS PRIVATE EQUITY, REAL ESTATE INFO STRUCTURE, PRIVATE CREDIT TO INDIVIDUAL INVESTORS IN THAT $1 MILLION TO $5 MILLION NET WORTH. THAT IS AROUND 10% OF THE HOUSEHOLDS IN THE U.S. IN THOSE FIRST TWO BUCKETS. ULTRA-HIGH NET WORTH AND CREDITED INVESTORS, AND ROUGHLY HALF OF THE AUM IN THE INDIVIDUAL CHANNEL. WITH CAPITAL GROUP, WE HAVE AN EXCITING NEW PARTNERSHIP WHICH REALLY ADDRESSES THE NEXT 90% OF U.S. HOUSEHOLDS. THESE ARE MASS AFFLUENT INDIVIDUAL INVESTORS WHO PROBABLY WOULD NOT BE BUYING OUR PRIVATE WEALTH PRODUCT AND WOULD NOT BE LP’S IN OUR TRADITIONAL FUND. WE ARE CREATING HYBRID PRODUCTS IN A MUTUAL FUND FORMAT. WE ARE STARTING WITH CREDIT AND THE SECOND QUARTER WHERE WE WILL PUT TOGETHER A PORTFOLIO WHERE CAPITA GROUP MANAGES THE PUBLIC CREDIT, WE MANAGE THE PRIVATE CREDIT, AND DELIVER A PRODUCT TO MASS AFFLUENT THAT LOOKS DIFFERENT FROM ANYTHING THEY’VE BEEN ABLE TO BUY BEFORE. SONALI: IT FEELS LIKE THE HOLY GRAIL FOR THIS INDUSTRY IS MAKING PRIVATE ASSETS AVAILABLE IN 401(K) PLANS. HOW SOON DO YOU THINK THAT HAPPENS, AND IF NOT THAT SOON, WHAT IS THE BIGGEST BARRIER? JOE: AGAIN, AT A HIGH LEVEL, WHEN YOU THINK ABOUT SOME OF THE SOCIETAL CHALLENGES WE HAVE, A BIG PART OF THAT IS SECURING YOUR RETIREMENT, RIGHT? AS YOU RETIRE FROM WORK — CAROLINE: JOE BAE ALONG WITH SONALI BASAK FROM BLOOMBERG INVEST. A QUICK CHECK ON THE MARKETS AS HE TRIES TO ARTICULATE THE FUTURE OF KKR BEING ONE OF BERKSHIRE HATHAWAY. MARKETS UNDER PRESSURE BY .4%. MAGNIFICENT SEVEN SELLOFF. MUCH MORE ON THE CHIPS IMPACT CAROLINE: WELCOME BACK TO “BLOOMBERG TECHNOLOGY.” CAROLINE HYDE IN NEW YORK. JACKIE: JACKIE DAVALOS IN WASHINGTON. CAROLINE: WE BRACED OURSELVES IF THERE’S GOING TO BE ANY REPRIEVE ON THE TARIFFS COMING IN FROM CANADA, MEXICO. I WANT TO SHINE A LIGHT ON SOME INDIVIDUAL MOVERS THAT ARE CURRENTLY MOVING FROM A HIGHER PERSPECTIVE. MICROSOFT TRYING TO TAKE BENCHMARKS INTO THE GREEN AT THE MOMENT. THEY ARE RESOLUTELY IN THE RED. U.K. REGULATORS SAYING, EASY GOING WITH YOUR OPENAI TRY OUT. WE WILL NOT BE INVESTIGATED THAT PARTICULAR DEAL THAT HAS BEEN DONE. WE ARE LOOKING DISNEY, THOUGH, UP .5%. THEY ARE GOING TO BE DOING SOME JOB CUTS. TESLA UP BY .7%. YESTERDAY WE HAD THE NEWS THAT CHINESE SALES ARE ONCE AGAIN DOWN. TODAY, GERMANY, FEBRUARY ONCE AGAIN, SIGNIFICANT WEAKNESS SALES ARE TO GERMANY FROM TESLA. THIS AS WE KNOW THE MARKET