Donald Trump, Elon Musk Fallout Deepens
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with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, the battle between Elon Musk and President Trump is refuelled, clashing over the tax bill and the EV subsidy question. Plus, Musk is taking oversight of sales in Europe and the US as investors brace for another ugly delivery number for Q2.

And Apple is considering using AI technology from anthropic or open AI, potentially sidelining its own in-house models. All right, let's get straight to our top story. Tesla is down 6%. It is off session lows. But the president in the last few minutes reiterating something that he said earlier this morning, basically that Doge should look at Elon Musk. There was a question to him about whether Musk should be deported. There is a clash over a bill. Let's get to those comments from earlier today.

Not everybody wants an electric car.

Let's get more on the feud. Elon Musk versus the White House. Bloomberg's Kayleigh Lyons joins us for more. And yet further comments coming from the president that he's going to be looking more deeply into Elon's businesses. Yeah, and Caroline, this was really reignited after Elon Musk has re-fired up his criticism of this one big, beautiful bill. Whether or not you assign the blame for that because of fiscal responsibility concerns Musk has and his view that this adds too much to the deficit and undermines the work of Doge or what President Trump and other Republicans

Republicans have suggested, which is just that Musk is upset about EV subsidies. Either way, Elon Musk has gone as far as to say that any Republican who campaigned on lessening the debt burden of the United States and then voted for a big addition to the debt would face a primary funded potentially by Elon Musk. He said they will lose their primary next year if it is the last thing I do on this earth. Keeping in mind, of course, he deployed almost $280 million in

in the 2024 election cycle. So that is what President Trump in part has responded to here. He just reiterated down in Florida that he wants the Department of Government Efficiency, which Elon Musk was running, to look into Musk's businesses, calling him the most subsidized person on earth, suggesting if those government subsidies were to go away, Elon Musk might have to go back

to South Africa, though it's unclear how exactly that would work. As yes, there is a rollback of EV subsidies, for example, in this legislation that could hit Tesla. But for another must company like SpaceX, which basically is the only reliable way to get US astronauts to and from the International Space Station, that may be a lot harder of a relationship to disrupt. Then there's the other threat, of course,

that President Trump has suggested he may act on today when he was asked directly if he would look at deporting Elon Musk. He said he'll have to look into that, knowing that, yes, Elon Musk was born in South Africa, but he is a U.S. citizen. So it's not clear either how that would work. And it's also not clear whether we could see an escalation in this tension. As we saw last month, Elon Musk for now is saying that while he is tempted to escalate, he'll refrain from doing so.

Bloomberg's Kayleigh Lyons in Washington, D.C. Thank you very much. Let's stick with Tesla. Bloomberg broke the story this morning that Elon Musk is set to take over the reins of the company's European and U.S. sales following the departure of longtime lieutenant Omid Afshar. For more, I want to get out to Bloomberg's Craig Trudell. This comes in advance of likely global sales data tomorrow, right? But what we're learning from sources, we broke this story of our colleagues in Asia, is the kind of

Sense of who's steering the ship right now at Tesla?

Yeah, I think this is interesting in light of the last few months, right? When April rolled around, we saw that Tesla had really disappointing first quarter deliveries. In May, Bloomberg spoke with Elon Musk at an economic forum where he said, you know what, sales have turned around. We don't expect to see any shortfall in sales. You know, I think as the quarter progressed, it became clear that that was premature, you know, at least to put it charitably.

that Tesla sales had in fact continued to decline. The expectation among analysts is again for another, call it in the ballpark of 12 to 13% drop similar to the first quarter. And Tesla, it does seem now is looking to sort of shake things up with Musk. It certainly seems dismissing Afshar and also taking over those reporting lines from him.

Craig, the irony here, though, is that many would say Elon is the problem and why sales fell in Europe, at least. Maybe not so much in Asia, where it's a competition issue in particular. But meanwhile, the issue, the focus he had in politics that has so hurt his sales is now biting him back from a White House perspective, it feels like.

