Bloomberg Technology 08/22/2023
ANNOUNCER: HARDWARE INNOVATION, HONEY, AND POWER COLLIDE. THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. ♪ CAROLINE: I'M CAROLINE HYDE A BLUE WORLD HEADQUARTERS IN NEW YORK. SONALI: AND I AM ED LUDLOW --ED:
AND CAROLINE: CAROLINE: I'M ED LUDLOW IN SAN FRANCISCO. WE BOON YOU -- WE BRING YOU THE BIGGEST TAKEAWAYS ED: FROM EARNINGS. ED:PLUS, ANALYSTS SOUR ON GROWTH CAROLINE: FOR THE COMPANY. CAROLINE:ACTIVISION DEAL GETTING DONE FINALLY. SUBMITTING A NEW BID TO THE CMA IN THE U.K. WE FIND OURSELVES IN A MACROENVIRONMENT.
TECH HAS CONTINUED TO OUTPERFORM OTHER BENCHMARKS, EVEN IN THE FACE OF RISING YIELDS ONCE AGAIN. WE ARE SEEING THE NASDAQ UP JUST 0.25%. CANINES, ALL EYES ON NVIDIA AS WE HEAD TOWARD THE CLOSING BELL. THE 2-YEAR YIELD, A BIT OF CALMNESS IN THE BOND MARKET. ALL EYES NOT ONLY ON EARNINGS COMING THIS WEEK, BUT JAY POWELL COME FRIDAY AND WHAT HE SAYS ABOUT THE FUTURE OF BORROWING COSTS IN THE U.S. INTERESTING VOLATILITY IN
CHINA'S TRADING. WE SAW A PICKUP IN BUYING. I AM LOOKING AT THE CRANE SHARES. BASICALLY SOME KEY INTERNET NAMES TRADED HERE IN THE U.S. HOLDING ON BY ABOUT 0.1%. WHAT IS THE KEY RISK IN THIS?
WE ARE SEEING CRYPTO AND BITCOIN UNDER CONTINUED PRESSURE AT ABOUT $26,000 THEREABOUTS. WHAT HAVE YOU GOT ON THE MICRO? ED: I LIKE TO GET THERE. ZOOM IS OFF BY ZERO POINT 9%, BUT ALL SESSION LOWS.
A SLIGHT ADJUSTMENT HIGHER FOR GUIDANCE ON SALES. STRENGTH IN ENTERPRISE, BUT SMALL BUSINESSES THAT WERE USING THE VIDEO PLATFORM FROM ZOOM, WE WILL SPEAK TO THE CFO. A LOT OF QUESTIONS FROM THE STREET ABOUT WHAT HAPPENS IF THE MACRO PICTURE GETS BETTER. WHAT ARE YOU GUYS GOING TO DO WITH CAPITAL? THOSE ARE THE QUESTIONS WE GET ASKED. MICROSOFT IS A BIG, BIG STORY.
MICROSOFT WILL ALLOW UBISOFT TO SELL ACTIVISION TITLES GLOBALLY. WILL THAT BE ENOUGH TO GET THE DEAL OVER THE LINE? WE WILL GO TO OUR REPORTER ON THAT ONE. THE BIG STORY WE HAVE BEEN WAITING ON AND IS FINALLY HERE IS ON THE CHIP DESIGN SOFTWARE FINALLY FILING FOR ITS IPO. WE DO NOT LEARN MUCH ABOUT THE SALE IN DOCUMENTS. WHAT WE KNOW IS THAT SOFTBANK WILL STILL BE THE SINGLE BIGGEST CONTROLLING SHAREHOLDER AFTER THE TRANSACTION.
BLOOMBERG HAS REPORTED THAT THE TARGET VALUATION, IF THEY RAISE AROUND $10 MILLION, THIS WILL BE NOT JUST THE BIGGEST IPO OF THE YEAR HERE IN THE U.S., BUT THE BIGGEST GOING BACK TO 2021. COULD THIS BE THE STARTING GUN FOR THE IPO MARKET? LOTS TO COVER. CAROLINE: AND WHAT THIS MEANS FOR THE BROADER MARKET. WHAT DOES THIS MEAN IN TERMS OF ACTUAL TECHNOLOGY DRIVING THIS? IAN HAS BEEN ALL OVER NOT ONLY THE ENTIRE SEMICONDUCTOR SPACE, BUT WHAT THIS BRINGS TO THAT SPACE. WHAT STRUCK YOU? FOR MANY, IT WAS EXPOSURE FOR -- TO CHINA, BUT WHAT ABOUT WITH THIS BUSINESS ACTUALLY DOES IN THE FILING? IAN: FUNDAMENTALLY, THEY ARE TRYING TO REPOSITION THEMSELVES AS BEING A DIFFERENT, MORE FAULT COMPANY FROM WHERE THEY WERE WHEN THEY WERE ORIGINALLY TRADED AND OWNED BY SOFTBANK. AND WHILE IT IS NOT REALLY APPEARING IN THE FILINGS, WHAT WE ARE UNDERSTANDING IS THAT THE REAL SALES PITCH WILL BE AROUND HOW IMPORTANT THEY ARE IN THE DATA CENTER, MORE THAN JUST A MOBILE PHONE TECHNOLOGY COMPANY AREA ED: THE HISTORY IS THE PROVIDER OF BLUEPRINTS FOR SMALL PROCESSORS.
THEIR DESIGNS LED TO ENERGY EFFICIENCY. THEY ALSO HAVE THE IP, OR THE CODE, THAT DETERMINES HOW A CHIP INTERACTS WITH THE SOFTWARE YOU WANT TO RUN THROUGH IT. THIS IS A BIG PUBLICITY STUNT, RIGHT? IT IS LIKE SAYING, WE ARE HERE, WE ARE ARM, BUT HOW DOES IT MOVE THAT COMPANY FORWARD? IT IS NOT WHAT THEY HAVE DONE HISTORICALLY. IAN: THEY ARE SPREADING. THEIR STORY HAS ALWAYS BEEN ONE OF HOW QUICKLY WE CAN BECOME AS PERVASIVE AS WE THINK WE CAN BE.
THAT HAS REALLY BEEN A STRONG STORY FOR THEM. BUT AT THE SAME TIME, THEY ARE TRYING TO DO MORE THAN THAT. THEY'RE TRYING TO MOVE UP THE STACK TO BE MORE OF A TECHNOLOGY PROVIDER, DO MORE OF THE DESIGNS, PROVIDE MORE OF THE COMPLETE PICTURE AND BE LESS RELIANT ON ACTUAL CHIPMAKERS. THAT, IN THEORY BRINGS COMPANIES LIKE AMAZON, NOT TRADITIONALLY A CHIPMAKER, CAN DESIGN THEIR OWN CHIPS. ED: THEY USE THAT AS PART OF WHAT GOES THROUGH THE AWS OFFERING. EXPLAIN ARM'S IS AN IS AN
EXPOSURE IN CHINA. IAN: IT'S LIKE MANY SEMICONDUCTOR COMPANIES IN THIS COUNTRY. CHINA IS THE BIGGEST MARKET FOR CHIPS. YOU WANT TO BE THERE. BUT AT THE SAME TIME, WASHINGTON IS MORE AND MORE CONCERNED ABOUT CHINA'S CAPABILITIES IN CHIPS AND IS TAKING STEPS TO LIMIT WHAT U.S. OR OTHER COMPANIES OUTSIDE OF CHINA CAN DO INSIDE CHINA. THAT IS THE CONFLICT THERE AND THAT IS WHEN HE SAW DETAILED DISCUSSIONS ABOUT THESE ARE THE RISKS, THIS IS WHAT WE HAVE TO THINK ABOUT. CAROLINE:
A SLOWING MOBILE ENVIRONMENT, BUT TO BE FAIR, SINCE 2014 OR 2015, WHEN I WAS BACK IN LONDON, I REMEMBER ARM TAKING ME TO THEIR HEADQUARTERS. THEY WERE DESPERATE TO TELL THIS WHOLE INTERNET OF THINGS DISCUSSION POINT. IT HAS BEEN A NARRATIVE THEY HAVE BEEN TRYING TO BUILD AS TO HOW THEY ARE MORE THAN MOBILE. WHAT ARE THEY IN TERMS OF SOFTBANK? WHY WOULD THEY NOT WANT TO SELL INTO THIS AI EUPHORIA AT THE MOMENT? DO THEY WANT TO KEEP HOLD A LITTLE LONGER IN THE NEAR TERM? IAN: THEY WERE GOING TO COME TO MARKET EARLIER THIS YEAR AND CHIP STOCKS WERE OBVIOUSLY NOT DOING VERY WELL. I WOULD NOT TOO MUCH INTO THE TIMING.