CAPITALIZATION FROM TESLA HAVE BEEN GOING HIGHER AS WE THINK ABOUT THE RELATIONSHIP BETWEEN ELON MUSK AND TRUNK, ALSO HAVING NEGATIVE IMPACT ON POTENTIALLY THE BRAND OF ELON AND TESLA OVER IN EUROPE. WE WANT TO THINK ABOUT WHAT IS HAPPENING WITH PRESIDENT TRUMP, AND HOW IN HIS ADDRESS TO CONGRESS YESTERDAY, IN PARTICULAR THE FOCUS ON CHIPS, WHICH IS A CALL TO END THE BILLION-DOLLAR C.H.I.P.S. ACT. LET’S TAKE A LISTEN. PRES. TRUCK: YOUR C.H.I.P.S. ACT IS A HORRIBLE THING. THEY TAKE OUR MONEY AND THEY DON’T SPEND IT. ALL THAT MEANS TO THEM, WE ARE GIVING THEM NO MONEY. ALL THAT WAS IMPORTANT TO THEM AS THEY DID NOT WANT TO PAY THE TARIFFS, SO THEY ARE COMING IN AND BUILDING MANY OTHER COMPANIES. THEY ARE COMING. WE DON’T HAVE TO GIVE THE MONEY CAN WE WANT TO PROTECT OUR BUSINESSES AND PEOPLE, AND THEY WILL COME BECAUSE THEY DON’T HAVE TO TAKE TARIFFS IF THEY BUILT IN AMERICA. IT IS VERY AMAZING. YOU SHOULD GET RID OF THE CHIP ACT. CAROLINE: ONCE AGAIN, INVESTORS TRIED TO FIGURE OUT WHAT THIS MEANS. LET’S HAVE A LOOK AT WHAT THE REACTION HAS BEEN, ULTIMATELY THE CHIP SPECTERS, INTEL DRAGS US LOWER. A BIG RECIPIENT, OF COURSE, OF LOANS AND GRANTS COMING FROM THE C.H.I.P.S. ACT. TSMC SAYING THEY WILL BE LAYING THE GROUNDWORK IN THE UNITED STATES. IS THAT THE TARIFF THAT BRINGS US HERE? TSMC UP BY 1.24%. BROADCOM UP BY .4%. MIKE SHEPARD JOINS US. THE DEVIL IS IN THE DETAIL HERE. WOULD ANY LOANS BE TAKEN AWAY FROM A COMPANY THAT HAS ALREADY BEEN GIVEN IT? MIKE: WHAT INDICATES THAT THERE WILL NOT BE ANY CALLBACKS THAT ACTUALLY TAKE PLACE. IF A CHECK HAS BEEN WRITTEN TO A COMPANY AND CASH, NOBODY IS COMING KNOCKING ON THEIR DOOR SAYING HEY, WE WANT UNCLE SAM’S MONEY BACK, TO PUT UNDER SOME OTHER PRIORITY UNDER THE NEW ADMINISTRATION. BUT AT THE SAME TIME, IT DOES RAISE THE QUESTION ABOUT MONEY THAT HAS BEEN COMMITTED BUT NOT YET DISPERSED. WITH THE BE ANY DELAYS ON THAT, EFFORTS BY THE PRESIDENT AND CONGRESS OR THE COMMERCE DEPARTMENT WHICH OVERSEES THIS PROGRAM FOR REDIRECT THE MONEY. EVEN THAT IS A REMOTE PROSPECT. WHEN THE PRESIDENT SAID THAT HE SHOULD JUST HAVE CONGRESS “GET RID OF” THE C.H.I.P.S. ACT, HE TURNED AROUND AND LOOKED AT MIKE JOHNSON. THAT PUT THE BALL IN CONGRESS’ COURT MORE THAN ANYTHING ELSE. WE SEEN CHANGES IN THIS CHIP ACT , AND THAT IS THAT THE DOGE- DRIVEN CUTS, DRIVEN BY ELON MUSK , THEY’VE LOST EMPLOYEES WHO