I think that's a perfectly good sort of counter argument to make here, right? In that in Asia we have not necessarily seen the blowback that we've seen in the US or Europe where it doesn't

I THINK IT'S A GREAT QUESTION. IT DOESN'T NECESSARILY MATTER ALL THAT MUCH TO A CONSUMER IN CHINA HOW CLOSE ELON MUSK IS TO DONALD TRUMP NECESSARILY. BUT IT DOES MATTER WHEN MUSK IS EXERTING HIMSELF OVER THE U.S. GOVERNMENT TO AMERICAN CAR BUYERS.

He's also inserted himself into European politics, most notably, I would say, in Germany, getting behind the AFD, which of course is a very sort of polarizing party, to say the least, not only in that country, but in Europe more broadly. And those sort of combination of factors, I think, there was a real sort of question earlier this year, how much of this is a backlash against Musk?

and how much is it, you know, things going on within the business, the changeover to a refreshed Model Y, I think we're seeing more indications that it's not just the Model Y and that the Musk factor is looming large here as well.

Shares have paired some of their decline, now down 5%. The session low was 7.7% decline. We're just showing this chart, Craig, that amidst all of the headlines, Tesla's market value has fallen below $1 trillion. Let's go back to the political. Kayleigh was explaining the tension between Musk and President Trump around the big, beautiful bill.

and the issue of EV subsidy, Elon Musk has been very consistent, to his credit, that actually he'd be fine if America did away with subsidies because I think my understanding of it is that he feels Tesla has a lower cost base and more pricing power. And if subsidies were to go away, which the president's statements contradict, it would be more beneficial to Tesla than it would be other American automakers.

Yeah, and I think our colleague in Bloomberg Opinion, Liam Denning, has probably made the most convincing counterargument to that, right? That this is not a matter of people deciding whether to buy a Tesla or another car.

another electric vehicle that there's also the potential for consumers to decide, you know what, rather than buy a Tesla, I may buy a combustion car from, you know, from, say, a General Motors or a hybrid from a Toyota. Right. And so it's not necessarily the case that a consumer is only going to to buy an electric vehicle and is sort of stuck on that.

I do think that subsidies while musk absolutely to your point He's been quite consistent over the years and say and saying, you know do away with subsidies Tesla will be fine I think it's it's hard to sort of take him at his word in in saying that when we're not talking about a small amount of money for for the consumer in the US we're talking about up to seventy five hundred dollars for the

you know, buyer who, you know, if this is taken away as the Senate Republicans want to expedite this, you know, phasing it out in September, that's a huge deal for Tesla. And it's not just that, that, you know, the company is sort of, you know, coming under target from Republicans. It's also, you know, things like funding for manufacturing tax credits.

You know, ZEV credits, regulatory credits that the company sells to other automakers. So this is a much broader sort of offering of subsidies or forms of government support that would really hurt Tesla if they were to go away.

Roughly 40% of Tesla's profits are at risk due to the shifting regulatory landscape. That's what JP Morgan analysts are currently putting an estimate of. One of the most, Craig Trudell, brilliant to have you. Thank you. Let's talk about owning this stock. Should it be included in ETFs like that of Defiance? Sylvia Jablonski is with us. She's Defiance ETF CEO, CIO. And we start with Tesla and Musk. I think you've articulated that you don't have exposure across the ETFs, particularly to Tesla. Is that because of the wrong...

the role Musk plays or other things? Good morning and thank you for having me. No, that's not really defiance specific. Our ETFs are in the quantum computing space, right? And 6G, which is the next gen of communication, really. So it's just that we don't happen to track the space or that particular product within those funds.

But that being said, you know, I think that if there were an opportunity to hold Tesla, it's not something that we would necessarily be opposed to. Right. I think that a lot of what's happening now is noise around politics. And, you know, there is some potential downside if this tax bill removes seventy five hundred dollars worth of credit. I mean, that subsidies affect sales in the long run. They rarely go unscathed if passed. But again,

But, you know, that aside, I mean, Elon Musk is still Elon Musk and, you know, the genius of robo taxis and driverless cars, in-home robots, which one day could be a staple in all of our homes. You know, I don't count the company or the CEO out regardless of this feud.

So do you not even bake in as a potential ire of, you know, you've got plenty of leveraged ETFs, for example, on single names, and whether or not eventually you'd want to be giving that sort of volatile exposure to your own client base, Sylvia. Would you ever hypothesize that such a leader in technology could be asked to leave the country, even? That seems to be what's being implied by the president.

