Bloomberg Technology 07/27/2023
FROM THE HEART OF WHERE INNOVATION MONEY AND POWER COMBINE THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. ♪ CAROLINE: I AM CAROLINE HYDE IN NEW YORK. ED: I AM ED LUDLOW IN SAN FRANCISCO. CAROLINE: FULL EARNINGS COVERAGE I HAD. WE SIT DOWN WITH MEDA CEO SUSAN LI. WE ALSO SPEAK TO THE CEO FROM PLAID. CAROLINE:
DO YOU LOVE YOUR TESLA OR THE MAN HE WAS BUILDING THEM? FIRST, WE TACKLED THIS MARKET. A MACRO PICTURE FIRING ON ALL SYLLABLES. MASTEC COMING OFF OF ITS HIGH, UP 0.94%. WE SEE THE CONSUMER LOOKING STRONG DOES THE FED STILL HAVE TO ACT.
WE SAW TWO YEAR YIELDS PUSH UP 0.06. IN TERMS OF MACRO POLICY IN EUROPE, IT IS A MUCH WORSE PICTURE IN TERMS OF ECONOMIC GROWTH. THE EURO GO SLOWER VERSUS THE U.S. DOLLAR SO WE ARE DOWN BY 0.8%. CRYPTO WAS ON THE DOWNSIDE BY
1%. WHEN IT COMES TO THE U.S. ECONOMY IS SOME OF THE MICRO PICTURES WE GET FROM BUSINESSES WITH THEIR EARNINGS. ED: WE ARE IN FULL SAND WITH EARNINGS. THIS IS THE MAKER OF INVISIBLE LINE, EARNINGS ABOVE EXPECTATION . NOT A NAME THAT WE TALK A LOT BUT INTERESTING A PERFORMANCE. COMCAST IS DOING BETTER THAN EXPECTED DESPITE LOSING SUBSCRIBERS AND THE INTERNET AND TV SPACE BUT THE SCALES ARE UP 6.25%. EBAY DOWN 8.62%.
THAT IS THE WORST PERFORMER. THE MAIN STORY IS MEDA AND WHAT IS DRIVING SHARES HIGHER IS THE FORECAST OF THE CURRENT PERIOD. UP 6.59%. YOU WOULD HAVE TO GO BACK TO 2021, SO MUCH FOCUS ON REELS AND AI AND THREAD. CAROLINE: LET'S GO TO MEADOW. INSIDER INTELLIGENCE PRINCIPAL ANALYST, ANYTHING LEFT ON SUBTLE NOT CALL ANYTHING YOU WANT TO GUIDE WITH MEDA? >> IT'S BEEN AN INCREDIBLE QUARTER. ALL OF THE NEWS I HEARD WAS VERY POSITIVE AND IT'S INCREDIBLE CONSIDERING NOT TOO LONG AGO, THE MIDDLE OF LAST YEAR I HAD SIGNIFICANT CONCERNS ABOUT THE COMPANY. WE SAW A REVENUE CHALLENGES WE SAW ISSUES WITH THE METAVERSE NOT TAKING OFF AS FAST AS MARK ZUCKERBERG THOUGHT IT WOULD.
THAT IS STILL THE CASE BY THE WAY. THE COMPANY HAS BECOME LEANER AND MEANER AND ABLE TO STAY FOCUSED ON WHAT IT NEEDS TO ACCOMPLISH NOW TO BE RELEVANT NOW. THE LAUNCH OF THREADS A COUPLE OF WEEKS AGO IS A PERFECT EXAMPLE OF A WAY MEDA HAS BEEN ABLE TO DOUBLE DOWN WITH A SMALL TEAM, A SMALLER SEEM THAN IT'S HAD IN THE PAST. PUT OUT AN AD THAT GOT GREAT PUBLICITY AND SEE WHAT HAPPENS WITH THREADS WHEN IT ROLLS OUT FURTHER BUT SO CARD -- SO FAR THE QUARTER LOOKS GOOD.
