Broadcom's Nvidia Moment, Trump Meets With TikTok
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From the heart of where innovation, money, and power collide in Silicon Valley and beyond, this is Bloomberg Technology with Caroline Hyde and Ed Ludlow. ♪♪

Live from New York, this is Bloomberg Technology. Coming up, Broadcom becomes the new Nvidia as the latter falls further into correction territory. We'll discuss why. Plus, TikTok CEO pays a visit to President-elect Donald Trump. What that means for the app's potential ban.

and a conversation with Senator Amy Klobuchar on how to combat the rise of AI-generated deepfake material online. But first, a check-in on these markets, which come down from record highs. We digest the retail sales data that shows the US economy remains resilient as we look ahead to the Fed meeting tomorrow. We're just on tenterhooks, but look, we date about a 0.5% dip lower on the NASDAQ 100 after it has been record high after record high.

go into some of the individual movers. It has been chip stocks that have been dragging us lower somewhat, again coming down from a significant run for Broadcom, for example. We're down more than 5%, but boy, has it been on a big rally, up 38% in the previous two sessions. Nvidia, though, off by 2.2%. We are further into correction territory. That means it's more than 10% off of its previous high. That was met in early November. And I'm looking at Arm as somewhere in Delaware,

ARM takes on its biggest client and indeed partner, Qualcomm. Once again, we've got these two key influential chip designers and makers going head to head in an IP battle that has broader ramifications. We dig into it with Bloomberg's Ian King. The chip master is here and we've got a lot to talk about when it comes to chips. Let's just focus on NVIDIA to start with because is there any real fundamental reason that we're suddenly getting to a technical correction here?

Nothing that you've seen any headlines on or seen any reporting on. As you remember, Caroline, they've said we're sold out basically. Their earnings are essentially a product of how much they can get from their suppliers right now. So nothing fundamentally that would give anybody any pause but obviously as you pointed out, a huge amount of money that has been poured into that stock.

it's up more than 100%, still 160% over the course of the year. We then flip to maybe a wannabe NVIDIA in the making. Brawcom really signaled the total addressable market here for its designs within data centers and the crowd went wild. Can you focus in on Brawcom and maybe a bit of profit taking on the day, but what do they have to do to make this a reality?

Yeah, I mean, they have to work really hard. I mean, what Hock Tan gave wasn't a sales target, right? We need to be careful about that. This kind of as much as $90 billion that he was talking about was an addressable market for his type of chips, and that's by 2027. So what he was saying is, like, we have line of sight to a huge increase in what we do, but that pales in comparison to NVIDIA, which is going to be $120 billion in data center sales alone this year, according to analysts.

When it comes to just enticing different kind of investors on board, I mean, many were basically playing catch up to NVIDIA for the last two years. Is there a slight FOMO trade here going on? Is that sort of what Hocktown has to deal with? Is that everyone's looking for the next NVIDIA? Yeah, I mean, that's absolutely part of it. And part of it might be, well, if you think about it, Broadcom is making chips. It's designing chips for the Googles and the Microsofts and companies like this who are

basically designing their own chips so that they don't have to buy as much from Nvidia. So there might be a kind of a switch trade here, but bear in mind that everybody who's been asked about this, mostly Hoctan most recently, said, look, there's plenty of room for everybody. This is a massive growth opportunity. Nobody's really taking anything away from anybody. Very briefly, Qualcomm ARM, how big is this?

It's been sort of ignored. They need to settle, according to investors. Both of them need each other. This is something that is very strange that they're on this collision course. Our analysis says they should be settling. They shouldn't be doing this. This is a jury trial, a lot of risk.

Currently up 100% for the year at least on arm shares. Ian King, breaking it all down, we thank you so much. Even more chip news for you because Global Wafers, a Taiwanese maker of silicon wafers used in chip manufacturing, has finalized a deal to receive as much as $406 million in awards from the U.S. Chips and Science Act. It's going to help build factories in Texas and Missouri. Now, the U.S. Commerce Department says it will dole out the funds based on Global Wafers reaching certain milestones.

We've got to get in to the whole breadth of semiconductors, but also AI, what it's contributing to the market come 2025. Callie Cox is with us, Chief Market Strategist at Ritholtz Wealth Management. Callie, look, we've got a lot on the move when it comes to chips. On the downside today, but on the upside for the year, is this a trade you want to remain in, the semiconductor trade?

seen today, Caroline. And I'll just toss a shout out to your prior guest because I think he framed the story of the sector so perfectly. But what you're seeing is a trade that's stuck in rarefied air right now. I mean, the AI trade has been one of the big stories of 2024. And unfortunately, what that means is that when the AI story hits a bump, which to be clear, I don't think it's hitting a bump today, but there are some changes underfoot clearly from what we saw in Broadcom earnings. When the AI trade changes or hits a bump,

then you could see some of these steeper pullbacks just because the sector has done so well. So right now, this is what we're warning clients about, right? Obviously, the AI story is quite encouraging. We're excited to see where AI goes in the coming years. But at the same time, tech is the most overvalued sector in the market. So even though there are a lot of promising signs,

We're urging clients to think about balance in their portfolios and reallocating into more unloved sectors. Okay, so before we get into going outside of tech more broadly into unloved, within tech, is there a way of reorientating? Many have talked about getting out of semiconductors into software, but has that trade actually already occurred? Have you missed that boat?