That seems to be what's being implied. And there are levered Tesla ETFs out there and they're quite popular and are seeing steady AUM growth. And that's just a consequence of first movers got there. But I can't really comment too much on the citizenship aspect of it, but it is my understanding that Elon Musk is a US citizen. So I'm not sure how that would go. Sylvia, when you compose an ETF,

Is "Key Man Risk" and the leadership of any given name part of the consideration?

Yeah, so that can always be a factor in terms of, you know, it depends on the type of ETF that is structured and what it does. So, you know, there have certainly been products in the market before where people are looking at, you know, specific leaders and basing ETFs off of the types of CEOs that they want to invest in. You know, sometimes that's been in the ESG space. Sometimes that's been around DEI factors. Other times it's been around, you know, kind of the tech lords and things like this. And so that's

certainly a factor that can play in. But I think most of the time, like when you're thinking about thematic ETX, for example, you're thinking about a theme and then you try to build in the products that actually fit that theme. So quantum stocks, for example, right? You're not thinking so much about the CEO, but more about the company itself and what it does. Remember when a single technology glitch could bring an entire workday to a standstill? I'm Mark Banfield, Chief Commercial Officer at TeamViewer. Today, most technical issues are recurring.

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Apple. It is considering using AI technology from Anthropic or from OpenAI to power a new version of Siri, sidelining its own in-house models.

If Apple moves forward with using third-party models, it will represent a significant reversal and an acknowledgement that the company is struggling to compete in generative AI. Bloomberg's Mark Gurman joins us for more, and this is a significant story, and it really puts the focus on the in-house model builders and whether that's going to be something they commit to.

Absolutely right. This is a blockbuster idea for Apple. I say it's an idea because they haven't made any final decisions here. Internally, they're investigating whether or not they should move away from their foundation models, that's their internal large language model system, to ChatGPT from OpenAI, Claude from Anthropic, or a different provider to power Siri specifically. As you know, Siri hasn't really worked well for

for years, right? And even with Apple intelligence and a move to generative AI, it hasn't improved. And it's been over a year since they announced these AI features. And so they're taking a hard look if they should be using someone else's back end. Be a similar situation to Amazon, which uses Claude for the new Alexa. And of course, Samsung, which uses Google Gemini to power their AI system.

Mark, Apple's up 1.7% today. It closed up 2% yesterday. There's a lot of evidence that the market is paying attention to this reporting. Part of what you reported is that Apple has asked Anthropic and OpenAI to go away and develop versions of their models that can run on Apple's cloud infrastructure, which also relies on custom silicon. Could you explain that a bit?

So right now, Apple has two types of AI, just to simplify it. They have on-device AI, and that means the large language models run on the iPhone, the iPad, the Mac themselves. That's for lower tier tasks like summarizing an email. Then they have cloud-based AI. They call that private cloud compute. This is for summarizing very long articles. This is for writing blocks of text.

And Apple wants to use either Anthropic or OpenAI, or at least they're considering them, in the cloud. That's because those models require a lot more processing power and that can't be done on the phone itself. It's also more private. Instead of having models from a third party running deep into the iPhone infrastructure, they'll be running in the cloud to keep things more sectioned off from user data. And so that's the way they're looking about this.

The idea here is that they're training these models right now, Anthropic and OpenAI. Apple's going to evaluate to see who's the best. And they very may well decide they're going to keep going with Apple Foundation models. Concurrently, they're developing a version of Siri for next spring that uses Apple Foundation models. But that is a competing project to this OpenAI and Anthropic idea. So we'll see what they end up doing. But the fact that they're heavily considering and evaluating this tells you everything you need to know.

Bloomberg's Mark Gurman, thank you very much. Now Mark Zuckerberg has announced the restructuring of Meta's artificial intelligence group now called Meta Super Intelligence Labs and he's stocking it full of hires from rival AI firms. Here with the story Bloomberg's Kurt Wagner and actually this is confirmation via

an internal memo from Zuckerberg and the team to Metastar of a lot of what we've reported over the last month. We have a super intelligence team. What was new in what Zuckerberg said?

