1 00:00:00,720 --> 00:00:03,160 Thanks to our amazing community. Members like. 2 00:00:03,160 --> 00:00:07,880 You We've reached the top 15 of Spotify's video podcast, the top 3 00:00:07,880 --> 00:00:11,640 10 audio podcasts on both. Apple and Spotify for the tech. 4 00:00:11,640 --> 00:00:13,000 Category. So you. 5 00:00:13,120 --> 00:00:15,800 All make this possible. If you want to support us more, 6 00:00:16,079 --> 00:00:20,280 check out our Patreon. That's patreon.com/stage. 0 news 7 00:00:20,280 --> 00:00:24,920 so we can keep this. Free and open for you to enjoy. 8 00:00:26,160 --> 00:00:28,080 Something interesting happened the other day. 9 00:00:28,200 --> 00:00:31,760 I was looking through our stats on Spotify and Apple Podcasts. 10 00:00:32,000 --> 00:00:37,440 And I noticed that about 50. 5% of you are not subscribed to the 11 00:00:37,440 --> 00:00:40,280 show that means. 45. Percent of you are subscribed, 12 00:00:40,280 --> 00:00:43,080 and I really do. 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Lip Bhutan is the CEO of Intel. 27 00:01:20,960 --> 00:01:24,600 He's also the chairman of an AI chip startup called Revos. 28 00:01:25,360 --> 00:01:28,880 This summer, he pitched Intel's board on buying that startup. 29 00:01:29,280 --> 00:01:31,600 The board said no, I didn't expect that. 30 00:01:31,920 --> 00:01:34,760 They told him he had a conflict of interest because he was 31 00:01:34,760 --> 00:01:36,440 representing both sides of the deal. 32 00:01:37,000 --> 00:01:41,120 Then Meta swooped in, a bidding war broke out, and Revos ended 33 00:01:41,120 --> 00:01:44,640 up selling for roughly double its earlier valuation. 34 00:01:45,160 --> 00:01:49,000 Ted's venture capital firm Walden Catalyst posted a 35 00:01:49,080 --> 00:01:52,360 congratulations message about the successful outcome it 36 00:01:52,360 --> 00:01:55,680 delivered to its investors. So is this a story about Aceo 37 00:01:55,680 --> 00:01:57,880 using his company to enrich himself? 38 00:01:58,280 --> 00:02:02,320 Or is this the messy reality of hiring a well connected deal 39 00:02:02,320 --> 00:02:07,280 maker to rescue a sinking ship? This is one of at least three 40 00:02:07,280 --> 00:02:11,120 instances where Intel has pursued deals that benefit 10 41 00:02:11,320 --> 00:02:13,160 financially. According to people familiar 42 00:02:13,160 --> 00:02:15,080 with the matter. Intel brought him in 43 00:02:15,080 --> 00:02:17,400 specifically because of its investment network. 44 00:02:17,520 --> 00:02:20,720 The same network that now creates conflicts going to walk 45 00:02:20,720 --> 00:02:24,400 through the Revos bidding war, a second struggling startup called 46 00:02:24,680 --> 00:02:28,520 Samba Nova where 10 also has ties, and the new policies Intel 47 00:02:28,520 --> 00:02:31,440 has put in place to manage these situations. 48 00:02:31,880 --> 00:02:35,520 We'll get right back into that after this break now. 49 00:02:35,640 --> 00:02:40,040 Intel hired Lip Bhutan in March to turn around a company that 50 00:02:40,040 --> 00:02:43,960 lost $19 billion last year. The board chose him because he 51 00:02:43,960 --> 00:02:46,680 spent decades as a venture capitalist with stakes in 52 00:02:46,680 --> 00:02:48,720 hundreds of chip and technology companies. 53 00:02:49,240 --> 00:02:52,280 That web of relationships has already delivered results. 54 00:02:52,600 --> 00:02:56,440 Tan helps clinch a $5 billion investment from NVIDIA and a $2 55 00:02:56,440 --> 00:02:58,160 billion investment from SoftBank. 