Well, if you're an AI investor, if you're all about the AI story, I think you need to start looking at the picks and shovels. And I think many people are doing that. That's why chip makers have had such an amazing year. But I think it's even time to look outside of chip makers there, looking at the companies that could utilize AI in their day-to-day operations, for example. Last year, I really liked going through earnings reports and seeing which companies mentioned AI.

and how well they did, because there were definitely a lot of hidden gems toward the end of last year. That's an exercise I haven't done in a while, but I still think that there's a lot of hidden value there, especially in those smaller tech companies that haven't gained as much favor.

Okay, does that remain within squarely the tech areas that become generative AI adjacent or is it looking to the healthcare implications? I mean, we've all looked at energy from an infrastructure play, but energy is an application of play as well. How are you seeing other sectors adopt AI and help their numbers?

To be clear, I don't look too far into AI usage beyond those broader sector trends that I think every Wall Street expert watches. But I think you're right. I think that there are a lot of applications that you could see, especially in healthcare, especially in energy. I think industrials are another interesting sector for the AI trade. But I think what investors need to remember right now is that this is a very long-term story. You can't judge it by

one day or a few days. This is going to take years to materialize. So if you're looking for those unloved stocks, if you're looking for those companies that might be dabbling in AI applications, you have to be thinking about holding them for years and years. How do you find them, Callie? How do you find the unloved smaller stock that no one's been talking about? What is it that you're going to go into from a data perspective, from a signal perspective? Well, I think that there are

I mean, I think there are still a lot of opportunities out there. Interest rates are quite high. That's led to a pretty thin rally over the past year or so. And because there have been, because the rally has been so thin, to be clear, you know, I think that there are some companies that are maybe on the cusp of, you know, talking about AI more, you know, discovering applications for AI that haven't

haven't gotten that market love that other big tech, other more attention-grabbing names have. So I think you have to look at valuations, first of all. Look at valuations. Look at the plan for earnings. I don't think many AI companies or AI tangent

you know, AI tangential companies are, you know, seeing earnings come from, you know, AI applications. This is still a very early story. But I think right now, if you are a long-term investor, you can look at valuations. You can look at, you know,

revenue signals that we've seen in Nvidia and Broadcom, for example, and see if there are those early signs of uptake. Even management commentary, I think you can find some pretty valuable things there, but that requires having to really parse through earnings reports and listening to these earnings calls. It takes a lot of work. - It takes a lot of work. That's why you get paid the big bucks,

Let's talk, Callie, about the macro picture here because while we are in this moment of valuations pretty high, run-up significant, you've got a Fed that we're looking to cut tomorrow. How much risk is there in macro policy?

I think there's a lot of risk at the moment. And right now, I still feel quite encouraged by the economy. The economy has been incredibly resilient over the past few years. But the risk I see, Caroline, is the fact that we're leaning into this tech versus everything else trade again in the month of December. But you still have a Fed that hasn't been quite clear about

where they will go into 2025. And we're about to get a lot of detail around that tomorrow when the Fed releases its decision. And more importantly, Jay Powell comes out and holds his 45-minute press conference. I mean, this is a Fed chair that loves to talk about scenarios going into the future. And I just, I think markets and Wall Street are overestimating, you know, where inflation could be, how high rates could go, because there still are signals of weakness in the job market.

Callie Cox, always taking us broader. We thank you, Chief Market Strategist at Ritholtz Wealth Management. Happy holidays. The EU is investigating TikTok, suspecting it didn't do enough to stop fake accounts and foreign powers from interfering with the Romanian presidential election last month. Now, the probe will look at whether the app failed to prevent bad actors from manipulating its recommendation system and if it correctly labelled political content under the bloc's Digital Services Act.

And sticking with TikTok here in the US, CEO Xiuqu met with President-elect Donald Trump just weeks before the app is expected, of course, to be potentially banned if it's not divested in the US over national security concerns. Remarks, Alexander Levine is here and everyone is a who's who of in and out at Mar-a-Lago at the moment. But Xiuqu is notable considering what Trump said yesterday about the little place in his heart he has for TikTok.

Absolutely. You know, we've seen legal blow after legal blow after legal blow for both TikTok and its parent company ByteDance this month alone, just as they've been trying to fight off this law that's supposed to take effect in January. But in pulling out all the stops, we saw a show at Mar-a-Lago yesterday. And to your point, he's not the first tech leader. We've seen Mark Zuckerberg go in recent weeks to talk to Trump and his team. We've seen Tim Cook as well. But the stakes are so much higher right now with the ban just over a month away, January 19th.