WILL OVERSEE DEPLOYMENT AND DISBURSEMENT OF THAT MONEY. WE ARE SEEING SOME DISRUPTION TO THE PROGRAM NO MATTER WHAT. ONE DIFFERENCE HIGHLIGHTED BETWEEN TSMC AND INTEL IS IN THE SHARE PRICE. PART OF THAT IS THAT INTEL IS STRUGGLING TO FIND CUSTOMERS THAT WOULD SUSTAIN THOSE BIG NEW PLANTS THAT THE GOVERNMENT NEEDS HELP TO BUILD. TSMC ON THE OTHER HAND HEARD FROM A VIDEO THAT HEY, WE ARE READY TO BUY THOSE TIPS YOU GUYS ARE GOING TO BE MAKING FOR US THERE. JACKIE: MIKE, WHERE DOES THIS LEAVE PRESIDENT TRUMP’S VISION FOR BOOSTING DOMESTIC PRODUCTION OF CRITICAL CHIPS, AND BROADLY, OUR COMPETITIVENESS WITH CHINA? THIS PROGRAM IS SUPPOSED TO PUT US IN THE LEAD, KEEP US THERE. WERE OTHER LEVERS DO WE HAVE TO PULL NOW? MIKE: WELL, WE KNOW THE FAVORITE LEVER OF DONALD TRUMP IS A WORD HE REFERS TO CONSTANTLY COME OF THE MOST BEAUTIFUL PERHAPS IN A DICTIONARY, AND THAT IS TARIFFS. HE SEES THAT AS THE DRIVER IN GETTING TSMC TO MAKE A DECISION TO MOVE TO THE U.S. HE ALSO INVOKED THAT A WEEK AGO WHEN APPLE ANNOUNCED A $500 BILLION PLAN TO INVEST IN THE U.S. OVER FOUR YEARS, AND HIRE AS MANY AS 20,000 NEW EMPLOYEES HERE ON AMERICAN SOIL. TRUMP SAID THAT THE THREAT OF TARIFFS HAD PROMPTED APPLE TO MAKE THAT DECISION. HE SEES IT AS A WAY, MUCH MORE THAN OUR SUBSIDY PROGRAM, TO EFFECTIVELY BRING COMPANIES, TO MAKE INVESTMENTS HERE. HE’S ALSO PROMISED REGULATORY RELIEF ON PERMITTING FOR ANY COMPANIES THAT WANT TO INVEST MORE THAN $1 BILLION HERE IN THE U.S. SO IT IS THE COMBINATION OF TARIFF THREATS AND REGULATORY RELIEF. HE TALKED ABOUT REGULATORY RELIEF AS WELL DURING HIS SPEECH LAST NIGHT. JACKIE: THAT IS BLOOMBERG’S MIKE SHEPARD. THANK YOU FOR JOINING US. LET’S GET INTO MORE ON TRUMP’S COMMENTS JOHN C.H.I.P.S. ACT AND TARIFFS. LIZA, I WANT TO START WITH THE POTENTIAL REPEAL OF THE C.H.I.P.S. ACT. THIS WAS SUPPOSED TO SUBMIT THE POSITION OF THE AI COMPETITIVE LANDSCAPE. DOES THIS POTENTIALLY PUT US BEHIND? LIZA: YES, THE COMMENTS TRUMP MADE IN HIS SPEECH LAST NIGHT WERE NOT NEW BEAUTIES ON THE RECORD OF COMPLAINING ABOUT SUBSIDIES. WHAT’S AT THE HEART OF HIS CONCERNS IS NOT WANTING TO BE SUBSIDIZING OTHER COUNTRIES, SO, YOU KNOW, IN HIS FIRST TERM AND NOW, HE’S PUTTING PRESSURE TO GET OUR ALLIES TO REIMBURSE US. HE REALLY FEELS LIKE IT IS UNFAIR THAT TSMC, A TAIWANESE COMPANY, HAS GOTTEN SUBSIDIES, SO WE SEEN THIS RATCHETING UP OF PRESSURE