I THINK SOFTBANK OBVIOUSLY NEEDS A WIN, GIVEN SOME OF THE OTHER INVESTMENTS IT HAS MADE WHICH HAVEN'T PANNED OUT. IN TERMS OF THE TIMING, AND YOU MISS -- AND YOU MENTIONED THE AI EUPHORIA QUITE ACCURATELY, THAT'S WHERE WE ARE NOW. I THINK WHAT ARM HAS TO STAY THERE IS WHO IS REPORTING TOMORROW, NVIDIA. HALF OF THE TOP LINE PRODUCT IS
A PROCESSOR BASED ON TECHNOLOGY. SO, THEY HAVE A PLAY AND THAT IS SOMETHING THEY WILL BE TRYING TO PITCH TO INVESTORS MORE STRONGLY. ED: BLOOMBERG'S IAN KING MR. CHIP, WE CALL HIM. IT HAS BEEN AN INTERESTING FEW DAYS. LET'S BRING IN LYNN O'DONNELL -- GLENN O'DONNELL.
YOU HAVE BEEN THROUGH THE FILING COULD WHAT WAS THE MAIN TAKEAWAY FOR YOU OF WHAT WE HAVE LEARNED ABOUT ARM'S IPO? GLENN: IT IS TRYING TO CAPITALIZE, AS IAN POINTED OUT, WITH THE AI CRAZE GOING ON RIGHT NOW. IT'S A GOOD TIME TO CAPITALIZE ON THAT. EVEN THOUGH WITH AI, MOST OF THE TALK IS ABOUT NVIDIA. MOST PROCESSORS NEED CPUS, A DIFFERENT KIND OF PROCESSOR TO WORK PROPERLY. IT HAS LICENSED ARM'S TECHNOLOGY TO GET THAT CAPABILITY. LOTS OF OTHER PLAYERS HAVE THESE ARM DESIGNS.
IT IS REALLY THE BRAINS BEHIND A LOT OF WHAT'S TO COME. I THINK THE TIMING OF THIS IPO IS REALLY PERFECT. CAROLINE: PUT ARM IN THE ECOSYSTEM. WHO ARE THEIR COMPETITORS? WHO ARE THEY MANAGING TO WORK WITH AND AGAINST? GLENN: THE BIGGEST COMPETITOR IS THE ESTABLISHED INTEL AMD BASED -- AMD BASE. JUST ABOUT EVERY PC HAS ONE OF THEIR PROCESSORS. THESE THINGS ARE UBIQUITOUS. THEY ARE NOT GOING TO LOSE THAT UBIQUITY.
HOWEVER, ARM'S GOING AFTER A SLICE OF THAT. EVEN THOUGH THESE ARE TWO HYPERCOMPETITIVE COMPANIES -- LET'S SAY INTEL AND AMD -- INTEL HAS ENTERED INTO AN AGREEMENT TO MANUFACTURE CHIPS FOR ARM. THE CONCEPT OF A FRENEMY'S IS VERY PREVALENT. CAROLINE: IT IS INTERESTING, ISN'T IT, THAT EVEN AS WE TALK UP THIS AI HYPE, EVEN AS WE LOOK TOWARD NVIDIA AFTER THE BELL, WE DID GET NUMBERS IN THE FILING. QUITE CLEARLY, THERE IS A SLOWDOWN BEING FELT BY ARM IN THIS MICROENVIRONMENT. ED: YOU CAN'T OUTRUN YOUR MAIN BUSINESS.
SALES SHOWED THEY WERE DOWN 1% IN THE PERIOD ENDING MARCH OF THIS YEAR ON THE YEAR. WHAT DID THAT TELL YOU ABOUT THE HEALTH OF THEIR MAIN BUSINESS, PRINCIPALLY THE ASSOCIATION WITH SMARTPHONE PROCESSORS? GLENN: SMART PHONES ARE DOWN, AS WE ALL KNOW. IN SEMICONDUCTOR STOCKS, COMPANIES HAVE BEEN SUFFERING. THE ECONOMIC SLOWDOWN HAS HAD A REALLY STRONG IMPACT ON ALL OF THEM. IT HAS NOT BEEN A GOOD COUPLE
OF QUARTERS FOR THESE COMPANIES. BUT THERE IS A TURNAROUND UNDERWAY. IT IS FUELED BY ALL OF THIS AI STUFF, MOST NOTABLY GENERATIVE AI. I HAVE BEEN THROUGH A NUMBER OF AI WAYS THAT DID NOT PAN OUT. BUT THIS ONE IS DIFFERENT. WE ARE GOING TO SEE A HUGE SURGE IN DEMAND FOR CHIPS THAT ARE ABLE TO PROCESS THESE WORKLOADS THAT PEOPLE ARE GOING TO BE THROWING AT IT.
WE ARE SEEING THAT WITH NVIDIA. NVIDIA IS ALREADY SAYING, HEY, WE CAN'T MAKE ENOUGH OF THESE THINGS. AND DEMAND IS OFF THE CHARTS. ARM IS GOING ALONG FOR THAT RIDE IN A BIG WAY, BECAUSE IT HAS THAT COMPLEMENT RECONNECTION TO WHAT NVIDIA IS WRITING. ED: I GET IT. YOU ARE A FINANCIAL ANALYST. WE LOVE TO POUR OVER THE NUMBERS. BUT THE THING I LOVE IS HYPE, THE STORY, PUBLICITY.
HOW IMPORTANT IS IT TO YOUR MIND THAT THE WORLD KNOWS ABOUT ARM, THAT THEY HEAR ABOUT THIS BIG IPO, THAT THEY MAY NEVER HAVE HEARD OF? GLENN: THEY HAVE NEVER HEARD OF IT, MOST PEOPLE HAVEN'T. FOR THE MOST PART, THEY DON'T MAKE THE CHIPS. THEY LICENSE THE TECHNOLOGY YOU MAY HAVE HEARD OF SAMSUNG AND QUALCOMM.
ALL OF THESE COMPANIES, AND NVIDIA, THEY ARE BUILDING THEIR CHIPS, THEIR PROCESSORS, ON ARM-BASED DESIGNS AND ARCHITECTURE. ARM IS REALLY AN INTELLECTUAL PROPERTY COMPANY. THEY MAKE THEIR MONEY OFF LICENSING AND OTHER INTELLECTUAL PROPERTY THEY HAVE DEVELOPED THAT OTHER COMPANIES CAN USE. THE MORE COMPANIES THAT BUILD THEIR PROCESSORS BASED ON ARM, THE BETTER ARM IS GOING TO DO.