56 00:02:58,440 --> 00:03:01,320 And Intel stock has roughly doubled since his appointment. 57 00:03:02,000 --> 00:03:05,560 So here's the key point, though. Those same relationships create 58 00:03:05,560 --> 00:03:08,360 a structural problem. Tan sits on both sides of the 59 00:03:08,360 --> 00:03:10,800 potential deals. He owns stakes in companies that 60 00:03:10,800 --> 00:03:13,400 Intel might want to buy or invest in. 61 00:03:13,840 --> 00:03:16,800 And Intel's board knew this when they hired him. 62 00:03:17,280 --> 00:03:21,120 They accepted that trade off. A spokesperson told Reuters that 63 00:03:21,200 --> 00:03:25,640 the board believes Intel should fully leverage his vast network 64 00:03:25,880 --> 00:03:28,480 to capture the new wave of industry opportunity. 65 00:03:29,240 --> 00:03:33,200 Now inside this Revos situation. Tan is the chairman of Revos, a 66 00:03:33,200 --> 00:03:37,040 start up building EI chips based on an open source design called 67 00:03:37,400 --> 00:03:41,240 Risk V that's an alternative to the proprietary chip 68 00:03:41,240 --> 00:03:44,000 architectures from companies like ARM and Intel. 69 00:03:44,560 --> 00:03:47,920 Tan's venture firm, Walden Catalyst, is an investor. 70 00:03:48,240 --> 00:03:51,440 When he pitched Intel on buying Revos over the summer, the board 71 00:03:51,440 --> 00:03:54,800 rejected the proposal. They told him he had a conflict 72 00:03:54,840 --> 00:03:57,640 and that he lacked an EI strategy to justify the 73 00:03:57,640 --> 00:04:00,160 acquisition. Tan then asked one of his 74 00:04:00,160 --> 00:04:03,040 lieutenants to pitch a new AI plan internally. 75 00:04:03,520 --> 00:04:06,400 That led to partnership talks between Intel and Revos. 76 00:04:06,440 --> 00:04:09,640 But Meta had been circling the start up for a while, and it 77 00:04:09,640 --> 00:04:12,600 made an offer. Intel responded with its own 78 00:04:12,600 --> 00:04:14,560 bid. Meta countered with a sweetened 79 00:04:14,560 --> 00:04:16,480 package. The competition pushed the deal 80 00:04:16,480 --> 00:04:20,440 value to around $4 billion, roughly double the $2 billion 81 00:04:20,440 --> 00:04:23,840 valuation Revos had been seeking an earlier fundraising. 82 00:04:24,880 --> 00:04:27,320 Now, Meta announced the acquisition in September. 83 00:04:27,640 --> 00:04:30,440 The bidding war increased the payout for Riva shareholders, 84 00:04:30,960 --> 00:04:34,040 including Tan. OK, keep going here. 85 00:04:34,560 --> 00:04:37,880 Reuters could not determine exactly how much Tan profited 86 00:04:38,160 --> 00:04:41,240 because of financials or private, but his venture firm 87 00:04:41,240 --> 00:04:45,560 publicly celebrated the outcome. That blog post matters because 88 00:04:45,560 --> 00:04:48,880 it shows the firm taking credit for a win that came partly from 89 00:04:48,880 --> 00:04:51,200 Intel's participation in the bidding process. 90 00:04:52,280 --> 00:04:54,440 Now there's a second start up in the story, too. 91 00:04:54,840 --> 00:04:58,160 Salma Nova is an AI computing company that Tan has backed 92 00:04:58,240 --> 00:05:02,840 since 2018 through his venture firm Walden International. 93 00:05:03,240 --> 00:05:05,080 No relation to me, my name is Will Walden. 94 00:05:05,280 --> 00:05:08,840 He became executive chairman in 2024 after the company struggled 95 00:05:08,840 --> 00:05:12,200 to compete against NVIDIA. Salma Nova raised money at a $5 96 00:05:12,200 --> 00:05:16,080 billion valuation in 2021, but the business did not grow as 97 00:05:16,080 --> 00:05:18,480 expected. Customers preferred Nvidia's 98 00:05:18,480 --> 00:05:21,920 chips, which work across a wider range of AI applications. 