ON TSMC THAT RESULTED IN A $100 BILLION ANNOUNCEMENT THAT TSMC WILL PUT EVEN MORE INVESTMENT INTO THE UNITED STATES. $65 BILLION ALREADY ANNOUNCED BEFORE, THE BIDEN ADMINISTRATION, WAS ALREADY THE LARGEST FOREIGN DIRECT INVESTMENT IN U.S. HISTORY, SO BY ADDING ANOTHER $100 BILLION TO THAT, IT REALLY TOPS THE CHART. SO IT KIND OF REMAINS TO BE SEEN IF THAT WILL BE ENOUGH TO KIND OF SATISFY HIM, REIMBURSED BY TAIWAN AND TSMC BY THESE SUBSIDIES, BUT THAT IS A CONCERN. CAROLINE: HOW THEN CAN A LOCAL PLAYER LIKE AN INTEL BE REIMBURSED? TELL US WHAT YOU THINK THE CARROT-AND-STICK SITUATION IS FOR LOCAL PLAYERS WHO HAVE BEEN PROMISED U.S. MONEY? LIZA: THAT’S A GOOD WAY TO PUT IT, CAROLINE. THE STAKE, OF COURSE, IS TARIFFS . AND I AGREE WITH THE PREVIOUS COMMENTATOR THAT THE SWISS ARMY TOOL IS THE TARIFF, SO THAT WAS THE STICK THAT WE HEARD ABOUT. BUT THERE WERE A PROMISING CARRIAGE AND SPRINKLED THROUGHOUT THE SPEECH. HE TALKED ABOUT TAX CUTS FOR MANUFACTURERS TO BUY MORE EQUIPMENT HERE THAT WOULD BE A POSITIVE THING. HE ALSO TALKED ABOUT HIGH SKILLED TALENT. THE ATTENTION HAS GONE FOR HIS PROPOSED GOLD CARD IDEA, WHERE HIGH NET WORTH INDIVIDUALS COULD PAY $5 MILLION TO GET A GREEN CARD, BUT ALSO BURIED IN THE SPEECH WAS AN ALLUSION TO THE ISSUE OF HIGH SKILLED GRADUATES FROM U.S. UNIVERSITIES HAVING TO LEAVE THE UNITED STATES AND NOT BEING ABLE TO STAY AND GET A GREEN CARD, SO IT SOUNDS LIKE PRESIDENT TRUMP WANTS TO CHANGE THAT, AND THAT IS SOMETHING THAT MANY COMPANIES COMPLAIN ABOUT AS BEING THE NUMBER ONE CONSTRAINT TO SETTING UP COMPANIES AND MANUFACTURING PLANTS IN THE UNITED STATES IS A LACK OF SKILLED WORKFORCE. JACKIE: LET’S TALK MORE ABOUT THAT TALENT PIPELINE, BECAUSE THE C.H.I.P.S. ACT WAS NOT ONLY PROVIDING MONEY FOR THE MANUFACTURING PLANTS BUT ALSO TO AGENCIES LIKE THE NATIONAL SCIENCE FOUNDATION, WHICH REALLY DEVELOPS A LOT OF THESE MASTER, DOCTORATE LEVEL STUDENTS THAT EVENTUALLY END UP IN THE PRIVATE SECTOR. BY YANKING THAT FINDING A WAY, WHY DOES THAT DO TO THE PIPELINE OF TALENT LONGER-TERM? LIZA: YEAH. I THING HERE THERE ARE A COUPLE OF PARTS OF PRESIDENT TRUMP’S AGENDA THAT ARE WORKING CROSS PURPOSES. ON THE ONE HAND FROM HIS INSTINCTS ARE THAT WE NEED TO ATTRACT THE BEST AND THE BRIGHTEST TO THE UNITED STATES, BUT ON THE OTHER HAND, YOU HAVE DOGE KIND OF FIRING WORKERS ACROSS THE FEDERAL WORKFORCE AND TRYING