The stakes are so much higher for show than they have been for really any of the other tech leaders that have visited so far. And at the moment, it's being thrown at the Supreme Court's door. But what technically do you think of that argument? The Supreme Court, basically TikTok has now asked the Supreme Court to take the case because the D.C. court had said that they, you know, they will not pause...

the law from taking effect and they basically upheld the law. When the Supreme Court decides, that's going to be likely two days before the ban is supposed to take effect. And so you can be sure that regardless of what the Supreme Court says come January,

all these other companies that are going to be on the hook for actually enforcing it, including Apple and Google, most notably, that preparations are definitely underway with getting ready for actually pulling the app off of the app stores. And before we get into how technically difficult and logistically difficult that is, go back to what the moon music just seems internally, externally, when you do see Trump signaling that he likes the platform, at least, and doesn't want to offend young voters. Absolutely. I mean, yesterday, to your point, we heard him say, I have a sweet spot for TikTok.

I think we, you know, you want to be able to take what he says at face value, but then you also have to take into consideration that he's stacking his team, his incoming team with all of the most outspoken anti-TikTok crusaders that have been in Congress and across the American government. And so there's a big question about whether once he is in office and once he is surrounded by

all of these people who had the knowledge that got the legislation and the law across the finish line in the first place, whether they may be able to convince him not to keep the platform. Hard to know which line to discern from Alexandra Levine, always helping us dissect it. We thank you. Meanwhile, U.S. Citizenship and Immigration Services finalized new H-1B regulations, actually overhauling eligibility standards for the primary visa program used by most tech

firms really. The regulations issued today codify a policy of prior deference in deciding extensions of previously approved H1B visas. The first Trump administration had dropped that policy, significantly slowing visa extensions.

Now let's look at Mike Gallagher for a moment now as well. Former congressman turned Palantir's head of defense, and he said that the U.S. Defense Department needs to overhaul its procurement process for a new era of modern warfare. He's stepping up efforts to seed startups that can help restore the country's competitive edge. Bloomberg's Lizette Chapman spoke with him. And Lizette, it really feels as though this American dynamism, this defense tech euphoria post-election is just continuing here.

Yeah, you're spot on about that. Defense tech has been on an absolute tear for the past four or five years, and it's only set to accelerate now that there are many of these companies have reached a critical mass like Palantir, like SpaceX, and like some of the up and comers like Andral that we get into in the story.

Yeah, let's get into the story because ultimately you sat down with Gallo. I mean, he's a famous China hawk just thinking about what we were speaking with with Alexandra, but a moment ago, and he can weigh in on TikTok. But how do you think we'll get more of a startup friendly Department of Defense in the US? What changes can be made?

There's so many different changes that a cadre of people on both the Dem side and also the Republican side have been pushing for for years, going back even over a decade when Palantir and SpaceX actually sued the U.S. government for the right to compete to win contracts. Moving it up to date now, there are a lot of changes to the procurement process, the process of deciding what the different branches need, how

it should be designed, making sure it's interoperable for the future, and then of course the process of selecting bidders and then ultimately selecting the winner. So that whole process, they want to see it really contracted from the years-long process of doing something like an F-35

fighter jet to something much shorter timeframe that better reflects the types of warfare that change every, not in terms of years, but in terms of months or even weeks that we've seen with the drones and AI and a lot of autonomous systems. They're looking to shorten that. - Yeah, in your story you highlight how Elon Musk called, well, the builders of F-35 war planes

I mean, he's never short on words and descriptions. But Lizette, what's interesting is about the way in which Palantir and Mike Gallagher in particular are trying to foster the startup ecosystem. How are they doing that? Right. They're...

reaching out to a lot of companies through something that they expanded. They just recently expanded under Mike Gallagher, who leads global defense now for Palantir. And it's to encourage software startups that want to do business with the US government to apply through Palantir's FedStart program so that Palantir can host their software for a fee and deal with all of the accreditation issues

issues, the different requirements, all the software updates and monitoring and keeping them up to date and current. And that's a really big deal for a lot of startups who have

different needs from different, every agency might have a different requirement to comply with. Now for a startup with only 20 people or maybe 50 people, that's very hard to set up that infrastructure that takes a long period of time, they said years, down to something shorter that they can handle. That's what FedStart and Palantir are working to do and it's in competition with other companies like Second Front, for example, that's also looking to do that.

Yeah, trying to reduce the compliance headache. Lizette Chapman, it's a great read. Go check it out. We appreciate you on today. Let's just talk about elsewhere in the VC ecosystem, Databricks, raising $10 billion in new funding, a Series J, which brings the software maker's valuation to a whopping $62 billion. Databricks stating it intends to invest this capital towards new AI products, acquisitions, and significant expansion of its international go-to-market operations.

Now coming up, some tech M&A news. Also in the startup space, Grammarly acquiring Coda. And Grammarly's incoming CEO is going to be joining us next. This is Bloomberg Technology. 89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.