Yeah, I think what we learned today to your point, Ed, is that this thing is official. We had been talking and reporting about this for a couple weeks now. I think what's new is that they listed in total, if you include Alexander Wang, 13 new hires for this team. So we did confirm a lot of the new members of the team. And we also learned that Nat Friedman, former CEO of GitHub, is going to sort of co-run this new team with Alex Wang.

I get the sense Alex Wayne is perhaps in charge with Friedman as his number two, but either way, these two people are going to be atop this thing. It was something that I think we had long speculated and heard about, but again, all of this is now official, and it represents a huge structuring and also a revision of what Meta wants to accomplish with AI.

and the ability and willingness to spend. He articulated that he's willing to spend hundreds of billions on this race, because there's no point coming second, basically, Kurt. I think that's the feeling, is that...

If you are the first to AGI, if you're the first to human level AI intelligence, that's sort of all that's going to matter. At a certain point, I think everyone's going to catch up to this, right? If this is achievable, everyone will get there. But whoever is there first not only gets to sort of stake that claim, gets to use that to benefit recruiting and other things, but they're also going to be the first to sort of lure consumers to their various products that have, you know, an AI chatbot. So, for example, if you're Meta,

looking at the Ray-Ban glasses and you think, wow, if we are the first people to come up with a human level AI assistant, then Ray-Bans are going to fly off the shelves. At least that is the hope, right? And so I do think that while, you know, presumably this might become ubiquitous tech, everyone wants to be there first for a number of reasons. The primary one being, of course, to sell those products and to get consumers to their product first before the competitors.

Big tech meets big football? Microsoft and the Premier League are launching a five-year strategic partnership aimed at transforming how fans engage with a game of football or soccer, however you call it. Whether it's fantasy football, in-match analysis, even a personal AI companion. Now we caught up exclusively with Microsoft UK CEO, that's Darren Hahnemann, and the Premier League Chief Commercial Officer, Will Brass, about the news.

This is a partnership, partnership like we have with many Microsoft customers, transforming the core of how the Premier League works and operates and runs their business and extending into their customers, which is the fans. And so the fan experience is incredibly experienced. And it's just a privilege to be able to leverage the power of the Microsoft Co-Pilot and the broader AI technologies that we have to reach so many people in such a positive way.

Will, same question to you. Who's paying who? What's the commercial value of this deal to you? That's one for us, I think, Ed.

But what I would say is it's a truly mutual strategic partnership that we're entering into on a multi-year basis. We're both very excited about what the future may hold in that regard. And of course, as the Premier League, we're very lucky to work with a number of genuinely world-class businesses and brands. We're a big part of our strategic work around the world. To add Microsoft to that family is a really great moment for us.

The wording you use was "add Microsoft". I've been tracking the Premier League from a data and analytics standpoint for a number of years now. When I came to America in 2018, I really sort of took on board

the role that the in-game experience plays, but on the analytics and data side. Fans have an essential appetite for it. In 2021, you had a similar partnership with Oracle, right, on the analytics and data side. Is this announcement you replacing Oracle with Azure and Microsoft, or is it in addition to?

So the partnership with Oracle has now expired and this relationship with Microsoft is a new one. Ultimately all of our partnerships are different in nature.

There isn't a direct read across between the work that we did with Oracle, the work that we do with Microsoft. Microsoft are becoming a partner in light of the technology transformation story that we're trying to go through. We think they're the perfect partner for that. And so we're excited to be moving ahead today together. Moving ahead today, Darren, paint what five years from now looks like. It's a five-year strategic partnership. How will my engagement with the Premier League have changed, do you think?

yeah i think this is the future of football it's a data driven drama it's smarter stats it's deeper stories it's um a better connection of the fan to what's going on and it's a life cycle so you know how do i start my experience on the game day what's my experience during the game and how do i interact and engage post the game based on the experiences i've had and so

As we engage and as we grow this partnership, we'll take feedback from the fans directly and we'll begin to build out even more capability that you'll find on day one as we launch today.