TO CUT FUNDING, SO IF THAT STARTS CUTTING THINGS LIKE FEDERALLY FUNDED R & D AND OTHER SUPPORT FOR SCIENCE, YOU KNOW, THERE’S A VERY STRONG TRACK RECORD OF THAT KIND OF FEDERAL INVESTMENT IN R & D PAYING OFF OVER THE LONG TERM ECONOMICALLY AND IN TERMS OF MOONSHOT PROGRAMS. HERE I THINK TRUMP OF THE AGENDA IS KIND OF FIGHTING WITH IT DENSE OUTCOME AND IT REMAINS TO BE SEEN HOW THAT FIGHT WILL BE RESOLVED. CAROLINE: WE BRING YOU ON TIME AND TIME AGAIN TO THE SHOW BECAUSE OF YOUR CHINESE EXPERTISE HERE, WHETHER IT IS YOUR PREVIOUS STUDIES, YOUR PREVIOUS SPECIAL COMPETITIVE STUDIES PROJECT, AND NOW AT GARNAUT GLOBAL, IS IT BETTER OR WORSE? LIZA: SO WHAT IS INTERESTING IS CHINA HAS BEEN A BIT ON THE BACK BURNER IN PRESIDENT TRUMP’S FIRST SIX WEEKS. HE’S NOT TALKING ABOUT CHINA AS MUCH. IT ONLY CAME UP VERY BRIEFLY A COUPLE OF TIMES IN HIS SPEECH LAST NIGHT, KIND OF IN PASSING. BUT WE KNOW THAT OVER ON THE OTHER SIDE OF THE PACIFIC, BEIJING IS OPENING UP ITS PEOPLE’S CONGRESS TODAY. THERE FROM YOUR MADE COMMENTS, REINFORCING THEIR DESIRE TO AN X TAIWAN, AND THEY ARE RATCHETING UP THE PRESSURE IN THE TAIWAN STRAITS. IT’S ONLY A MATTER OF TIME BEFORE CHINA KIND OF FORCES ITSELF BACK ONTO THE FRONT BURNER OF TRUMP’S AGENDA. CAROLINE: LIZA TOBIN, ALWAYS GREAT TO CATCH UP, MANAGING DIRECTOR OF GARNAUT GLOBAL. COMING UP, BRINGING AI TO CONSUMER PRODUCTIONS, TALKING ABOUT OPPORTUNITIES IN THAT CONSUMER SPACE. ARM CEO RENE HAAS. THIS IS “BLOOMBERG TECHNOLOGY.” TIME NOW FOR THE VC SPOTLIGHT. A GROWING NUMBER OF OPPORTUNITIES TO TRANSFORM YOUR PRODUCT, THE CONSUMER. BEN QUAZZO IS A PARTNER AT ACCEL , AND WHEN I THINK OF YOUR CAREER, I THINK OF AI AND ENTERPRISE, BUT YOU ARE REALLY LEANING INTO HOW IT’S GOING TO AFFECT MY LIFE. WHAT ARE SOME OF THE BETS YOU’VE BEEN MAKING? BEN: THAT IS RIGHT. WE RECENTLY LED $70 MILLION INTO AN AI POWERED LANGUAGE LEARNING OUT CALLED SPEAK IT IT TEACHES ITS LEARNERS HOW TO COMMUNICATE, HOW TO HAVE CONVERSATIONS THROUGH VOICE AND AUDIO. THIS IS KIND OF BEING CONTRASTED, THE HISTORICAL INDUSTRIES WITH NUMEROUS A AND GRAMMAR CENTRIC TECHNIQUES, SO WE ARE EXCITED TO BACK THE LEADER IN AI FOR LANGUAGE LEARNING THIS SYSTEM. JACKIE: BEN, WHERE ARE WE NOW WHEN IT COMES TO CONSUMER TECHNOLOGY? THERE WAS QUITE THE HEYDAY IN THE MID-2000’S, BUT TODAY IN THE ERA OF AI, THE BIGGEST TEXTS ARE BEING WRITTEN FOR A LOT