With over 15 years of experience building responsible, secure AI, Grammarly isn't just another AI communication assistant. It's how companies like yours increase productivity while keeping data protected and private.

Designed to fit the needs of business, Grammarly is backed by a user-first privacy policy and industry-leading security credentials. This means you won't have to worry about the safety of your company information. Grammarly also emphasizes responsible AI so your company can avoid harmful bias. See why 70,000 teams and 30 million people trust Grammarly at grammarly.com slash enterprise. That's Grammarly at grammarly.com slash enterprise.

Grammarly. Enterprise-ready AI. Not everybody likes talking about money. Some people find it awkward.

Sometimes I even find it a little embarrassing. I do not. I like talking about money. Whether it's the boardroom, the newsroom, the trading floor, I've spent the last 30 years talking about money, writing about money, and talking about it and writing about it a little bit more. I'm Erin Summers at Web, and every week, senior reporter John Stepak and I answer your questions about personal finance, and we discuss the best strategies for making the most of your money. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investment choices for themselves and their families.

My question is whether you think maxing out my company pension match is enough for when it comes to saving for my pension. Should I attempt to pay my child's university fees and living costs? My partner and I have excess savings. So should we overpay on our mortgage or should we put the money into stocks? From Bloomberg Podcasts, tune in to Merrin Took's Money. Follow Merrin Took's Money on Apple Podcasts, Spotify or wherever you listen.

Grammarly is the maker of AI-powered writing assistance software and it's acquiring productivity startup Coda in a deal that will also bring in a new CEO, Shashir Mehrotra. He's currently the co-founder and CEO of Coda and is slated to take over the top job at the combined Grammarly. He joins us now for more on the deal. So coming together, productivity tools, what do you offer as one?

Yeah, I'm really excited about this opportunity, Koda, joining with Grammarly. I've been a personal user of the product for many years. I'm really drawn to the innovative approach, passionate people. But the reason this happened was the leaders of both companies that got together and just painted our visions for the future, what we saw with the future of AI productivity. And it just turned out that our view was near identical. We both saw...

the technology evolving to what we call user-centered AI and a future world where the applications we use won't feel as isolated, siloed, rigid that we're used to today. Instead, really focused on the user, adapted to each person, their teams, their roles. So we're going to be building a user-centered AI platform of the future focused on applications and agents for everybody. Hey!

It's a competitive space. I hear agents being named by startup, by large publicly traded business alike. And I hear of, you know, Apple trying to integrate, trying to make my email flow easier. How are you going to compete against big tech as well as startups? Yeah, maybe just start with the term agent. I know it's a hot term everybody is using these days. I think of Grammarly as actually the original AI agent. I mean, it's about 40 million users use Grammarly every day.

It goes through about 200 billion words a day. And one of the key things about that agent is that it works right alongside you. One of the big innovations that BareMillage has worked on is that instead of forcing you to go to some other place, it follows you into every different surface, about 500,000 different applications.

that have been integrated with Grammarly. One of the terms the Grammarly team likes to use, I've really loved, is the idea that they built this AI superhighway. And it's the gateway to have agents actually work with you in every other tool. But one observation is right now, there's only one car running on that highway. The Grammarly tool set today, it's amazing, but what it does is just help you with your proofreading

And one of the things we're going to do is we're going to take one of the most popular parts of the Coda product, we call it Coda Brain, which is a network of hundreds of integrations into all of your backend systems, and we're going to turn them into agents on this platform. And so what you can imagine is instead of interacting with...

with Grammarly as just a proofreading agent, you can imagine that now the suggestion that come to you will help you draft and send emails, can help you structure customer conversations, can help you update your CRM systems, and we can really bring agents right to the user. That's one of the main things we'll be working on. Shashir, you said how your goals of the two companies were basically completely in line.

Is the goal an IPO in line as well when you're looking at the changes made at Grammarly, new CTO from Instacart, new CFO coming from HashiCorp, you with your background at YouTube, at big companies as well as startups, it looks as though you're destined for an IPO.

You know, I think the goal is to build an enduring company. And I think that in this sort of crazy world of AI changing everything we work on, I think there's a very small list of companies that can have that meaningful platform to really be that future of AI. I think the approach of Grammarly and now with Coda, I think we can really be at the forefront of that.

And yeah, we'd like to be one of those top three or four companies that people think of when they think about the AI tools for their world. Shashir, Arutra, thank you for coming on. Incoming CEO of Grammarly.