I JUST SEE THAT THERE ARE GOOD TIMES AHEAD FOR THAT. CAROLINE: GLENN O'DONNELL, FINISHING ON AN OPTIMISTIC NOTE. MEANWHILE, COMING UP, HOW IS YOUR SET UP AT HOME? IS ZOOM IT? THEY JUST POSTED SECOND-QUARTER RESULTS AND HAVE RAISED THE FORECAST FOR BOTH ADJUSTED EARNINGS AND REVENUE.
BUT ANALYSTS ARE WANTING MORE CLARITY ON LONGER-TERM GROWTH PROSPECTS. WE ARE GOING TO DIG INTO THAT WITH THE CFO. THIS IS BLOOMBERG TECHNOLOGY. ♪ CAROLINE: ZOOM, THE VIDEOCONFERENCING COMPANY WE ALL KNOW, REPORTED SECOND-QUARTER RESULTS AND BOOSTED THE OUTLOOK WITH A MOVE BEYOND THE COURSE. LET'S JIG -- LET'S DIG INTO THE VISIBILITY AND STRENGTH FOR THIS BUSINESS. THE CFO JOINS US NOW WE SAW
SOME EXCITEMENT FROM NUMBERS BEING POSTED AFTER THE BELL. REALITY HITS TODAY AMID A MACRO PICTURE THAT IS WORRYING. CAN YOU GIVE YOUR INVESTOR BASE, OUR AUDIENCE, SOME VISIBILITY INTO THE FUTURE GROWTH STORY FOR ZOOM RIGHT NOW? KELLY: WE WERE REALLY PLEASED WITH OUR Q2 RESULTS. AS YOU SAID, WE BEAT BOTH OUR TOP LINE REVENUE GUIDANCE, AS WELL AS OUR PROFITABILITY OUTLOOK. WE RAISED THOSE NUMBERS FOR THE FULL YEAR OF FY 24, BOTH TOPLINE AND BOTTOM-LINE GUIDANCE. WHEN I THINK PEOPLE ARE LOOKING FOR IS LONG-TERM GROWTH WHICH WILL BE DRIVEN FROM THE EXPANSION OF OUR PLATFORM, OUR NEW PRODUCTS, SOME OF OUR NEWER PRODUCTS LIKE ZOOM PHONE, WHICH IS OUR CLOUD SOLUTION.
ALSO, ZOOM CONTACT CENTER, WHICH IS ONLY SIX QUARTERS OLD. THAT IS OUR NATIVELY BUILT, FULLY MODERNA CLOUD CONTACT CENTER. WE HAVE LOTS OF OTHER PRODUCTS ACROSS OUR PLATFORM, LEGS OOPS SCHEDULE OR. ALL OF THIS BRINGS TOGETHER A PLATFORM THAT, AS THOSE PRODUCTS MATURE, WILL DRIVE GROWTH.
WE ARE ALSO LOOKING FOR THE OVERALL MACRO, AS YOU MENTIONED, BOTH IN THE U.S. AND INTERNATIONALLY. JUST REALLY IMPORTANT FOR US FOR BOTH SEGMENTS. AS WE WORK WITH OUR CUSTOMERS, WE HAVE GONE THROUGH REDUCTIONS, WE HELP THEM TRANSITION THAT INTO SOME OF OUR NEWER PRODUCTS. ED: KELLY, THE ZOOM STORY WAS REALLY CLEAR IN THE FISCAL SECOND QUARTER. TOPLINE GROWTH OF 10% OVERALL.
BUT SALES TO INDIVIDUALS ARE DOWN 4.3%. IN OTHER WORDS, THE INDIVIDUAL USER -- INDIVIDUAL USER, WHERE ALL FALLING AWAY. KELLY: THE ONLINE SEGMENT OF OUR BUSINESS THAT YOU ARE REFERRING TO IS ABOUT 40% OF OUR BUSINESS TODAY. IT IS INDIVIDUALS, LIKE YOU AND I, BUT IT IS ALSO SMALL BUSINESSES, WHICH IS REALLY IMPORTANT TO REMEMBER. A LOT OF THESE CUSTOMERS BUY ONLINE. WE ARE CONTINUING TO EXPAND THE OPPORTUNITY BY ADDING MORE CURRENCIES IN WHICH WE SELL, ADDING MORE PRODUCTS TO THE PLATFORM. IT IS A VERY IMPORTANT PART OF
OUR BUSINESS, AND THE TEEN IS CONSISTENTLY INUNDATING HOW WE BRING MORE PRODUCTS TO THEM AND EXPAND THE TOP OF THE FUNNEL. WE HAVE SEEN A LOT OF STABILIZATION IN THE TURN RATE. WE ARE DOWN TO PRE-PANDEMIC LEVELS, WHICH IS REALLY GREAT. IT WILL JUST TAKE A LITTLE LONGER THAN WE EXPECTED TO STABILIZE OVER TIME. CAROLINE: WHAT ABOUT THE EUPHORIA THAT EVERYONE WANTS TO DISCUSS THAT IS AI? HOW MUCH ARE YOU TRYING TO LEAN INTO THAT OR BE REALISTIC TO WHAT IT ADDS TO YOUR PRODUCT PORTFOLIO? KELLY: WE THINK AI IS A REALLY IMPORTANT STRATEGIC PART OF OUR PORTFOLIO GOING FORWARD.
WE JUST HIRED EXD LONG --D W ONG -- WE HAVE ZOOM VIRTUAL AGENT, FOR EXAMPLE, WHICH IS PART OF OUR CONTACT CENTER SOLUTION. WE ALSO WILL BRING THOSE BENEFITS INTO THE BROADER PLATFORM WITHOUT NECESSARILY ADDING A LOT TO OUR CUSTOMER BASE. WE WANT TO GET THE BENEFIT FROM IT. WE WANT TO TALK MORE ABOUT ADDITIONAL FEATURES OR PRODUCTS THAT REALLY LEVERAGE AI WHEN IT COMES OUT IN ZOOM TOPIA, WHICH IS OUR USERS CONFERENCE IN OCTOBER. ED:
THERE WAS PRETTY STRONG REACTION TO NEWS THAT ZOOM WAS PUSHING ITS WORKFORCE BACK TO THE OFFICE. MANY SAW THAT WITH A SENSE OF IRONY, GIVEN THE ROLE THAT YOUR TECHNOLOGY PLAYED IN THE WORK FROM HOME ERA. WAS THAT SEVERE REACTION JUSTIFIED? ARE YOU SURPRISED THAT PEOPLE WERE SO SURPRISED IN THEIR OWN MIND THAT YOU HAVE MADE THAT MOVE? KELLY: WE BELIEVE THAT A STRUCTURE HYBRID APPROACH IS BEST FOR ZOOM. WE HEAR FROM OUR EMPLOYEES. THEY WANT TO BE TOGETHER FOR COLLABORATION. BY STRUCTURING DAYS IN THE OFFICE, JUST TWO DAYS, BY THE WAY, IT ENSURES THAT WHEN THEY COME TO THE OFFICE, THEY'RE GOING TO SEE THEIR COLLEAGUES, THEIR FRIENDS. IT ALSO REALLY HELPS DRIVE INNOVATION.