Q3 IF THEY MEET THAT GUIDANCE REVENUE GROWTH WOULD BE YOU SO MUCH BETTER AFTER 2022 WHICH WAS NOT A GOOD YEAR. ED: DID WE LEARN ANYTHING ABOUT THREADS. DEBRA: THIS IS A TYPICAL PATTERN THAT MATTEL FOLLOWS, THEY WANT TO BUILD UP AN AUDIENCE FIRST BEFORE THEY START TO MONETIZE IT. THEY MENTIONED THAT THEY THINK THERE IS ROOM TO ME TWITTER WHICH IS RARE FOR META SOME MENTION TWITTER. THEY DO THINK THERE IS ROOM FOR A ONE BILLION USE COMMUNICATION ADD. THEY LOOK AT WHAT'S UP AS THE OTHER TOP THREE IN THEIR COMMUNICATION. CAROLINE: THERE IS A QUESTION OF PEOPLE
REMAINING ON THE APP CAN THEY REALLY TAKE ON THE COMPETITION, WHEN YOU ARE SEEING A VERY COMPETITIVE SPACE WHO ALL WANT TIME AND ADVERTISERS. DEBRA: IT WILL TAKE TIME FOR THRUSTS TO FIND ITSELF. ONE OF THE BENEFITS TO HAVE A SMALLER TEAM IS THAT THEY WERE ABLE TO LAUNCH THREADS QUICKLY AND BRING IT ONLINE BEFORE IT HAD SOME OF THE FEATURES PEOPLE WERE LOOKING FOR.
THE DOWNSIDE TO THAT IS THAT IT DID NOT HAVE THE FEATURES PEOPLE WERE LOOKING FOR SO SOME PEOPLE MAY HAVE DECIDED THIS IS IT FOR ME. THE CHALLENGE IS TO GET PEOPLE BACK. I THINK IT NEEDS TO BE MORE THAN A TWITTER KILLER. THREATS NEEDS TO FIND ITSELF OR
A PLACE FOR CREATORS TO COMMUNICATE IN THE WAY THEY WANT TO COMMUNICATE ON THREADS WILL NOT BE ENOUGH TO COMPLETELY REPLACE TWITTER. THAT WILL BE THE DIVIDING LINE IN TERMS OF WHAT MAKES THREADS AND APT TO STAND OUT. YOU MENTIONED TIKTOK, TIKTOK IS META 'S NUMBER ONE COMPETITION. TWITTER HAS NOT BEEN META'S COMPETITION FOR A LONG TIME. ED:
10 BILLION AND YOU WILL RUN RATE FOR REELS. YOU HAVE THE MATH ON THIS, TIKTOK DID 9 BILLION LAST YEAR. DEBRA: OUR FORECAST WAS UNDER JUST 10 BILLION. VERY CLOSE. ED: ARE THEY COMPETITIVE? IS REELS A TIKTOK COMPETITOR IN TERMS OF ITS ABILITY TO GET EYEBALLS THE TO MAKE MONEY? DEBRA: IT HAS BECOME A STRONG COMPETITOR. WE HEARD ON THE CALL THAT THREE
QUARTERS OF ADVERTISERS ARE USING REELS. THAT SPEAKS TO THE ABILITY OF META TO GET ADVERTISERS WHO ARE ALREADY AGREED TO TRY SOMETHING NEW. ANOTHER THING I THINK IT'S WORTH PAYING ATTENTION TO IS WHERE PEOPLE ARE SEEING REELS.
THEY ARE USING ITS AI TO SHOW RECOMMENDED CONTENT SO PEOPLE ARE SEEING REELS IN THEIR FEEDS THAT ARE ATTUNED TO THEIR INTERESTS SO THEY ARE MORE LIKELY TO WATCH THEM. IT'S STILL TRUE THAT SOME REELS ARE MANY REELS ARE PULLED FROM TIKTOK OR SIMILAR TO TIKTOK. IT HAS SOUGHT IS AN ISSUE. BUT OVERALL, I THINK REELS IS DOING WELL RIGHT NOW. ED:
TEMPERATURE WILLIAMSON IS ALWAYS GOOD TO GET THAT REAL TIME ON EARNINGS. COMING UP WE ARE JOINED BY ZACH PERRET THE PLAID CEO AND WHY THEY ARE CAUSING SOME BUZZ IN THE FINTECH INDUSTRY. THIS IS BLOOMBERG. CAROLINE: THE CONSUMER IS STRONG BUT LET'S TALK ABOUT HOW WE MAKE PAYMENTS AT THE MOMENT. WE ALL WANT INSTANT GRATIFICATION. THE FINTECH COMPANY PLAID LEADS IN THESE APPS.