That was Microsoft UK CEO Darren Hardman and the Premier League Chief Commercial Officer Will Bruss. Coming up, we're going to talk a lot more about Tesla as the stocks falls from this reignited feud carry between Elon Musk and President Trump. Down 5% off session lows but below a trillion dollars in market cap. For all the focus on Robotaxi AI, this week it's all about selling cars.

welcome back to bloomberg tech we're really zeroed in right now on ev makers around the world we're actually going to start with byd the chinese ev maker 10 sales growth in june but remember part of the strategy is to go for mass volume growth of byd through heavy discounts in competition with tesla down 5.3 caro we've been talking about how it's off session lows i think at one point it was down 7.7 but this is a company that has fallen below a trillion dollars of market value

Because Elon Musk and President Trump's relationship, well, I think it's changing. And the reignited feud is upon us because we already knew they had a monumental bust-up but previous month and now that argument continues. Dana Hull breaks it all down for us and this is going back to the frustration that Elon Musk seems to have with the tax bill but many would try and interpret that this is actually about EV subsidies.

I think it's about a lot of things. I mean, Musk is very worried about the deficit and has been for quite some time. And the whole premise of Doge was that it was going to cut government waste, fraud and abuse. Simultaneously, you have this crazy bill moving through the Senate with that ad.

adds an enormous amount of money to the deficit, gives billions of dollars to ICE, kind of expands the surveillance state, cuts people off of Medicaid and SNAP. And, you know, Elon overnight was like, this is a bad bill. And he is threatening to primary people. He's threatening to start a third party. And so he and President Trump have kind of gotten back into it. And so, you know, Musk is using the power of his bully pulpit to really kind of warn people

the Senate and politicians that he is not a fan of this bill. And so it's kind of reignited this long simmering feud between the two of them that has kind of been off and on for a while. In the last few minutes, the president has been speaking in Florida ahead of his alligator Alcatraz tour. Let's just listen to what he said.

Elon Musk is ripping into this bill again. Are you concerned that Republicans are going to be swayed by Musk and his money? No, I don't think so. I think what's going to happen is Doge is going to look at Musk. And if Doge looks at Musk, we're going to save a fortune. Thank you very much, everybody. I don't think he should be playing that game with me.

There's two parts to the President's accusations or claims against Musk. One, that he does feel upset about the EV subsidy, but also that Musk himself is subsidized. And in the course of your reporting over the last month or so, we've explained how across Elon Inc., there is exposure that Elon Musk has across subsidies, but also grants and key government contracts.

Oh, for sure. I mean, if you look at SpaceX, I mean, SpaceX is a key government contractor. They have loads, billions of dollars in contracts with NASA and with the Pentagon. And I mean, that is, you know, I think that

SpaceX is actually quite significant in terms of just the funding that it gets from the U.S. government. And so you're seeing two alpha males kind of go at each other. It's curious to me that Trump is saying that Doge would look at Musk because, like, what is Doge without Musk, really? Like, you know, I'm not entirely sure who's running the show there. Yeah.

But this is just, yeah, this is just sort of wild. I mean, and the Senate has not voted yet, as far as I know, but it's coming down to the wire on whether they have the votes to proceed.

Yeah, I think we're getting headlines that are votes close. Blue Mox down a hole from the Elon Inc. team. Thank you very much. Let's stay with Tesla. Tesla shareholder, but also Elon Musk critic, Ross Gerber. The Gerber-Kawasaki CEO and president took to X last night following comments from the president saying, it seems Elon is destined to find out who is more powerful.

Ross Gerber is here with us. Ross, I just wanted to give the context of your position. You are a long-term believer in the broader Tesla story, right? Your concern and what you go on to say about the board in particular is that this political fight between Elon Musk and the president is not to the benefit of the company. Have I got that right? Oh, yeah. I mean, it's horrific for the company, to be honest.

The actual math, Ross, because what's interesting is I think JP Morgan analysts have said maybe about 40% of profits are exposed here to regulatory shift and the landscape. Do you think that's as much as we could see a dent of? Is it more or less than that?

No, I think it would be much more detrimental because when you look at pricing of EVs, like Teslas in particular, there's a severe supply and demand imbalance because the demand for Tesla has dropped off. So people don't really want the cars and the discounts that they get through the $7,500 credit is a substantial amount of money relative to, let's say, a $40,000 car.