99 00:05:22,400 --> 00:05:25,680 Samba Nova laid off about 15% of its staff earlier this year. 100 00:05:26,800 --> 00:05:30,440 Now Tan pitched Intel on buying Samba Nova the summer, according 101 00:05:30,440 --> 00:05:34,000 to three people familiar with the talks, and the logic was 102 00:05:34,000 --> 00:05:37,240 that the acquisition could provide technology and talent to 103 00:05:37,240 --> 00:05:39,960 help Intel enter the AI chip market. 104 00:05:40,600 --> 00:05:43,240 Deal talks are ongoing, and Intel and Samba Nova have signed 105 00:05:43,240 --> 00:05:46,400 a non binding term sheet. That means the company Tan 106 00:05:46,400 --> 00:05:50,320 chairs might buy a company that Tan holds a leadership role in a 107 00:05:50,320 --> 00:05:54,440 financial stake. So what do we know right now? 108 00:05:54,800 --> 00:05:58,080 Intel has put policies in place to manage these conflicts. 109 00:05:58,440 --> 00:06:01,040 Tent cannot attend or vote in board meetings or investment 110 00:06:01,040 --> 00:06:03,600 committee meetings when he has a personal interest in the 111 00:06:03,600 --> 00:06:05,920 outcome. And if he recuses himself from a 112 00:06:05,920 --> 00:06:09,840 decision at Intel Capital, the investment arm authority goes to 113 00:06:09,840 --> 00:06:13,000 the chief financial officer, David Zinsner. 114 00:06:13,360 --> 00:06:16,800 That structure is supposed to create separation, but Zinsner 115 00:06:16,800 --> 00:06:20,800 reports directly to Tan, which limits how much independence the 116 00:06:20,800 --> 00:06:24,360 arrangement actually provides. Now hold out of this. 117 00:06:24,760 --> 00:06:28,120 Tan took different direct control of Intel Capital shortly 118 00:06:28,120 --> 00:06:30,920 after becoming CEO. He reversed an earlier plan to 119 00:06:30,920 --> 00:06:34,480 spin off the investment unit. He reorganized it so that it 120 00:06:34,480 --> 00:06:38,520 reports directly to him in the investment committee now 121 00:06:38,520 --> 00:06:43,640 consists of just two people, Tan and Zinsner, the executive who 122 00:06:43,640 --> 00:06:47,040 works for him. And since then, Intel Capital 123 00:06:47,040 --> 00:06:49,720 has invested in several companies where Tan already has 124 00:06:49,720 --> 00:06:51,880 a stake through his personal investment vehicles. 125 00:06:52,320 --> 00:06:57,680 One example is Protein Techs, which announced a late stage 126 00:06:57,680 --> 00:07:01,320 funding run in September. Intel Capital increases existing 127 00:07:01,320 --> 00:07:04,520 position in the startup, which also counts Tan's firms as 128 00:07:04,520 --> 00:07:07,080 investors. Some Intel employees have 129 00:07:07,080 --> 00:07:10,200 reportedly felt pressure to pursue deals in Tan's portfolio 130 00:07:10,200 --> 00:07:13,800 to win his support, and two corporate governance experts 131 00:07:13,800 --> 00:07:19,040 consulted said this arrangement raises red flags numerous and 132 00:07:19,040 --> 00:07:21,640 the conflicts are inherent in forging deals with their own 133 00:07:21,640 --> 00:07:24,760 portfolio companies. One of those experts also 134 00:07:24,760 --> 00:07:28,160 acknowledged the upside. You don't want to block good 135 00:07:28,160 --> 00:07:31,040 investments just because your CEO is well connected. 