LET'S BRING IN ZACH PERRET THE CEO OF PLAID. HOW ARE PAYMENTS IN YOUR PLACE WITHIN THE PAYMENT ECOSYSTEM GOING TO CHANGE? >> WERE GOING FROM A PAYMENT SYSTEM THAT WAS AROUND CARDS AND INTO NEW PAYMENT TRAILS. AS WE IS STARTING TO LOOK THIS WILL BE A NEW PAYMENT RAIL COMING IN WE EXPECTED TO INCREASE CONSUMER CHOICE, COMPETITION AND OPTIONALITY. WE ARE REALLY EXCITED FOR THE POTENTIAL BUT IS VERY EARLY. WE JUST LAUNCHED FEDNOW. CAROLINE:
HOW MUCH OF A THREAT IS IT TO FINTECH? ZACH: WE THINK IT'S AN ACCELERANT. WHEN YOU THINK ABOUT THE WAY YOU TRANSFER FUNDS FROM YOUR BROKERAGE TO YOUR CHECKING ACCOUNT IT WILL OFTEN TIME TAKE THREE DAYS BUT IT IS SLOW. WHEN YOU LOOK AT FED NOW IT WILL BE TO DEPOSIT THOSE FUNDS INSTANTLY REMOVE THEM FASTER A LOT FASTER THAN YOU WOULD NORMALLY. ED: THERE WILL BE SOME THAT SAVE THE INSTANT TRANSFER OF FUNDS, YES THAT IS WHAT I WANT. BUT IT SOUNDS LIKE THE REALITY OF THIS NATIONWIDE ROLLOUT IS A WAY AWAY.
WHEN DO YOU SEE IT COMMONPLACE STANDARD FOR TRANSACTIONS IN THIS NATION? ZACH: HOPEFULLY SOON. IT WILL TAKE YEARS. IT WON'T BE AN INSTANT THING AND IT WILL TAKE 3, 4 YEARS BEFORE HE GOES MAINSTREAM.
BUT WE WILL SEE IS CERTAIN USE CASES WILL ACCELERATE FASTER. IF YOU THINK ABOUT PAYROLL, IF YOU GET IT DELIVERED MORE QUICKLY IT'S BETTER FOR EMPLOYERS, EMPLOYEES SO AS SUSPECTED THAT THERE WILL BE SUBSECTIONS OF THE INDUSTRY THAT ARE FOCUSED ON MAKING IT GO QUICKLY. THE BIG QUESTION IS HOW BANKS ADOPTED. IT'S A STRAIGHT FORWARD AMOUNT OF WORK THAT A BANK HAS TO DO TO GET UPDATED WITH THE FEDNOW SYSTEM. ENABLING ALL OF THOSE CONSUMERS TO USE IT. ED:
YOU ANNOUNCED A PARTNERSHIP WITH CROSS SERVER THIS MORNING ON REAL-TIME PAYMENTS AND ONE OF THE THINGS YOU HIGHLIGHTED WAS THEIR PROPRIETARY TECHNOLOGY AND ABILITY TO DO THIS. WHAT IF THEY HAVE THAT OTHER BANKS LACK THAT YOU THINK NEED TO BE MORE COMMONPLACE? ZACH: WE APPRECIATE THE PARTNERSHIP WITH CROSS SERVER THEY ARE LEANING INTO THIS REAL TIME TECHNOLOGY. WE ALSO HAVE OUR GPO PROTOCOL FOR LARGE BANKS. WITH THE COMBINATION OF THESE TWO WE WILL GET TO A LOT MORE CONFUSING -- CONSUMERS. CAROLINE: WHEN ED STARTED TO DESCRIBE WHAT IS COMING VIA FEDNOW I THOUGHT OF CRYPTO. THE ABILITY TO GET ACCESS TO MONEY DIRECTLY.
IS THAT A COMPETITIVE FORCE? DO YOU SEE CRYPTO EVOLVING IN THE SAME WAY? ZACH: THUS AN INTERESTING POINT BECAUSE WHEN WE HEARD THE PROMISE OF CRYPTO OR DEIFY OR THESE PROTOCOLS AND TOOLS IT WAS CENTERED AROUND THIS CONCEPT OF ENABLING CONSUMERS HAVE ACCESS TO MONEY AT ALL TIMES. IN SOME SENSE FEDNOW IS COMPLETING THIS JOURNEY. WHEN THIS GOES TO SALE -- SCALE THEY CAN ACCESS THEIR MONEY THE IS THAT THEY WANT TO. NOT TO SAY THAT CRYPTO IS DEAD. MANY CRYPTO COMPANIES WILL USE FEDNOW.