So the typical Tesla buyers is actually sort of like a millennial. So these price increases definitely are bad. And when you go into areas like I'm in Europe now, I mean, the hate for Elon is huge. You know, I'm in Italy where this was a country that, you know, America's

Americans fought and died to end fascism here and had a horrible experience under Berlusconi, which is like a billionaire like Musk. And so people are just, you know, done with it. So this is just another like nail in the coffin, which I tweeted that really is going to hurt Tesla. And I'm very upset about it. You know, I just think this is totally unnecessary.

I mean, I think we can bring up what you've been posting a little bit earlier, Ross, but I'm really interested as to the latest breaking news out of Bloomberg has been that Elon has helped reassert himself into the sales role in Europe, in the US of Tesla. Now, do you think that's a good move? Do you want him more involved? Or is it the fact that, you know, if he's impacting the way people feel in Italy and around the EU, is that a good thing or no?

Well, there's no Teslas in Italy. I mean, we're not selling any here. I have seen a handful at most and I've driven all over the place, you know. And, you know, the way I look at it is this.

Elon has a talent, obviously, and he's a very successful engineer and a manufacturer who's built Tesla up into being a huge company. But from a marketing and media perspective, he's destroyed his image. And the more involved he is, it's actually worse from a marketing perspective. And especially because he's not coming out and saying, hey, you know, I'm sorry for, you know, sort of pissing off everybody. I've been wrong.

you know, about Trump and, you know, please buy my cars. It's more just fighting and political infighting and then threatening to start another party. You know, you're at this kind of point where it's like,

what is this guy doing? You know, like you're supposed to be selling cars and robo taxis. And instead, we're in a fight with the president of the United States, which he enabled and helped empower. But I'm sorry, Elon, President Trump is way more powerful than you. I mean, he's literally bombing Iran and you're messing with this guy. So it's just quite frankly, it's stupid.

Ross, Musk has been consistent through social media posts, videos, that he's okay with the idea that subsidies, in particular direct-to-consumer subsidies, go away because he argues Tesla has this lower cost base and pricing power. And the president, obviously his comments dispute that. He keeps claiming that Elon is upset. What do you think about the doing away with subsidies and how Tesla's position in the market would be impacted?

Well, it turns out that Tesla real competition isn't as much EVs as it turns out to be like hybrid vehicles like the Audi I'm driving here in Italy, which is actually a great vehicle and it gets about twice the gas mileage that a regular gas car would get. It's not an EV, so it doesn't have the same benefit. But when you actually look at competition just on

on a regular basis of all vehicles, there's lots of choices consumers have and many of them are energy efficient even if they're not EVs. And they're making those choices and we're seeing in the numbers, not to mention we're seeing EV sales like in Europe actually soar and it's just not Tesla. So this idea that it's not gonna hurt Tesla because the benefits are taken away is really just, again, it just doesn't make any sense and it goes against the fundamental theories of economics.

So making the car more expensive means less people will buy it. It's simple as that. And they already have a hard time selling the car. Ross, I see on the Bloomberg terminal that Gerber Kawasaki had around 235,000 shares at the end of March and that you'd been a seller of the stock. And I just point that out to the audience because when I said you were coming on, some people say, well, Gerber Kawasaki doesn't even hold any shares at all. So I'm putting that out there. In your post on X, you cited the board.

The idea that Elon Musk's political statements are not helpful is not unique to you. Others share it. Have you had anything from the board or do you have any sense if the board has any plan to act on this? No, they're not going to do anything. And we all know that they are all paid by Elon and work for Elon. It's not an independent board. Delaware courts have said this over and over again. There's been one change to the board since they did have one independent board member recently.

you know the fact of matter they're not gonna do anything about it you know and I think there's some confusion I run an ETF GK ETF and we sold our Tesla yesterday we had a small position left and that's just the you know one small part of what we manage it we manage over three and a half billion dollars for clients at Gerber Kawasaki and many of them are big

long time Tesla diehard shareholders and that's who I really represent they love Tesla like I love Tesla but Elon is not doing what's best for us shareholders so we still have I checked yesterday over 60 million dollars in Tesla stock for our clients and and that's why I'm advocating for because I personally have sold a lot of my personal position I still own some personally you know my cost basis is two dollars and fifty cents a share so I like keeping some shares just

because it was one of the best trades of my life. But, you know, I just don't see with a valuation of 150 times earnings when you have Microsoft, NVIDIA, and Google, and Meta all trading under, let's say, 40 or 30%.