Welcome back to Bloomberg Technology. Caroline Hyde in New York. A quick check on your markets. Look, we're all eyes on the Fed tomorrow and digesting some retail data today that still shows the U.S. economy is going strong. Good news, sometimes bad news. The Nasdaq 100 falls from its record high. We're off by just three tenths of a percent. Chipmakers on the downside and particular some profit taking over at Broadcom. Move on and have a look at what's happening in individual movers when it comes to the crypto space as well. Bitcoin still

Still at 1.108,000, we're at 106,000 as we trade, so still holding on to those record highs. MicroStrategy, though, just seeing a bit of profit taking, shall we say, after a 500% run-up this year. Of course, basically a Bitcoin proxy entering the Nasdaq 100 on Friday, many feeling this will be the beginning of a momentum trade. But how much of this is that?

priced in already. Much of that, of course, is because sectors like crypto are continuing to outperform following the election of Trump. How is broader hiring? How is startup optimism? Payrolls processing company Gusto has a bird's eye perspective. The HR startup has announced, in fact, a new partnership with Xero. It's a leading accounting software platform for small businesses.

Let's ask Gusto CEO and co-founder Josh Reeves. It's great to have you here. Pleasure to be here. Thanks, Caroline. So let's talk about the partnership and why you're focusing on small. You're already a provider to an awful lot of small and medium-sized enterprises. Why furrow that even more?

So we're thrilled to support and serve over 400,000 small businesses today. And one of the things we realized a couple of years ago is you have small businesses that are going to use Gesto directly, but there's a lot of small businesses out there served by existing platforms like Xero.

And Xero focuses, like you mentioned, on accounting. A lot of these other platforms do not want to go build things like payroll themselves. And so we created this industry called embedded payroll, which is basically the ability for folks like Xero, and that's what we're announcing today, to launch their own payroll products powered by Gusto. So more analogous to that Stripe-type business model. And we're really excited about it because it's a way for us to reach more small businesses where they're at. And are they ultimately underserved at the moment because...

Your startup space is a busy one. There are plenty of HR payroll startups trying to be the be-all and end-all to everyone. How are you finding that small, medium-sized enterprise space? Yes, I always love reminding folks there's more dentist offices in the U.S. than tech startups. So we really do obsess over, and Xero does as well, and a lot of our partners, actually. We're thrilled to partner with a number of companies, including Chase Payment Solutions,

to basically bring modern, delightful payroll to where they're at in a more accessible, intuitive way. Saves them time, saves them money, prevents mistakes, filing issues. And we've built now 10 plus years of infrastructure processing over half a trillion dollars of payroll to really earn that credibility and be who these partners want to choose when they're building out their own payroll platform.

Interestingly, I don't think a dentist office is going to be hiring many people abroad, but you've been trying to focus in on this, making it easier to hire internationally. We're getting the news today that H1Bs, for example, are going to be overhauled and streamlined, made easier by the current administration. How are people's propensity to hiring abroad at this moment? It really depends on industry. With Gusto, you do have the ability to hire both contractors and employees internationally. I'd say there's been more resonance on the contractor side.

But again, many, many products that we're expanding into. International is just one. We offer a lot of functionality around time tracking, 401 , business insurance, all the different pain points. It's really hard still to run and start a small business, and our job is to make that easier.

It's hard to run a startup, even as successful as yours. You haven't raised money since 2021, ultimately because looking at your profitability, you don't need to. But what is the pressure on you to IPO, to have an exit? Are you finding that the competitive moat when you're versus a deal or a rippling is getting harder?

or is it fine? We welcome the competition. We want to be the best product in the market. We believe we are. We're also just only one decade into this journey. We talk about it being a multi-decade journey. So at some point in the future, we will be public, nothing to share there. But really our obsession is on how do we give the best possible experience to those customers and do that through our actions, through the work we put in, and also through the partnerships we sign with folks like Xerox.

and the talent you have. When you're lying in bed and you've got something on your mind, does it tend to be talent acquisition? Is it about generative AI? What are you thinking most about? Mostly thinking about team building. And as we, like you said, have free cash flow positive, a solid business model, real customer need that we're really delivering true value for.

we're being very aggressive reinvesting that capital, that free cash flow into building new products, building additional services for our customers to use. And so that usually means hiring, team building. And I'm doing a lot of time these days interviewing candidates.

As is the life of a CEO. Josh, it's great to have you. Thanks for stopping by. As you're in New York, he's, of course, the CEO of Gusto. Josh Reeves there. Meanwhile, coming up, VC Spotlight upon us will talk consumer investing in 2025. Shamim Walsh is with us, Managing Director at BAM Ventures. Plus, a conversation with Minnesota Senator Amy Klobuchar. All about antitrust. You don't want to miss it. This is Bluebeg Technology. Thank you.

89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.

With over 15 years of experience building responsible, secure AI, Grammarly isn't just another AI communication assistant. It's how companies like yours increase productivity while keeping data protected and private.

Designed to fit the needs of business, Grammarly is backed by a user-first privacy policy and industry-leading security credentials. This means you won't have to worry about the safety of your company information. Grammarly also emphasizes responsible AI so your company can avoid harmful bias. See why 70,000 teams and 30 million people trust Grammarly at grammarly.com slash enterprise. That's Grammarly at grammarly.com slash enterprise.

Not everybody likes talking about money. Some people find it awkward.