THE REALITY IS I EXPECT THESE TWO TO INTERPLAY WELL. I EXPECT THEM TO LIVE HARMONIOUSLY TOGETHER. IT IS FUNNY TO HEAR THAT MESSAGE 20, 365 COMING FROM THE FEDERAL RESERVE. CAROLINE: TALKING ABOUT LIVING
HARMONIOUSLY WITH BANKS, IT WAS A YEAR OR SO AGO THAT VISA WAS TRYING TO BUY YOU AND YOUR BECOMING A MORE COMPETITIVE PLAYER. HOW CAN YOU SERVE VISA WHEN YOU THINK YOU WILL BE OF FORCE AND DOMINIC PAYMENTS? ZACH: WE THINK VISA IS AN INTERESTING PARTNER AND WE KNOW MANY PEOPLE THERE PERSONALLY. THE WAY WE THINK ABOUT OUR BUSINESSES DIFFERENTLY, WE FOCUS ON ENABLING THE CONSUMER TO CONNECT THEIR MONEY TO ACCOUNTS TO GET REAL-TIME VALUE FROM THEIR DATA AND TO ENABLE BANK PAYMENTS. NOT TO SAY THAT DEBIT OR CREDIT CARDS OR THOSE PAYMENT RAILS WILL GO AWAY. WE THINK ABOUT ADDING ANOTHER OPTION FOR CONSUMERS. ANOTHER CHOICE FOR MERCHANTS
AND AS WE ENTER THIS NEW WORLD OF INCREASING COMPETITION WE JUST NEED TO LIVE ALONGSIDE EACH OTHER. ED: YOU MENTIONED COMPETITION, ONE DOMAIN THIS IS PLAYING OUT IS AN ARTIFICIAL INTELLIGENCE TAKING A LARGE LANGUAGE MODEL AND USING IT TO UNDERLINE YOUR SERVICE. HOW ARE YOU INVESTING IN THAT SPACE? WHAT TYPE OF ENGINEERS YOU USE TO MAKE YOURSELF MORE COMPETITIVE? ZACH: AN AREA WITH A QUITE A LOT ABOUT. AI HAS TWO MAJOR WAYS WE WILL
SEE A PLAY OUT IN FINANCIAL SERVICES. THE FIRST IS STRAIGHTFORWARD, HELPING ALL BUSINESSES BE MORE EFFICIENT. IMPLEMENTING AI TOOLS TO HELP CONSUMER EFFICIENCY. THE SECOND IS THINKING ABOUT FUNDAMENTALLY NEW PRODUCTS THAT CAN ONLY EXIST WITH THE HELP OF AI. ONE OF THOSE AREAS IS BUILDING BETTER TOOLS FOR CREDIT ANALYTICS AND SCORING. WHEN HE THINK ABOUT THE WAY
CREDIT WAS SCORED 10 YEARS AGO IT'S NOT TOO DIFFERENT. WE HAVE A FICA SCORE WITH INTEREST I DID THEN. WE WANT BETTER TOOLS FOR YOUR LOAN PACKAGE. IF YOU'RE APPLYING FOR A LOAN AND LIVE INTERNATIONALLY, YOU DON'T HAVE EMPLOYMENT HISTORY IN THE U.S.
HOW DO YOU GET THAT INTO YOUR LOAN SERVICE? THE OTHER WAY WE WANTED TO GET INTO HIS HOW CAN AI MAKE BETTER PREDICTIONS ABOUT WHAT A CONSUMER CAN BORROW? WHAT CAN THEY PAY BACK? WE HAVE A LONG WAY TO GO IN TERMS OF WORKING WITH REGULATORS WHEN HOW WE SHOULD APPLY AI FURTHER LENDING DECISION. I THINK THERE'S A BIG OPPORTUNITY FOR US AHEAD. ED: THAT'S A CONVERSATION WE ARE KEEN TO DIVE INTO AS WELL. WE ARE JUST OUT OF TIME.