What's the justification for this valuation? Robots in a robo taxi that doesn't really work. It just seems like there's a big disconnect here. And eventually this reckoning will come as the stock market ultimately does work these things out. So, you know, I caution investors there's going to be a cost at some time for all this. And it maybe hasn't happened yet, even though the stock is down 25 percent this year. You could easily see the stock drop in half.

if this continues. So I'm very concerned about the future of Tesla and for my shareholders. So that's why I'm here and that's why I advocate on behalf of Tesla shareholders.

It's time for the VC Spotlight. Here with me is Mark Bergaba, Managing Director at General Catalyst. You have something that's called roll-up strategy. Yes. Or rather, AI-enabled roll-up strategy. So you say we are a global investment firm, but we're also a global transformation firm. Yes. Explain the strategy.

Absolutely. Yeah, we're seeing AI having a huge potential in many industries such as legal, IT, call centers, HOA management, but these businesses are more traditionally services businesses. So what we're doing is we're backing teams that are enabling both services and software, and we think that can be empowered by AI. Right. One of the portfolio companies or most recent investments is Udia. Correct.

On the face of it you say, well is this a Harvey? But it's not. The whole point is that it's kind of like back office help and AI makes it better. Absolutely. So with Udia for example, it's really targeting the general counsel, so the in-house law firm versus the external law firm instead. And so Udia is a really powerful way to have services and software in one platform, really helping those in-house legal teams versus third-party law firms.

That's a fascinating tactic in the way in which you're helping build, create. How big is the creation portfolio now? How much money have you raised to put to work in this way?

Yeah, General Catalyst raised $8 billion last year. The Creation Fund is a billion and a half of that. We're putting about half of the money into these hybrid AI-native services plus software opportunities. So when we look at where the spend is, for example, in Udia and in legal services, it's not necessarily in the software piece. A lot of the spend is on external third parties. And so can we bring in technology like AI software but also services pieces within the in-house legal parties in order to really scale out their businesses?

And to scale, talent is needed. And I bring it back to some of the stories that we are talking about day in, day out of the mega cap names and the fight for talent and how expensive it has become. How are you sourcing those wannabe entrepreneurs who could be being paid phenomenal amounts if they just jump ship from an Apple or an OpenAI over to Meta right now?

Absolutely. A lot of the founders we're backing on creation want to create these hybrid services plus software AI native style companies. So they want to be the next generation Constellation Software or Transdime or Danaher. They really want to build these large compounders that can grow in the public markets. And so we're seeing the answer is not just in giving a software solution, but it's really in doing a hybrid services plus software business. And so many of them want to create these compounders that they see growing quickly in the public markets, but empowered by AI.

And the way we looked at it is we looked at over 70 industries and we found in 10 of them, AI software could automate over 30% of tasks. So those are the 10 industries that we've been going after in order to actually buy out these companies and improve their operations so they can take on more revenue and they can have more business. So for us, this is really an AI growth story. How do we get AI software in the hands of these compound founders

who can provide both software and service businesses and really grow and compound traditional accounting firms, traditional IT firms, HOA management companies, really getting this AI native software and automation in the hands of these businesses. Mark, over the years, we're very used to seeing general catalysts flush left, leading rounds or partnering very high up in the cap table on all kinds of rounds.

But it's competitive out there. Absolutely. Is the roll-up strategy a point of difference? Because, you know, as far as I can tell, founders right now have their pick when it comes to term sheets and who they might take capital from. Capital is almost like commoditized in some sense. Absolutely. It's an extremely busy time in venture and in private equity. So what we've been thinking about is what are the most ways to help and support a founder? And we really do think at General Catalyst that is our mantra.