Sometimes I even find it a little embarrassing. I do not. I like talking about money. Whether it's the boardroom, the newsroom, the trading floor, I've spent the last 30 years talking about money, writing about money, and talking about it and writing about it a little bit more. I'm Erin Summers at Web, and every week, senior reporter John Stepak and I answer your questions about personal finance, and we discuss the best strategies for making the most of your money. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investment choices for themselves and their families.

My question is whether you think maxing out my company pension match is enough for when it comes to saving for my pension. Should I attempt to pay my child's university fees and living costs? My partner and I have excess savings. So should we overpay on our mortgage or should we put the money into stocks? From Bloomberg Podcasts, tune in to Merrin Took's Money. Follow Merrin Took's Money on Apple Podcasts, Spotify or wherever you listen.

We want to just take a look at consumer investing trends right now after retail sales looked so good today. What are they looking like into 2025? BAM Ventures is going to join us in VC Spotlight. The firm's portfolio boasts some of the biggest names in consumer investing like Zola, NerdWallet, Wanderly. BAM Ventures Managing Director, Shamim Walsh, joins us for now for more. And it's interesting that maybe consumer bets...

We all know them because we use them, but perhaps they haven't got the valuations of the semiconductor, the software space of late. But what does consumer resiliency look like?

Well, first off, Caroline, good morning. And I wanted to thank you for having me here. And for those who may not be familiar with me, as Caroline said, I'm a managing director at BAM Ventures. We're a precedency consumer-focused fund based in Los Angeles and built by the founders of billion-dollar public companies like LegalZoom and The Honest Company. And then, as you mentioned, we had the privilege of investing early in household names like Sweetgreen, Snap, Scopely,

and nerd wallet, et cetera. And to your question, you know, it's interesting because I think valuations are what catch headlines. But we often underestimate the inputs that

it takes to get to those numbers and also the equity breakdown. So, for example, you know, a company that exits for five billion dollars is a eye popping amount. But when you look at the cap table and you see that a founder, you know, own two percent of that business, they actually made less than a company where the founder owned 25 percent of a 500 million dollar exit. So the valuations are often

You know, particular on the brand side may not be there. On the tech side, of course, they do have that potential. But...

you know, the equity outcomes for the investors and the founders, you'd be surprised to see are often much better. Yeah. And so you're very much trying to align oneself with the founder and with your own legal background. I'm sure you're ensuring that they maintain a lot of holding and serve themselves well by having ownership of the business as it matures and takes funding. What then about finding these diamonds in the rough?

How are you deciding, okay, this is a startup, a consumer-facing startup that is at a pivot point, is about to go up and to the right? We have this internal mantra that we say that we have to love the founder and not hate the idea. At this stage that we invest, it truly is about the founders. And we love what we call the silent assassins, the folks that are...

focused on building their business, who know their customer, who know how people actually operate. You know, there are a lot of things that we theoretically would like to exist or like to do. You know, I'd love to be the fittest woman in the world, but, you know, maybe I won't put the effort and time into an exercise regime or counting my macronutrients. And the founders that actually understand how people function

you know, live and behave. And what gets them to a purchase decision is really what we're looking for. And do they do that via EQ? Are they doing that through data? What do you want to see when one founder that you don't hate the idea of comes and pitches you? Yeah, I think it...

it's both. And I think more importantly, it's around understanding not only their consumer, but themselves as well, what their strengths and weaknesses are. So if there are incredibly data-driven, maybe they hire a team that is very EQ and brand-driven or vice versa. If they're incredibly brand-driven, then they hire a team who understands operational efficiencies and knows how

that they need to hit their margins. And so I think the most important thing we look for is a founder who understands their customers, as I mentioned, but also who knows how to hire around them. - Look, you've been at Angel Investing for more than 17 years. You've been in your seat at BAM Ventures for a number of years. And what are valuations like at this particular moment? How are you looking into 2025 and thinking about whether these are the right sorts of checks to be writing at the right valuation?

Yeah, I think that we are in valuations are very specific to the sectors. Right now, you know, you hear about the buzzwords of AI or crypto and they can command a hefty valuation. They also are very capital intensive. I think to the point I was making at the beginning around the inputs and the outputs,

A lot of times funds will back into valuations based on how much they need to deploy, and it may be detached from how much a company itself is actually worth. If you're a large fund and you need to write $10 million checks and you love a particular category and you give them $10 million, then you need to back into a valuation from there as opposed to investing in a company they may not need as much.

It's interesting that you said crypto is sort of the buzzword. And sure, Bitcoin's been the buzzword, MicroStrategy's been the buzzword, but are we seeing more and more founders coming to you with a Web3 adjacent company now or a consumer focus that is building in Web3 once again? Are we at that stage of the cycle?