136 00:07:31,400 --> 00:07:34,400 But the experts said Tan should have dropped his portfolio 137 00:07:34,400 --> 00:07:37,640 investments, place them in a blind trust or set up a special 138 00:07:37,640 --> 00:07:41,280 committee of the board to evaluate deals where he was a 139 00:07:41,280 --> 00:07:43,960 stakeholder. The Intel did not say whether 140 00:07:43,960 --> 00:07:45,880 Tan had taken any of those steps. 141 00:07:46,760 --> 00:07:49,840 Now here's where this goes. The Trump administration took a 142 00:07:49,840 --> 00:07:53,640 9.9% stake in Intel this summer through a $8.9 billion 143 00:07:53,640 --> 00:07:55,920 investment. That deal effectively made 144 00:07:55,920 --> 00:07:58,360 American taxpayers shareholders in the company. 145 00:07:58,720 --> 00:08:02,000 The investment came from CHIPS Act funding and the Department 146 00:08:02,000 --> 00:08:04,160 of Defense's Secure Enclave program. 147 00:08:04,560 --> 00:08:07,480 Intel is the only U.S. company capable of manufacturing 148 00:08:07,480 --> 00:08:10,960 advanced chips on American soil, and the government wants to keep 149 00:08:10,960 --> 00:08:13,200 it that way. The government's stake is 150 00:08:13,200 --> 00:08:16,120 passive, no board seat. They don't have any governance 151 00:08:16,120 --> 00:08:18,560 rights. But it adds another layer to the 152 00:08:18,560 --> 00:08:21,000 stakes here. If Intel's CEO is pursuing deals 153 00:08:21,000 --> 00:08:23,640 that benefit his personal portfolio, the public has a 154 00:08:23,640 --> 00:08:26,440 financial interest and whether that behavior is appropriate. 155 00:08:27,480 --> 00:08:30,960 And Tan does not see his deal making as conflicted, according 156 00:08:30,960 --> 00:08:32,559 to people familiar with this thinking. 157 00:08:32,840 --> 00:08:36,520 He believes his positions at these startups and at Intel make 158 00:08:36,520 --> 00:08:39,600 him uniquely able to negotiate transactions that benefit all 159 00:08:39,600 --> 00:08:42,559 parties. Intel's spokesperson said the 160 00:08:42,559 --> 00:08:45,440 company has an unwavering commitment to the highest 161 00:08:45,440 --> 00:08:48,680 standards of corporate governance, integrity and 162 00:08:48,680 --> 00:08:51,960 accountability. This is a messy situation 163 00:08:51,960 --> 00:08:54,760 without a clean answer. Intel needed someone with deep 164 00:08:54,760 --> 00:08:57,360 history relationships to rescue the company. 165 00:08:57,760 --> 00:09:00,160 They hired A venture capitalist with stakes and hundreds of 166 00:09:00,160 --> 00:09:02,200 firms. Now they're navigating the 167 00:09:02,200 --> 00:09:05,080 predictable conflicts that come with that choice. 168 00:09:05,440 --> 00:09:07,880 Canada has delivered results. The stock is up. 169 00:09:08,400 --> 00:09:11,960 The NVIDIA and SoftBank investments are real, but so are 170 00:09:11,960 --> 00:09:14,840 the questions about whether Intel's board can adequately 171 00:09:14,840 --> 00:09:18,520 supervise the CEO who controls the investment arm and whose 172 00:09:18,520 --> 00:09:23,280 portfolio companies keep showing up in Intel deal flow. 173 00:09:23,800 --> 00:09:26,320 The regulations require disclosure of related party 174 00:09:26,320 --> 00:09:29,240 transactions, but Intel's next filing is not due until spring 175 00:09:29,240 --> 00:09:32,080 of 2026. Until then, shareholders and 176 00:09:32,080 --> 00:09:36,000 taxpayers are left trusting that the policies Intel put in place 177 00:09:36,720 --> 00:09:41,760 are enough. Hey, thank you so much for 178 00:09:41,760 --> 00:09:43,960 listening today. 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