OF ENTERPRISE COMPANIES. WHAT OPPORTUNITIES ARE YOU SEEING TO BRING BACK THAT CONSUMER SPACE? BEN: YEAH. LOOK, I THINK IT HAS BEEN A TOUGH DECADE FOR CONSUMER ON THE WHOLE, BUT AI UNLOCKS A WHOLE NEW OPPORTUNITY. WE ARE SEEING A BLEND OF THOSE COME OF THE B TO B APPLICATION ON THE CONSUMER SIDE OF THE HOUSE. WE ARE TRYING TO BACK PRODUCTS THAT ARE BRINGING BETTER USER EXPERIENCE IS TO ITS USERS, AND WITHIN THE CONSUMER WORLD, THAT CAN COME IN THE FORM OF LANGUAGE LEARNING, IN THE FORM OF MUSIC, HEALTH, AND WELLNESS. SO I THINK THERE’S A LOT OF OPPORTUNITY, AND, FRANKLY, THE FOUNDATION THAT AI PROVIDES THE APPLICATION OF THESE BUSINESSES IS THE REAL GAME CHANGER HERE. JACKIE: WHAT DO YOU MAKE OF VALUATIONS IN THE MARKET? AI SEEMS TO BE THE OUTLIER, GETTING THOSE VALUATIONS EVEN BEFORE THE COMPANY STARTS GENERATING REVENUES. DO YOU THINK THAT WILL START TO SOFTEN? BEN: IT’S HARD TO PREDICT THE FUTURE COULD WE WILL GO THROUGH A LOT OF LOCAL MAXIMUMS, LOCAL MINIMUMS. AT ACCEL, WE LOOK AT WHAT THE NEXT DECADE WILL DRIVE FROM AN ENTERPRISE PERSPECTIVE. WE ARE LASER FOCUSED ON THOSE MISSIONS. THE VALUATIONS HOPEFULLY WILL LOOK BACK ON AND WON’T FEEL TOO SCARED ABOUT OUR ENTRY POINTS. BUT THERE’S NO DOUBT THERE’S A LOT OF EXCITEMENT HERE, AND I THINK YOU HAVE TO BE DISCIPLINED ON WHERE YOU ARE PLACING YOUR BETS. CAROLINE: IS SOME OF THAT COMING OUT? I THINK OF MIKE ANDERS FROM ICONIQ CAPITAL OVER AT BLOOMBERG BEST, AND THE DISRUPTION, CONSUMER SENTIMENT SHIFT, MAYBE THAT’S A BETTER ENVIRONMENT FOR HIS COUNTRY AT LEAST TO START WRITING CHECKS, BECAUSE WE DO HAVE THE FOMO A LITTLE BIT. WHEN WE ARE UP BY 23% COMPARED TO NVIDIA’S HIGH EARLIER IN THE YEAR. BEN: YEAH. THE TOUGH PART OF LOOKING AT PUBLIC VALUATIONS IF THEY ARE CHANGING ON A DAILY BASIS TO IT WHERE WILL THEY SETTLE 5, 10 YEARS FROM NOW. WHILE WE WILL SEE MEDIUM SHIFTS WEEK TO WEEK, MONTH-TO-MONTH, THE TRUTH IS OUR UNDERWRITE HAS TO BECOME A WHAT CAN THIS COMPANY BE FIVE YEARS FROM NOW, 10 YEARS FROM NOW? THAT’S A CHALLENGE FROM A BAIT IS NOT CORRELATED FOR THE DAY TODAY PRICE MOVEMENTS IN THE PUBLIC MARKETS. JACKIE: WHAT DO YOU MAKE OF THE HUMANE, KIND OF DISASTER THERE? IT DID NOT REALLY TAKE OFF, THE AI PAIN, IT WAS REALLY THE FIRST SECTION OF GENERATIVE AI AND HARDWARE. DO YOU GUYS LOOK AT THOSE TYPES OF OPPORTUNITIES WHEN YOU ARE GOING OUT AND LOOKING AT, YOU KNOW, HOW