WE ARE THE BEST TO LEVERAGE OUR PRODUCTS, ENSURE THAT WE ARE MEETING THE NEEDS OF OUR CUSTOMERS, WHO ARE ALSO IN A HYBRID ENVIRONMENT. BY LEVERAGING ZOOM ROOMS AND NEW FEATURES LIKE INTELLIGENT DIRECTOR, WE ARE ABLE TO ENSURE THAT WE ARE MAKING THE BEST POSSIBLE PRODUCTS TO MARKET. ED: KELLY STECKELBERG, ZOOM CFO, THANK YOU FOR JOINING US.
COMING UP ON THE SHOW, MICROSOFT LOOKS TO PUSH ITS ACTIVISION DEAL OVER THE FINISH LINE WITH ANY PROPOSAL TO THE CMA. CAROLINE: IT IS EARNINGS SEASON. I WANT TO SHINE A LIGHT ON ONE THAT YOU DO NOT AUTOMATICALLY ASSOCIATE WITH TECHNOLOGY, BUT YOU SHOULD. MACY'S IS HAVING ITS WORST DAY SINCE MARCH 2020 TWO, THE LOWEST SINCE JANUARY 21. THIS IS A MACRO PLAY, A WORRY ABOUT THE CONSUMER AND A BUILDUP IN DELINQUENCIES. BUT THEY ARE STILL FOCUSED VERY MUCH ON TECHNOLOGY AND AI.
LET'S HAVE A LOOK AT HOW THEY ARE FOCUSING ON DIGITAL. THEY ARE PULLING BACK BY 10%. THEY ARE STILL SAYING THEY HAVE GOT MORE TO KNOW. JEFF KENNETT TELLING ME, "OUR ASPIRATIONS ARE QUITE HIGH AND WE WANTED TO BE HEALTHIER THAN IT IS TODAY. WE DO BELIEVE THAT IN THE
FUTURE DIGITAL CAN GROW MORE AGGRESSIVELY WITHIN THE BALANCE OF THE COMPANY." THEY'RE LEANING INTO MARKETPLACE, OFFERING FAR MORE PRODUCTS ONLINE. ED: TIME FOR TALKING TECH. FIRST UP, BAIDU REPORTING REVENUE THAT ROSE BY THE MOST IN MORE THAN ONE YEAR. SALES JUMPED 15%, WHICH WAS AHEAD OF EXPECTATION. CHINA'S LEADERS JOINING TECH APPEARS IN REDISCOVERING GROWTH AS BEIJING RELAXES ITS GRIP ON THE PRIVATE SECTOR.
MICROSOFT GOT A NEW CHANCE AT WINNING APPROVAL FROM U.K. REGULATORS AFTER THE TECH GIANT SUBMITTED A SUBSTANTIALLY DIFFERENT DEAL TO THE COMPANIES -- THE COUNTRIES FOR A $69 BILLION TAKEOVER. THE CMA WILL NOW OPEN A NEW DEAL PROBE AFTER MICROSOFT SAID IT WOULD GIVE UBISOFT RIGHTS. CAROLINE: LET'S GET MORE ON THAT. ALL WE WERE WAITING TO HEAR HOW THEY WERE PERHAPS GOING TO APPEASE REGULATORS IN THE U.K., DID THIS ONE TAKE YOU BY SURPRISE? >> WE HAD REPORTED A LITTLE BIT AGO THAT THEY WERE LOOKING AT THIS POTENTIAL MOVE. THEY ARE GOING TO DO IS
DIVESTING GLOBALLY THE CLOUD GAMING RIGHTS TO UBISOFT. IT WILL BE A NONEXCLUSIVE LICENSE IN THE EU, SO THAT MICROSOFT IS STILL ABIDING BY THE COMMITMENTS THAT IT MADE TO THE EUROPEAN COMMISSION ANTITRUST AUTHORITIES. CMA WILL NOW DO A REDO OF THE PROBE TO SEE IF THESE RESULTS IN CONCERNS ABOUT GAMING. THEY MAY NEED TO LOOK AT IT AGAIN JUST TO MAKE SURE THAT IT STILL COMPLIES WITH ALL THE COMMITMENTS MICROSOFT MADE TO THEM. ED:
WE ACTUALLY HAD THE INTERVIEW WITH THE CHIEF EARLIER. WHAT WE SEE WITH THIS NEW DEAL, AND WE HAVE TO TEST IT CAREFULLY FOR OUR REVIEW, IS THAT RATHER THAN MICROSOFT BEING ABLE TO CONTROL HOW THOSE CLUB STREAMING RIGHTS ARE USED, THAT CONTROL WILL SHIFT TO AN INDEPENDENT COMPANY. IT HAS ALWAYS BEEN A BATTLEGROUND FOR THE CLOUD.
THAT IS WHAT THE CMA'S ISSUE HAS BEEN. LEAH: THE CMA AND EU HAVE BEEN FOCUSED ON THE CLOUD BECAUSE THEY THINK THAT IS A NEXT GENERATION OF GAMING HERE. SO MUCH STUFF RELATES TO CONSOLES, WHETHER YOU HAVE AN XBOX OR PLAYSTATION. BUT IN THE FUTURE, PEOPLE THINK THAT YOU MIGHT JUST CONNECT TO YOUR TV OR PHONE TO PLAY THESE GAMES, SORT OF IN THE SAME WAY THAT WE USED TO WATCH DVDS AND NOW EVERYBODY STREAMS MOVIES. THEY HAVE BEEN VERY, VERY FOCUSED ON THE CLOUD AND HOW MICROSOFT WOULD DOMINATE THE INDUSTRY. THAT MIGHT RESOLVE SOME
CONCERNS. THEY STILL NEED TO LOOK AT IT. THIS IS STILL AN ONGOING PROCESS. THEY ARE NOT DEFINITELY SAYING THAT THEY WILL ACCEPT IT, BUT THEY ARE REVIEWING IT AND THEY WILL BE DONE BEFORE THE OCTOBER 18 DEADLINE.
ED: THE CLOUD WAS SUCH A PREOCCUPATION FOR BOTH PARTIES BECAUSE THEY TRIED SO HARD TO POINT OUT TO ALL REGULATORS THAT IT IS NOW, RIGHT IN THIS MOMENT, TEENY TINY. THE WHOLE POINT IN THE DEAL WAS MOBILE. IKER SOFT WANTED ACTIVISION. WE CONTINUED TO CHASE THIS ONE.
IT IS UNBELIEVABLE THE DRAMA. COMING UP HERE ON BLOOMBERG TECHNOLOGY, MOONPAY HAS A NEW CONSUMER TO BRAND EXPERIENCE. IVAN SOTO-WRIGHT WILL ALSO ADD TO THE CONVERSATION ON THE TRENDS USING IN THE BROADER CRYPTO MARKET. TESLA UP FOR A SECOND DAY. FRIDAY, FOR THE SIX CONSECUTIVE SESSION, NOW SLIGHTLY SOFTER, TO TENS OF 1%.
FROM SF AND NEW YORK, THIS IS BLOOMBERG. CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY. I AM CAROLINE HYDE IN NEW YORK. ED: AND I'M ED LUDLOW IN SAN FRANCISCO. THE NASDAQ 100 SOFTER, DOWN 0.2%. WE ARE COMING DOWN OFF THE JUMP OF THAT INDEX IN MORE THAN THREE WEEKS. TECH HAD KIND OF TURNED A
CORNER, NOW WE ARE TREADING WATER A LITTLE BIT. FACTORS INCLUDE, BUT ARE NOT LIMITED TO, WHAT WE ARE SEEING IN EARNINGS AND AHEAD OF EARNINGS. NVIDIA REPORTS AFTER THE BELL TOMORROW.