So we're helping incubate companies, we're helping companies buy out their distribution and the data they need to grow, which is the roll-up strategy. We're helping folks on customer acquisition with our CVF fund. We're incubating businesses in-house. So General Catalyst is really working to find the most ways to partner with founders, and we think this AI-native trend is a really, really great way to do it.

for the first time there's an opportunity to actually buy out your client list and in doing so by the data needed to have a better AI native solutions whether that's for nursing whether that's for call centers whether that's for HWA managers actually owning the data and the distribution is extremely important in refining the model and having the best product on market we can go back to UDL or crescendo as case studies

What is their biggest cost at the moment? You know, they are not relying on their own infrastructure or necessarily requiring the talent to build their own models. So what is it that's expensive for them? The hardest part in all of this is really the go-to-market because we're seeing on the AI side, whether it's Anthropic or OpenAI or Google, every three to six months we see amazing improvements in logic and reasoning and math.

The hardest part of this AI revolution is really getting it into the hands of the end customers. It's the go-to-market piece. Many of these industries are fragmented, they're hard to sell into, they don't like buying technology products, and even if they buy them, it's very difficult to implement them. So for us, we're finding the hardest part is really the go-to-market and getting the distribution. And that's why the AI-enabled roll-up approach is solving, in many ways, the hardest part of kind of an AI transformation story.

Not to get too ahead of ourselves, but as you are creating, as you're harnessing, as you're transforming, I'm sure you're thinking about an exit strategy. And eventually, are you thinking as a man who's done M&A in the past with Tagomi, the company you founded before, is M&A the real path here for some of these roll-ups?

It could be one path, but really the North shining star is to have these compounders in the public market. If you look at the performance of Transdime or you look at Constellation Software or even Berkshire Hathaway or others, holding companies historically that have had better operations and can buy smaller businesses and then improve them, allow them to take on more clients, to grow, to become more profitable and continue to compound businesses, that has been a really successful strategy in the public markets.

We think there's a whole new generation of these public compounders that are being started right now. And a lot of the improvements they'll do will be around AI automation, automating more basic tasks like customer support or data entry or translation or summarization or creation of presentations. All of these things are getting easier and easier to do in AI. So we're putting together teams that have industry experience and M&A experience coupled with this AI technology experience

to go and actually buy businesses, improve them, and grow them, and continue to compound. It's a very classic story in the public market, but with an AI twist, we think we'll have a major impact.

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As Elon Musk reignites a feud with President Trump over the tax bill, what does that entail for the company's autonomous ambitions? It's just a week or so since it launched its robo-taxi service in Austin, Texas. Mandeep Singh of Bloomberg Intelligence, our in-house analyst, is here with us. In my reporting, it's been quite clear. Elon Musk aligned himself with the president and went into the White House to get certain things. One of them was to influence federal-level regulation and frameworks for robo-taxis.

How have you modeled for that? Because you've been writing a lot recently about Waymo in competition with Tesla's autonomous ambitions. Yeah, look, I mean, when you size the robotaxi right now, you know, it's pretty small. Uber and Lyft do about 11 to 12 million rides a day.

Waymo at this point even with the growth that they have had this year is about 13 million annual rides so really the number of rides in a day contrasts with 13 million annual rides so that's what we're talking about and with Tesla entering the market the hope was they can scale much faster because obviously they can make the vehicle at one-third of the cost than a Waymo vehicle but now I think

getting those safety approvals city by city, that's what's taken Waymo so long in terms of ramping across those five cities. And I think it will be hard for Tesla to ramp up. So based on our expectations, Robotaxi will have a much slower growth than the hockey stick growth we have seen with ChatGPT or, you know, on the LLM side. This is going to be a much smaller market, at least for the foreseeable future.

So given, Mandy, that the stock is down six straight days and we're sub one trillion, is that priced in briefly, please? Well, not really, because the expectation is Tesla will be a big player and that's always been part of their premium valuation. So clearly there is a scope for expectations being reset if this robo taxi rollout is expected to come out much, much slower than consensus expectations.

Manip Singh of Bloomberg Intelligence, thank you so much for the breakdown. Now that does it for this edition of Bloomberg Tech Ed. Don't forget to check out the podcast. You know where to find it. It's on all the Bloomberg platforms and online on Apple, Spotify and iHeart. From London and San Francisco this week, this is, has been and will continue to be Bloomberg Tech.

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