CAN WE BRING THIS FROM A CONSUMER STANDPOINT? BEN: YEAH. LOOK, I THINK IT’S ALWAYS EASY TO POKE HOLES IN SOMEWHAT FAILED MISSIONS. HINDSIGHT IS 20/20. BUT IT TRUTH IS, CONSUMER IS SUCH A BIG OPPORTUNITY THAT YOU HAVE TO BE BRAVE. I HAVE A LOT OF RESPECT FOR TEAMS ACHIEVING AND AUDIO, FITNESS, HEALTH AND WELLNESS. I DON’T IMAGINE THEY ARE GOING TO BE THE ONLY ONES, HOWEVER, I ALSO THINK WE WILL WAKE UP IN 2035 WITH A WHOLE SLEW OF NEW PRODUCTS THAT WE USE EVERY DAY, NOT ALL OF THOSE WILL BE CREATED BY THE APPLES OR AMAZONS OF THE WORLD. JACKIE: THAT’S BEN QUAZZO, PARTNER AT ACCEL, THANK YOU FOR JOINING US. COMING UP THE START UP TRYING CAROLINE: IT IS THE START OF AIMING TO BRING BACK EXTINCT CREATURES, LIKE THE DODO BIRD AND THE WOOLLY MAMMOTH. COLOSSAL BIOSCIENCES HAS CREATED A WOOLLY MOUSE. SCIENTISTS MODIFIED THE MOUSE USING THE DNA TECHNOLOGIES, GIVING THE ANIMALS LONGER, THICKER HAIR AND ALSO METABOLISMS. BEN LAMM, COLOSSAL BIOSCIENCES CO-FOUNDER AND CEO, IS BACK ON THE SHOW. HOW BIG OF A STEP IS THIS? THEY LOOK REALLY CUTE. THEY DON’T LOOK THAT DIFFERENT FROM A DIFFERENT MOUSE. BEN: I THINK THEY LOOK SIGNIFICANTLY DIFFERENT THAN A NORMAL MOUSE. THEY HAVE BEEN CALLED THE MOST ADORABLE MOUSE. SOMEONE HAS ASKED, WHERE THE WOOLLY MOUSE HAS BEEN EDITED, AND THE ANSWER IS NO, WE’VE BEEN EDITING FOR ABOUT TWO POINT FIVE YEARS, BUT WHAT THE WOOLLY MOUSE DOES IS IT PROVES THAT IN THE PROCESS OF UNDERSTANDING ANCIENT DNA, MAKING THE EDITS, SCREEN THEM WHEN THEY ARE HEALTHY, PRODUCING MOVING, HEALTHY ANIMALS WORKS, AND IT WOULD ALSO WORK IN ONE. WE STARTED THE PROJECT IN OCTOBER, NOVEMBER WE HAD OUR FIRST, AND WE HAVE THE EXACT TYPE OF PHYSICAL ATTRIBUTES WE WERE LOOKING FOR, WHICH IS A VALIDATION OF ALL THE EDITS WE ARE MAKING IN THE MAMMOTH ALREADY. CAROLINE: WHAT IS THE NEXT STEP? WHERE DO WE GET TO SEE THE NEXT INNOVATION FOR THIS PARTICULAR MOUSE? BEN: YEAH. SO RIGHT NOW, IT IS OBVIOUSLY CLEAR WE CAN SEE THE WOOL LY-NESS, AS WE LIKE TO CALL IT COME IN TERMS OF TEXTURE, THICKNESS, AND THE WAYS IT GROWS. THEY ARE SLIGHTLY FATTER IN A LITTLE LARGER, WITH THE METABOLISM GENES THAT WE TRY TO GIVE, AND WE CAN SEE OBVIOUSLY THE COLOR, WHICH IS THE COLOR THAT MAMMOTHS ARE. WHAT IS INTERESTING IS IN SIX TO 12 MONTHS, WE WILL GET APPROVAL FROM THE ETHICS BOARD, WE WILL ACTUALLY TRY TO DO A BEHAVIORAL TEST, FEEDING THEM DIFFERENT