ALSO, IF YOU THINGS ABOUT THE GLOBAL ECONOMY. JACKSON HOLE THIS WEEK. WHAT A LOT FOR INVESTORS TO TAKE ON BOARD. THERE ARE TWO PIECES OF NEWS OUT THERE THAT ARE ALSO PARTICULARLY RELEVANT TO THE FINTECH AND CRYPTO SPACE. , A RECORD DROP IN SALES.
BUYING BOTH THE AMSTERDAM LISTED SHARES AND SOME U.S. LISTED SHARES AS WELL. NOT DOING LIST TO SUPPORT -- NOT DOING MUCH TO SUPPORT ANYTHING TODAY.
A STAKE IN CIRCLE, SAYING IN THE FILING THAT IT SEES SOME MOMENTOUS STABLECOINS, BUT WE DON'T HAVE ANY DETAILS OF AGREEMENTS. THERE TRY TO MAKE THEIR MIND UP, THAT STUCK DOWN 2%. CAROLINE: LET'S STICK WITH CRYPTO FOR A MOMENT. MOONPAY IS A LEADING WEB
INFRASTRUCTURE PROVIDER. THEY ARE TAKING A HANDS-ON INTERACTIVE EXPERTISE TO NEW YORK CITY'S WATERFRONT SEAPORT NEIGHBORHOOD. I GOT A LITTLE BIT OF A TASTE OF WHAT THEY EXPERIENCE. TAKE A LOOK. >> NEW YORK, NEW YORK. HE WAS HERE AND WHAT ARE THEY DOING? ARE THEY WORKING, VISITING, COMING BACK FOR MORE? IT IS SOMETHING MANY WOULD LOVE, PARTICULARLY ATTRACTIONS. COULD WEB THREE HELP WITH THAT?
THAT IS WHAT THE SOUTH STREET SEAPORT OWNER IS BANKING ON. THEY'RE WORKING WITH MEN PAY -- MOONPAY. THERE WILL BE A SCAVENGER HUNT WHERE REAL AND DIGITAL OR -- DIGITAL WORLDS COLLIDE. THERE ARE COOL CITY TOKENS. IF YOU COLLECT ENOUGH, YOU WILL BE ENTERED FOR THINGS LIKE HOTEL STAYS, CONCERT TICKETS, AND THE LIKE.
EXPERIENCES YOU CAN USE OR SELL ON THE SECONDARY MARKET THINGS TO THE BLOCKCHAIN TECHNOLOGY BEING USED HERE. WHAT DOES HOWARD HUGHES GET IN RETURN? YOUR EMAIL, ZIP CODE, A GREAT UNDERSTANDING OF WHERE YOU COME FROM, HOW YOU MOVE THROUGH THE SEAPORT, AND CRUCIALLY IF YOU RETURN. HERE IS A CASE FOR CRYPTO BEING USED IN THE WILD WITH A PURPOSE. AN APPLICATION. LET'S SEE HOW WELL PEOPLE ADOPT IT. CAROLINE: LET'S DIG INTO IT. WE WELCOME MOONPAY'S FOUNDER AND CEO, IVAN SOTO-WRIGHT. THIS IS IT, ISN'T IT? THIS IS HOW CRYPTO NFT'S ARE APPLICABLE IN OUR EVERYDAY LIFE AND TO COMPANIES.
IS THAT THE PROOF POINT YOU NEED IN THIS MOMENT IN THIS MACRO MARKET ENVIRONMENT? IVAN: FOR US, WE ARE ALL ABOUT READING THIS MAINSTREAM. THE EXPERIENCE NEEDS TO BE SO SIMPLE, SO INTUITIVE, SO EASY FOR PEOPLE TO UNDERSTAND. IN THIS CASE, IT'S REALLY FUN. IT IS A DIGITAL SCAVENGER HUNT. YOU GO TO THE SEAPORT AND YOU SEE QR CODES ALL AROUND.
THERE ARE 10 OF THEM. IT IS QUITE A CHALLENGING SCAVENGER HUNT. I'M EXCITED TO SEE HOW PEOPLE GET ON WITH IT. ONCE YOU SCAN ONE OF THESE THINGS, WHAT IS REALLY BECAUSE THAT BEHIND THE SCENES, WE ARE USING OUR TECHNOLOGY. WE ARE SETTING UP A WALLET FOR
EACH INDIVIDUAL PERSIAN -- INDIVIDUAL PERSON. THEY'RE CLAIMING THESE TOKENS AND THEY CAN GET A PRIZE EVERY WEEK. THEY CAN BE SOLD ON THE SECONDARY MARKET. CAROLINE: I USED IT. I AUTOMATICALLY HAD A WALLET FORMED. IT WAS VERY SEAMLESS. I'M INTERESTED, THOUGH, BECAUSE YOU ARE NOT AT ANY POINT SAYING BLOCKCHAIN, WEB THREE, CRYPTO.
IT IS VERY MUCH, THIS USE THE TECH AND SEE WHAT IT'S ALL ABOUT. HOW MUCH ARE COMPANIES WANTING TO USE AND ADOPT NFT'S AND CRYPTO, HOW MUCH ARE YOU MANAGING TO SCALE A BUSINESS? IVAN: IT'S ANALOGOUS IF YOU THINK ABOUT THE INTERNET. YOU DON'T TALK ABOUT THE TECHNICAL COMPONENTS OF USING SOCIAL MEDIA AND APPLICATIONS YOU USE EVERY SIGEL DAY.
IT IS SIMILAR FOR BLOCKCHAIN. WE NEED TO REMOVE THE JARGON AND FOCUS -- FOCUS ON USE CASES. FOR US, THE FUTURE OF DIGITAL ECONOMY WILL BE FOCUSED ON THESE DIGITAL WALLETS. FIRST, WE HAVE TO GET PEOPLE THERE DIGITAL WALLET TO BEGIN WITH. WE THINK THAT IS GOING TO HAPPEN THROUGH WORKING WITH BRANDS, ENTERPRISES. WE ARE WORKING WITH THE HOWARD
HUGHES CORPORATION. THIS IS AN AWESOME INITIATIVE. THERE ARE SOME COMPANIES OUT THERE THAT ARE REALLY LOOKING AROUND AT HOW TO USE TECHNOLOGY AND THINKING ABOUT THE LATEST ADVANCEMENTS. FOR US, IT IS A GREAT USE CASE, A GREAT CASE STUDY. WE CAN'T WAIT TO SHOW THE DATA AND ANALYTICS AROUND THIS FOOT TRAFFIC COMING AND HOW DO WE INCREASE THAT? HOW DO WE GET MORE SPEND BEHAVIOR? CAROLINE: THERE WE HAVE IT, AND IN TERMS OF REAL ESTATE, WANTING TO JUSTIFY RENTS. WE ARE ALSO HEARING MORE AND
MORE ABOUT NFT'S AND CRYPTO BECOMING MORE ABOUT LOYALTY FOR COMPANIES. THAT SEEMS TO BE SOME SORT OF PROOF POINT. ED: I AM NOT SURPRISED TO SEE YOU OUT THERE IN THE REAL WORLD, ENGAGING WITH THE TECHNOLOGY. THAT IS A SPACE YOU KNOW REALLY WELL. BUT TO YOUR POINT, WHAT YOU ARE JUST OUTLINING IVAN, FOR THE MAJORITY OF THE PUBLIC OUT THERE, THEY ARE NOT COMPETENT IN THE AREA OR FAMILIAR, AND THEY JUST NEED SOME BASIC HELP AND UNDERSTANDING USE CASES. WHY SHOULD THEY BE USING IT? IVAN: YEAH, I THINK IT ALWAYS TURNS WITH EDUCATION. THAT IS PROBABLY THE MOST
IMPORTANT THING WE THINK ABOUT. WE HAVE THAT EDUCATION IN A WAY THAT IS DELIVERED IN A FUN WAY. WE ARE NOT OPENING A TEXTBOOK AND LEARNING ABOUT BLOCKCHAIN TECHNOLOGY. WE ARE OUT THERE IN THE WILD, SCANNING A QR CODE.