We are. We see a lot of founders who have a Web3 component. I do see it having come back into vogue. And like I mentioned, AI is the mode du jour. And to that point, when you're a consumer founder, is it just that you want to see AI boosting productivity internally rather than trying to back themselves into a generative AI business?

do you mean what we look for as investors or what founders are pursuing these days yeah what a founders pursuit what are you seeing and what are you wanting briefly yeah well what we're wanting the way that we think about ai is the way we think about the internet you know it's like if a founder came to us and told us they're building an internet company i think it's ubiquitous it's necessary it is the future for us we're really looking at

you know, the other elements that will make you a successful business, what your distribution, your team, sales and marketing, the AI itself for us particularly, and our fund size is not the sole determinant of whether a company is attractive or not. And I think founders are catching on to that as well. I think there was a period of time where just adding a .ai was, they thought, was changing everything.

things in terms of activeness, but I think at this point founders are starting to realize we need to show some differentiation beyond that. Well said. Shamim Walsh, Managing Director at BAM Ventures. Thank you so much for your time today. Now, let's just talk about Senate Judiciary Subcommittee, set to hear on antitrust and legal experts. Let's get to Kayleigh Lyons in Washington.

I'd like to welcome our global Bloomberg television and radio audience as I'm joined in conversation by Democratic Senator Amy Klobuchar of Minnesota, live from Capitol Hill. Senator, thank you very much for being here. You are leading a subcommittee hearing today titled Continuing a Bipartisan Path Forward for Antitrust Enforcement and Reform. And I do wonder, in what will become January, a Republican-controlled Congress in both chambers and White House, what that bipartisan path actually looks like.

Okay, well, first of all, thanks for having me on, Kayleigh. It's great to be on. And I think what you've seen in this area of antitrust, you've seen some broad bipartisan agreement on a number of these cases, right? For instance, the Google case started under the Trump administration, the first Trump administration, as did the Facebook case that was at the FTC. Google was at the Justice Department.

Then it proceeded through the Biden administration. Biden administration also brought some major cases, for instance, against Ticketmaster and other companies. And so you've seen a more aggressive antitrust enforcement over the last few years. And now you have a new approach

appointees going in place, and at least one of them I have heard is a belief is over at the Justice Department with some former Democratic antitrust enforcers that she knows what she's doing. I'm looking forward to meeting with her, Gail Slater, and I'm hoping that we will continue those cases. I love competition. I like capitalism. That's why I'm for antitrust enforcement.

Well, you've mentioned Gail Slater. What about Andrew Ferguson? Do you think he loves the issue of competition in the same way that you do? Do you trust that the FTC will be in good hands under his leadership? You know, I am looking forward to meeting with him. Interestingly enough, we do not confirm that position because he was already on the commission. There is a new position.

member that is being appointed on the Republican side. I'll note that he also, he wrote a piece on the breakup of Ticketmaster in which he favored that. So I just think with antitrust, because at its core, it is about competition and it's been laggard for many decades. And as a result, we're seeing more and more consolidation. It isn't that big companies are bad. It's that sometimes when you have no competition, then you start getting less innovation, more competition,

high prices, et cetera, et cetera. So I'm actually really excited about this. Senator Lee and I are doing this together, this hearing. Senator Grassley and I have passed our bill together. And I think you're going to continue to see interest in tech. In fact, Senator Cruz and I did a joint interview this morning and a bill that we have gotten through the Senate on taking online porn off the Internet. Different than antitrust. However, you're just going to continue to see bipartisan work on tech.

Well, I'm glad that you have brought up the Take It Down Act, which you co-sponsored with Senator Cruz. Is that trying to tackle symptoms of an underlying disease rather than the disease itself? And the disease I'm referring to here is unregulated artificial intelligence. Thanks.

I really would like to put in some rules of the road on AI. And this bill is actually broader than just AI pornographic pictures. It's actually also real pictures as well as AI-created ones. We're now seeing 1 in 12 Americans saying that they have

been a victim or know someone that's a victim of this. We've had 20 suicides in one year of young kids, 20 suicides, because someone, a girlfriend, boyfriend, someone they knew, put up their photo. They were embarrassed that their friends and their family would know, and they killed themselves. These are FBI statistics. So Senator Cruz and I came together. The bill does two things. One, make it clearly a crime.

to use pornographic imagery of someone else, whether it's AI created or real. And then number two, that the platforms have to take it down. That's why it's called the Take It Down Act.

They take down other violations of intellectual property. And the fact that people can be abused in this way to the point of committing suicide. And in one case that I know of, Senator Cruz's case, he actually had to call Snapchat to get the image down after months of this victim from his state dealing with it. That's just wrong.

Senator, I'd like to ask you about another one of your colleagues, your fellow Democrat. Senator Elizabeth Warren of Massachusetts wrote a letter, we understand, to President-elect Donald Trump asking for firm conflict of interest rules to be put into place related to Elon Musk, who, of course, has been tapped to co-lead this new Department of Government Efficiency. Have you had any conversations with Senator Warren about that, or at the very least, do you share in that sentiment?