DIETS, INCREASING THE TEMPERATURE JUST A LITTLE BIT TO SEE HOW THEY BEHAVE IN DIFFERENT ENVIRONMENTS, TO SEE IF THEY DO PREFER COLD TOLERANCE. AND THAT WILL BE TO SEEING IF WE ARE ON THE RIGHT TRACK FOR SOME OF OUR MAMMOTH EDITS. CAROLINE: I TURN TO THE MOMENT OF GEOPOLITICAL ANXIETY, A MAN WHO HAS BUILT, WELL, YOU BUILT AI COMPANIES, YOU THOUGHT ABOUT SPACE, BUT NOW IS THE TIME YOU ARE THINKING ABOUT WOOLLY MAMMOTHS AND IT’S POTENTIALLY EXTINCT ANIMALS COMING BACK. PUSH US FORWARD AS TO WHY AGAIN CAN WHY ARE WE DOING THIS? BEN: WE ARE LOSING 50% BIODIVERSITY BETWEEN NOW AND 2050 IF WE DON’T DO ANYTHING ABOUT IT, RIGHT? WE KNOW CONSERVATION WORKS. WE NEED NEW TOOLS AND TECHNOLOGIES WITHIN THAT, AND WHAT IS AMAZING ABOUT THE TECHNOLOGY AS WE CAN BUILD TECHNOLOGY THAT HELPS HUMANS, AND IT ALSO BUILDS OPPORTUNITIES WHICH ARE GIVEN TO THE WORLD FOR FREE COULD WE LOST OUR FOUNDATION LAST YEAR. IT GIVES US THE OPPORTUNITY TO INSPIRE NEXT GENERATIONS. OTHER GEOPOLITICAL ISSUES, I THINK EVERYONE GENERALLY IS ON BOTH SIDES OF THE AISLE AND ALL OF THE WORLD THAT LOSING SPECIES IS BAD, AND WE SHOULD BE ABLE TO PROTECT WHAT IS HERE AND BUILD NEW TECHNOLOGIES FOR CONSERVATION. CAROLINE: AND THAT TAKES MONEY, AND BOY, HAVE YOU RAISED IT. HOW EXPENSIVE IS IT? HOW MUCH MORE MIGHT YOU NEED TO RAISE? BEN: WE ARE A TECHNOLOGY STARTUP. THIS IS ALSO INNOVATING NEW TECHNOLOGIES FOR HUMAN HEALTH CARE, AND WE SPUN OUT BREAKING LAST YEAR, OUR DEGRADATION COMPANY, WE SPUN OUT FORM BIO, WE HAVE ANOTHER ONE THAT MAY OR MAY NOT THIS YEAR. WE WILL CONTINUE TO RAISE MONEY AS LONG AS THERE ARE INVESTORS TO ADD SENTIMENT AND ARE EXCITED ABOUT THE MISSION. GENETICS IDENTIFIED GENES, MAKE 100% OF PRECISION EDITS USING — MAKING ALL THESE EDITS, ALL AT ONE TIME, WITH 100% EFFICIENCY, THAT IS JUST NOT SOMETHING THAT WE SEE IN GENOME ENGINEERING, RIGHT? LEADING THE CHARGE IN GENETIC MULTISLICE ENGINEERING IS PROBABLY A PRETTY LARGE MARKET, LONG-TERM, SO WE WILL CONTINUE TO RAISE MORE CAPITAL IN THE YEARS TO COME. CAROLINE: THE WOOLLY MOUSE, THE STEPPINGSTONE TO THE WOOLLY MAMMOTH. THANK YOU SO MUCH FOR BRINGING US THE CUTE PICTURES AND YOUR EXPERTISE. BEN LAMM, CO-FOUNDER AND CEO OF COLOSSAL BIOSCIENCES. THAT DOES IT FOR THIS EDITION OF “BLOOMBERG TECHNOLOGY.” CHECK OUT OUR PODCASTS. THIS IS A DAY OF POLITICAL ANXIETY, THE FUTURE OF TARIFFS. THE NASDAQ IS OFF BY .6%.