AND WE ARE GETTING THIS REWARD. WHEN WE THINK ABOUT LOYALTY AND REWARDS, ONE OF THE BIGGEST PROBLEMS WE HAVE HAD IS ENGAGEMENT WITH LOYALTY AND REWARD PROGRAMS. A LOT OF COMPANIES HAVE STRUGGLED TO HAVE PEOPLE USE LOYALTY AND REWARDS. I THINK THE SECONDARY COMPONENT IS CRITICAL.
LET'S SAY YOU WIN TICKETS TO A CONCERT. LET'S SAY YOU ARE NOT GOING TO BE IN THE SEAPORT FOR A COUPLE OF WEEKS AND CAN'T GO TO THE CONCERT. YOU CAN LIST THEM ON A PLATFORM ON THE OPEN INTERNET AND ANYONE CAN GO AND PURCHASE THEM. ED: YOU HAVE OPERATED IN NFT CHECKOUT SINCE 2022.
HOW IS THE MARKET FOR NFT'S RIGHT NOW? I FEEL LIKE WHEN CAROLINE AND I DISCUSSED THAT MARKET ON THE SHOW OF LATE, IT IS BECAUSE VALUES HAVE COME DOWN IN A SHOCKING WAY. JUSTIN BIEBER IS THE EXAMPLE, WHICH WE CONSTANTLY BRING UP ON THE SHOW. IVAN: FROM OUR PERSPECTIVE, WE TAKE A VERY LONG TERM VIEW. THIS IS AN ASSET CLASS. NFT'S ARE MORE THAN JUST ELECTABLE'S, THEY ARE NEW FILE FORMAT. WHEN WE THINK ABOUT MOONPAY, WE ARE IN INFRASTRUCTURE BUSINESS WE WANT TO BE BEHIND-THE-SCENES, AND ABLE AS MUCH ACTIVITY AND YOU LOOK AT THE DEVELOPERS THAT HAVE COME TO THE SPACE, WE ARE UP 80% UNIT DEVELOPER ACTIVITY SINCE 2020. CAROLINE: INTERESTING THAT YOU MENTIONED
DEVELOPERS. ARE YOU ACTIVELY HIRING? WE UNDERSTAND THAT AT ONE POINT, PEOPLE WERE LEAVING THE COMPANY. WERE YOU HAVING TO LET GO OF PEOPLE? IVAN: WE OPERATE WITH THIS IDEA OF CHANGE FOR THE BETTER IN JAPANESE. WE TRY TO MAKE SURE WE HAVE ENOUGH PEOPLE.
WE HAVE PEOPLE LEAVE AND COME IN. WE ARE BUILDING FOR THE LONG TERM. WE ARE HERE TO STAY OVER THE LONG-TERM. CAROLINE: DO YOU NEED MORE MONEY?
JUSTIN BIEBER IS A MAN WHO INVESTED IN YOU BACK IN THE DAY. ARE YOU INTERESTED IN RAISING MORE FUNDS? IVAN: NO, WE ARE IN A GOOD FINANCIAL POSITION. WE ARE GOING TO CONTINUE TO BUILD AND FOCUS. WE HAVE OUTPERFORMED THE MARKET BY OVER 30% THIS YEAR. PARKING IS DOWN 50%. THAT IS OUR BENCHMARK. WE COMPARE OURSELVES AGAINST THE MARKET.
WE ARE TAKING A LONG-TERM VIEW THAT THIS MARKET WILL GROW. ED: IVAN, MOONPAY'S PARTNERSHIP WITH BINANCE U.S., WHICH IS THE AFFILIATE IN THE U.S., THERE ARE BANKS THAT HAVE WALKED AWAY
FROM BINANCE U.S. THEY DON'T WANT TO DO BUSINESS WITH THEM. WHY ARE YOU DOING A PARTNERSHIP THERE? IVAN: WE WORK WITH A RANGE OF PARTNERS. FINANCE U.S. HAS AN INFRASTRUCTURE AROUND WALLETS. WE CAN MAKE IT EASY FOR THEM TO
TOP OF -- TOP OFF THEIR WALLETS. WE FOLLOW ALL OF THE REGULATORY RULES ACROSS EVERY JURISDICTION IN WHICH WE OPERATE. WE CAN MAKE IT EASY FOR PEOPLE TO TOP OFF THEIR WALLETS.
CAROLINE: BANKING PARTNERS, AND MORE BROADLY, JUST THE ENVIRONMENT. HOW IS THE REGULATORY ENVIRONMENT OPERATING IN THE U.S. AT THE MOMENT? ARE YOU FEELING SUPPORTED OR THAT YOU NEED TO MAKE SURE YOU ARE LOOKING ABROAD TO BEEF UP PRESENCE A LITTLE MORE? IVAN: WE ARE IN INTERNATIONAL BUSINESS.
WE OPERATE IN 106 TO COMPANIES -- COUNTRIES. WE OPERATE THE MAJORITY IN THE UNITED STATES. WE ARE CONTINUING TO WORK PROACTIVELY WITH REGULAR LEADERS. THAT IS AN INCREDIBLY IMPORTANT PART OF OUR BUSINESS. WE'RE TRYING TO GET TO A PLACE WHERE WE CAN GET CLARITY OVER HOW TO DEFINE THESE DIFFERENT ASSETS. THEY GOING TO BE COMMODITIES, SECURITIES, HOW DO WE GET THEM INTO THESE RESPECTIVE BUCKETS? YOU HAVE PROBABLY SEEN THE UPCOMING RULINGS THAT ARE COMING INTO PLACE. OBVIOUSLY, WE HAVE JURISDICTION
BETWEEN THE DIFFERENT REGULATORS TRYING TO FIGURE OUT WHO SHOULD HAVE REGULATION OVER -- JURISDICTION OVER THESE DIFFER IN ASSETS. HOPEFULLY, WE WILL COME TO A CONCLUSION IN THE NEXT YEAR. ED: IVAN SOTO-WRIGHT, CEO AND FOUNDER OF MOONPAY. THANK YOU FOR YOUR TIME. COMING UP HERE ON BLOOMBERG TECHNOLOGY, WE ARE GOING TO DISCUSS THE STATE OF THE VENTURE CAPITAL INDUSTRY WITH JONATHAN KEIDAN, FOUNDER AND MANAGING PARTNER OF TORCH CAPITAL. THIS IS BLOOMBERG TECHNOLOGY. ♪ CAROLINE: TIME NOW FOR THE ROUNDUP.