Now, I haven't seen this letter, but I will say that I believe that we need conflict of interest rules in place for people who are making major decisions in the government. That is what our people have done voluntarily.

for years now. And you have a number of very wealthy people going into the Trump administration. There's been wealthy people as well under Democratic administrations. But you have a number of them coming in. And we need the conflict rules in force. We need to know that the decisions they are making are not for their own interests, but for the interests of the American people. And I would hope that President-elect Trump agrees.

Finally, President-elect Trump yesterday met with the CEO of TikTok, Xiuqu at Mar-a-Lago, after saying in a news conference, Senator, that he has a warm spot in his heart for TikTok when asked if he would like to see the ban go through or will try to stop it. Given some of the issues we have already discussed around technology in particular and what is propagated on these platforms, what is your view about whether that ban should be enforced come January?

Of course, this came out of Congress with strong bipartisan support. And there are two avenues here. One is that they can follow the law and divest and find a buyer for the company. And the second is that they still are appealing to the Supreme Court. So my view has been that we should have rules of the road in place, by the way, for all platforms. I have been way out there, as I think you know, in terms of getting not just pornography off the Internet,

but other very, very difficult things that are on there right now and that we should have a better policing of that and people should have the right to protect their own intellectual properties. And also that we should have antitrust enforcement. You just can't have, say, Google with a 90% market share on the search engine and not have any competition and then allow

them to self-preference, as we see with Amazon and other companies, their own products at the top. That's why the NFIB, which is not a liberal organization, the National Federation of Independent Businesses, is strongly supporting the bill that I have with Senator Grassley, which simply puts some rules in the road in place for competition on the internet. All right. Democratic Senator Amy Klobuchar of Minnesota joining us live from Capitol Hill on Bloomberg Television and Radio. Thank you so much. And I'll send it back to you in New York.

Kayleigh Lyons, we thank you. Senator Amy Klobuchar of Minnesota as well. Let's just break all of this down. Politics intersecting with technology. We do that with Bloomberg's Mike Sheppard. And just going to the bipartisan nature of antitrust focus, it does feel as though many interpret Trump administration more business friendly, but he's put some people in seats that have really critical eyes on companies such as Google.

That's certainly been our sense as we've reported out Trump's selections for these key positions, including the head of the antitrust division at the Justice Department and the person who would succeed Lina Khan at the Federal Trade Commission. And now we've heard it from Amy Klobuchar herself, the senator from Minnesota, who has really spearheaded efforts in Congress, in the Senate, on this area of competition enforcement. And she is signaling some optimism

that the incoming Trump team will not divert too much from the playbook when it comes to cracking down on areas, especially big tech, where we've seen a lot of concentration of market power. We saw her reference Google at the very end of her remarks to our colleague Kayleigh Lyons. Yeah, and saying that she's looking forward to meeting with Andrew Ferguson as well. Mike, I want to shift more broadly into the context of technology.

and the next administration because there is a merry-go-round at Mar-a-Lago at the moment of all the key names in tech, whether it be Netflix, we know Bezos is due, we have just had Shou Chu. Is it really a key focus on technology in the future?

Well, it really has been a parade of these high-profile CEOs going in to meet with President-elect Donald Trump to have their cases heard and to hear a little bit from him themselves so that they understand a little bit how to relate with him. Think of it as corporate diplomacy, but a two-way street.

Trump really likes to exercise that sort of function of his office to reach out to CEOs in the way that a president would also reach out to heads of state. He likes that kind of engagement. We saw it in action so much during his first term in office. And now we're already seeing signs of it now as he prepares to return to the White House.

And for these companies, it's a chance for them to be heard, especially for Xiaoqiu. His company is facing this existential question of a ban that could take effect as soon as January 19th.

That is an existential question for TikTok. Other companies may be going in and saying, "Look, my key worry here is talent and access to talent." One of the most read stories on the Bloomberg today and across the web is about H-1B visas, how the current administration, how the current U.S. citizen immigration services are basically making final changes to making it easier, more streamlined. Is that something that might be upended by the next administration? What's hiring going to look like?

Well, there is a risk of that happening, of course. And one of the concerns that companies, not just tech companies, but tech companies in particular, in reference to the H-1B program, there are only 85,000 visas available every year. They're really coveted. The competition is really, really stiff for them. And tech companies need that workforce of skilled workers with advanced degrees to be able to produce

you know, propel their development of the latest technologies. And any change to that program is a disturbance in the force, and it risks impeding their progress. During the last Trump administration, they had dropped a policy known as prior deference, which helped grease the skids for some of these applications. And this policy was just codified, reinstated with --

rules that were finalized today by the Customs and Immigration Service and the Department of Homeland Security. What we want to see, what we're looking for going ahead as the Trump team takes office is, what will they do there as they try to address the broader question of the border?

Mike Sheppard, bringing it all together for us from Washington. Thank you very much indeed. Now, that does it from this edition of Bloomberg Technology. You do not want to forget to check out our podcast. Find it on the Terminal as well as online on Apple, Spotify and iHeart. This is Bloomberg Technology. Not everybody likes talking about money. Some people find it awkward.

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