FIRST UP, VENTURE CAPITAL ACTIVITY HERE IN CANADA. STAGED A REBOUND IN THE QUARTER LED BY AN ART AFFILIATE -- ARTIFICIAL INTELLIGENCE COMPANY IN TORONTO THAT DREW MONEY FROM NVIDIA. A TURKISH START UP LOOKUP MORE THAN 10% OF ITS WORKFORCE AS THEY STRUGGLE WITH LOSSES IN MORE MARKETS IN WHICH IT OPERATES. MEANWHILE, ALSO GLOBAL, AFRICA'S LARGEST STARTUP IS PRESSING AHEAD WITH PLANS FOR AN INITIAL PUBLIC OFFERING AFTER MAKING HEADWAY IN RESOLVING ALLEGATIONS OF FINANCIAL ISSUES IN KENYA. THAT IS ALL ACCORDING TO THE CEO. ED: THOSE ARE YOUR START UP HEADLINES FOR MORE ON THE STATE OF THE CHURCH ARE -- VENTURE CAPITAL, WE ARE GOING TO BRING IN JONATHAN KEIDAN, FOUNDER OF TORCH CAPITAL.
THE BIG NEWS OF THE DAY, HIS ARM FILING FOR ITS IPO. WHAT I WON'T ASK YOU -- WHILE I WON'T ASK YOU ARM SPECIFICALLY, WHAT ABOUT THE STARTING GUN? THIS WILL BE FOR THE TECH IPO MARKET BROADLY. JONATHAN: WE HOPE THAT WITH A FEW SUCCESSFUL IPOS RECENTLY, IT IS SLOWLY STARTING TO OPEN BACK UP. THAT SAID, I AM NOT YET CONVINCED THAT THIS IS A START OF THE RUSH. WE WILL SEE HOW THINGS MOVE. I THINK THE ECONOMY IS STILL
VERY UNEVEN. I THINK INVESTORS ARE STILL VERY UNEVEN BOTH ON THE RETAIL SIDE AND THE PRIVATE SIDE. FINGERS CROSSED THAT IT GOES WELL. THAT WILL ENCOURAGE MORE IPOS. I THINK IT IS A VOLATILE TIME
FOR TECH FOR THE SHORT AND MEDIUM-TERM. CAROLINE: AND OF COURSE, ARM ITSELF IS B2B. WE WERE SPEAKING WITH THE CEO OF MACY'S EARLIER. HOW MUCH CONCERN IS THERE WITH LACK OF CONCERN ON CONSUMER TECH ENABLED BUSINESS DOING IN THIS ENVIRONMENT? JONATHAN: I THINK YOU HAVE TO DIVIDE THEM. WE SAW A LOT AROUND THEIR TRADITIONAL CONSUMER TECH COMPANIES. THEY WENT PUBLIC. THEY GOT HAMMERED. THEY WEREN'T PUBLIC READY
COMPANIES, EVEN THOUGH THEY WERE FUNDED LIKE THEY WERE. I THINK REAL CONSUMER TECH IS ALWAYS A MASSIVE OPPORTUNITY BECAUSE TECH IS CONSTANTLY CHANGING BEHAVIOR. I THINK WE SEE THAT IN AI. THERE IS AN EXPLOSION OF USAGE IN THE AVERAGE EVERYDAY CONSUMER WITH CHAT-GPT AND OPEN-AI, AND SO ON. WE ARE AT THE VERY BEGINNING OF
THAT. THAT IS WHAT IS EXCITING ABOUT INVESTING IN CONSUMER TECH. TECH IS ALWAYS CHANGING, CONSUMER BEHAVIOR IS ALWAYS EVOLVING, CREATE NEW OPPORTUNITIES IN NEW MARKETS. CAROLINE: IT'S INTERESTING.
I WAS SPEAKING WITH SOME IN THE SPACE WHO KNOW AN AWFUL LOT AROUND THE CONSUMER AS WELL. WHEN WE ARE TALKING TO COMPANIES AROUND AI, THERE IS THIS FROTH AT THE MOMENT. ARE YOU FEELING THE SAME AT THE MOMENT? JONATHAN: I ABSOLUTELY AGREE WITH THAT. IF WE LOOK BACK IN HISTORY, THE
GOAL WAS NOT THE FIRST OR SECOND SEARCH ENGINE, IT WAS THE 10TH, 11TH, 12TH. WE ARE AT THE VERY BEGINNING WITH AI. TRYING TO ANOINT WINNERS AND KINGMAKERS IS VERY CHALLENGING. WE DON'T YET KNOW IF THOSE WE
THE COMPANIES WHO GET IT RIGHT IN THE NEXT 3, 5, 10 YEARS OF WHERE CONSUMERS ARE TRULY USING IT AND WHAT THE COMMERCIALIZATION IS. THERE ARE A LOT OF BABY AI COMPANIES THAT GET ENORMOUS VALUATIONS. IN THE LAST 1.5 YEARS, OVERALL IN TECH, VALUATIONS HAVE BEEN
DEEPLY COMPRESSED. WHERE THEY ARE INFLATED IS AROUND AI. THERE IS A LOT MORE UNCERTAINTY AND I THINK VC FUNDS ARE GOING AFTER THEM LIKE THEY ARE SURE THINGS. THEY ARE NOT. IT IS STILL VERY EARLY.
AN EXCITING REVOLUTIONARY OPPORTUNITY, BUT WE WILL NOT PICK WINNERS. TORCH CAPITAL IS IN THE HEADLINES EARLIER THIS YEAR. ED: YOU WILL RAISE $200 MILLION FOR FUNDS. HOW IS THAT GOING? DO YOU HAVE ANY FUNDS RAISED? JONATHAN: LAST YEAR, WE DID VERY FEW DEALS. PART OF OUR THESIS AND HOW WE
OPERATE IS TO BE VERY FOCUSED AND DISCIPLINE, WHICH I THINK WE DID PRETTY WELL OVER THE LAST FEW YEARS, WITH FROTH AROUND THE WHOLE TECH ARENA. BUT RIGHT NOW, WE ARE SEEING VALUATIONS COME DOWN, ESPECIALLY IN THE EARLY STAGE. WE ARE SEEING A LOT OF SMART, FOCUSED FOUNDERS.
THIS IS NOT A FUN TIME TO START A COMPANY AND TRY TO RAISE FUNDS FOR THAT. WE ARE SEEING VERY DETERMINED FOUNDERS OR EXPERIENCED FOUNDERS. WITH VALUATIONS, WE ARE SEEING TECHNOLOGY CHANGING. WE ARE SEEING A LOT OF INTERESTING OPPORTUNITIES. FOR EXAMPLE, ONE OF OUR
PORTFOLIO COMPANIES CALL -- COME IN IS, CALLED DURABLE, WE ARE SEEING THE RISE OF THE SOLO PRINTER AND SMALL BUSINESS OWNERS. THEY ACTUALLY USE AI. THEY ARE HELPING FOUNDERS GET FROM ZERO TO ONE TO START A BUSINESS. PART OF THAT IS TO START A WEBSITE. THEY CAN BUILD A WEBSITE IN UNDER 30 SECONDS THAT IS CUSTOMIZED AND CAN TAKE PAYMENTS, AND REALLY GET A BUSINESS UP AND RUNNING. IN THEIR FIRST SIX MONTH, THEY BUILT 4 MILLION WEBSITES AND HELPED 4 MILLION BUSINESSES GET OFF THE GROUND. WE ARE STARTING TO SEE FLASHES OF WHERE THE NEXT GENERATION OF COMPANIES ARE GOING TO COME. WE HAVE ACTUALLY DONE RE-TIMES
THE AMOUNT OF DEALS THAT WE DID LAST YEAR ALREADY IN THE FIRST HALF OF THIS YEAR. WE ARE VERY ACTIVE IN THIS SPACE. ED: A DATA POINT WE'VE BEEN TALKING A LOT ABOUT ON THE SHOW IS THAT IN THE FIRST HALF OF THIS YEAR, 50% OR MORE OF ALL VC DOLLARS GOING TO NAI STARTUP, WENT TO ONE IN SAN FRANCISCO. WHEN YOU TALK ABOUT WHERE THE NEXT GENERATION IN THE ROAD YOU OPERATE IS COMING FROM, IS THERE ANY CLEAR GEOGRAPHICAL DIVIDE IN WHERE YOU ARE INVESTING AND WHERE NEW COMPANIES ARE BEING STARTED? JONATHAN: I VIEW THE QUESTION DIFFERENTLY.
I THINK IT IS ALL OVER. WE INVESTED IN ANOTHER EXCITING COMPANY IN VANCOUVER. WE ARE SEEING COMPANIES ALL OVER THE COUNTRY. IT IS NOT COMPLETELY FOCUSED ON SAN FRANCISCO AND NEW YORK. I THINK BETWEEN CODED AND THE
ABILITY TO GET TALENT AND CALL MATT -- AND COMMONALITY FROM REMOTE WORK, STARTUPS ARE BEING BUILT ALL OF THE COUNTRY, WHICH I THINK IS VERY EXCITING. THERE IS NOT JUST A PURE CONCENTRATION AS THEY USED TO BE. WE ARE LOOKING EVERYWHERE. CAROLINE: JUST TO BRING THIS FULL CIRCLE, WE FOCUSED ON DISCUSSING WHERE THE ARM PIPELINE MIGHT BE ABLE TO FLUSH OUT A BIT. BUT MORE BROADLY, ARE THEY JUST ON ICE? ARE YOU SEEING COMPANIES WILLING TO MAKE THIS AN EXIT CHOICE? JONATHAN: THEY ARE ON ICE. WE ARE NOT NEAR THE BOTTOM. I THINK GROWTH COMPANIES AND PRE-IPO COMPANIES ARE MUCH BETTER AT CUTTING EXTENDED RUNWAYS. THEY HAVE NOT HIT THE OPEN
MARKET WITH NEW RAISES. WE HAVE SEEN SOME, LIKE STRIKE AND OTHERS, SOME OF THE BIGGEST ONES, BUT THE BIGGEST REASON THAT HASN'T HAPPENED IS BECAUSE BOTH GROWTH FUNDS AND M&A STRATEGIC'S ARE ALL JUST WAITING ON THE SIDELINES AND SAYING, NOT UNTIL WE KNOW WE HAD THE BOTTOM WERE STARTING POINT CAPITAL. I THINK WE HAVE A LITTLE WAYS TO WAIT. I THINK IT WILL BE TOWARD THE END OF THIS YEAR AND EARLY NEXT YEAR THAT WE WILL SEE TRUE VALUATIONS AND WHERE THEY SET, AND I THINK M&A WILL BE EXPLOSIVE. IT MAY NOT ALWAYS BE PRETTY, LIKE FOR SOME OF THE VALUATIONS WE SAW IN 2021, BUT I THINK IT WILL BE A MINUTE BEFORE WE SEE FULL-FLEDGED M&A BACK TO THE MARKET. CAROLINE: GREAT HAVE SOME TIME WITH YOU.
FROM NEW YORK AND SOMEWHERE OUT EAST OF NEW YORK, AND FROM SAN FRANCISCO, THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: TIME TO TAKE A LOOK AT WHAT THE INTERNET IS TALKING ABOUT IN TODAY'S "GOING VIRAL." THINK JUSTIN BIEBER. HE IS USING TWO KEY CLIENTS, ARIANA GRANDE AND DEMI LOVATO. YOU MAY KNOW SCOOTER BRAUN FROM BEING FAMOUSLY EMBROILED IN THAT FEUD WITH TAYLOR SWIFT. SHE HAD TO GO RECORD AND STOP MONEY FLOWING TO THE ENTITY HE HAD PURCHASED. HE HAS MADE DISPOSALS TO SOUTH
KOREAN COMPANIES AIRED IT IS FASCINATING THAT MANY ARE TRYING TO WONDER IF THERE IS LOVE LOST HERE. APPARENTLY, DEMI LOVATO, THEY ARE STILL GOOD FRIENDS, ACCORDING TO THE INTERNET. ED: IT'S WHAT PEOPLE ARE TALKING ABOUT. BUT THAT STORY YOU JUST OUTLINED COULD BE ONE OF THE HEADLINES POTENTIALLY SCRUBBED FROM ACTS. ACCORDING TO REPORTS, THE SOCIAL MEDIA PLATFORM PREVIOUSLY KNOWN AS TWITTER, IS GOING TO START REMOVING HEADLINES FROM NEWSLETTERS. EXPLAIN IT TO ME.
>> IT'S EXACTLY WHAT YOU SAID. IF YOU POST AN ARTICLE, THE HEADLINE IS NOT GOING TO BE THERE. IT WILL JUST BE AN IMAGE. WHATEVER YOU WANT TO POST AROUND IT. BUT IT IS A WEIRD THING. THERE'S GOING TO BE NO HEADLINES, NO DESCRIPTIONS, JUST AN IMAGE. ED: I THOUGHT THIS WAS SUPPOSED TO BE THE GLOBAL TOWN SQUARE, WHERE PEOPLE ARE FREE TO SHARE WITH HER ONE. AISHA:
I SUPPOSE IT IS IF YOU SHARE WITHIN THE BOUNDARIES THERE. IT WILL MAKE THINGS LOOK VERY LIKE TIKTOK, VERY VISUAL, MAYBE LIKE INSTAGRAM. WHETHER IT IS GOOD OR BAD, WE WILL HAVE TO SEE. CAROLINE: AND THIS IS ALL ABOUT BRINGING EYEBALLS. IT FEELS LIKE ALL OF THESE CHANGES THAT PERHAPS SEEM ODD TO THE LADY CONSUMER, ARE YOU SUPPOSED TO GO BACK IN THERE AND USE IT MORE? AISHA: IT'S ALL ABOUT ENGAGEMENT. MUSK HAS BEEN PRETTY VOCAL ABOUT WANTING TO DO IMAGES PER BUT YOU LOSE A LOT OF CONTEXT. YOU IMAGINE AN IMAGE, YOU DON'T
KNOW IF IT IS AN ARTICLE OR JUST A PICTURE, SO YOU LOSE A LOT OF INFORMATION THERE. I THINK THAT IS WHAT IS CHALLENGING AND WHY PEOPLE ARE STRUGGLING WITH THIS IDEA. CAROLINE: AND WE WONDER AGAIN HOW THE ADVERTISERS ARE GOING TO REACT TO ALL OF THIS. I AM SURE LOTS OF CALLS STILL COMING. WE THANK YOU. A GREAT BREAKDOWN. ED, WE ARE BACK TOGETHER, BUT
THAT'S IT FOR THIS EDITION OF BLOOMBERG TECHNOLOGY. ED: A MASSIVE WEEK. WE HAVE OUR IPO NEWS, EARNINGS CONTINUING WITH NVIDIA IN 24 HOURS. BUT DON'T FORGET THE PODCAST. WHEREVER YOU GET YOURS,
SPOTIFY, A HEART, AND THE BLUEBIRD PLATFORM.
2023-08-23 15:06