THANK YOU TO ZACH PERRET FROM PLAID. TESLA HAS A SHIFT IN OWNER SATISFACTION. VOLKSWAGEN'S 700 BILLION INVESTMENT AND DEV START UP.
WE WILL SPEAK TO THE CEO. >> THIS IS AN ELABORATE ED: TIME FOR TALKING TECH, CHINA IS TRYING TO BOOST INVESTMENTS IN THEIR TECHNOLOGY SECTOR. THEY WANT TO REVIVE THE PRIVATE SECTOR THAT HAS BEEN HIT WITH REGULATORY CURBS. GINA RAIMONDO SAID THE ACTIONS NEEDED FROM THE U.S. AND ITS ALLIES TO FIND A SURPLUS IN SEMICONDUCTORS POINTS TO CHINESE SUBSIDIES AND CALLS ON MORE INCENTIVES TO BRIDGE THE GAP. CHINA CURBED EXPORTS AND GALLIUM AND GERMANIUM WHICH ARE IMPORTANT FOR SEMICONDUCTORS AND RADAR SYSTEMS. CAROLINE:
LET'S TALK TESLA, IT'S BEEN FIVE YEARS SINCE THE MODEL HIT THE MARKET. BLOOMBERG SURVEYED SEVEN DOLLARS OWNERS ABOUT THEIR EXPERIENCE. OWNERS MAY LOVE THEIR CARS BUT THEY HAVE SOURED ON THE BOSS BEHIND TESLA. JOINING US NOW FROM MORE IS TOM. PERHAPS WE ARE NOT SURPRISED. WILL IT PUT ALL PEOPLE BUYING ANOTHER CAR OR INVESTING FURTHER INTO THE TESLA'S ECOSYSTEM. TOM: MY INITIAL THEORY WAS THAT IT WASN'T FLOWING THROUGH BECAUSE THEY'RE STILL EXPERIENCING HUGE SALES INTENSIVE DEMAND.
WE SAW A STRONG REACTION THAT WE RECEIVED AND YOU CAN FEEL IT IN THE COMMENTS. PEOPLE FEEL BETRAYED IN A WAY. WE DID START TO TIE IT TO THEIR BUYING BEHAVIOR. PEOPLE LOOKING AT A FUTURE VEHICLE WE ASKED THEM WHAT KIND OF CAR THERE WERE LOOKING FOR IN THE DEMAND FOR TESLA IS STRONG. 87% WERE LOOKING AT IS TESLA.
THAT SEEMS REALLY HIGH BUT WHEN YOU LOOK AT THE PEOPLE WHO ARE NOT LOOKING OUT OF TESLA IT'S ALL BECAUSE OF ELON MUSK. THAT WAS THE NUMBER ONE REASON FOR PEOPLE NOT LOOKING AT TESLA. YOU NEVER SEE THAT KIND OF CORRELATION BETWEEN THE CEO AND PRODUCT MAKING DECISIONS. EVEN AMONG THESE PEOPLE WERE TURNING AWAY, THEY STILL LOVE THEIR CARS AND THE LOT OF THEIR COMMENTS VOICE STOP. ED:
THE QUESTIONS POSED THIS YEAR VERSUS THE FIRST YEAR STARTED. HOW ELSE HAVE THE RESPONSES SHIFTED? TOM: I MISSED THE FIRST PART OF YOUR QUESTION. SHIFTING RESPONSES? SAYS 2019 THE NUMBER ONE QUESTION WAS IN ELON -- AND ELON SENTIMENT.
ELON'S TWEETS AFTER ACQUISITION WHERE THE WORST SCORING AMONG ALL OF THE QUESTIONS. ED: COMING UP, THE CONVERSATION CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY I AM CAROLINE HYDE IN NEW YORK. ED: LET'S GET A QUICK CHECK ON THE MARKETS. THE S&P 500 UP 1.57%. GDP PICKING UP STEAM IN THE SECOND QUARTER. SOME OF THE BIGGEST MOVERS ARE
AROUND EARNINGS. SPEAKING OF WHICH, THE KEY NAME WE ARE WATCHING AND TERMS OF POINTS IS META A STRONG EARNINGS IN THE QUARTER JUST GONE. SIGNS OF RESILIENCY AND REMOUNT -- REBOUND. SALES OF 34.5 BILLION U.S. DOLLARS.
IT WOULD REPRESENT TOP LINE GROWTH AT HER 20%. GO BACK TO 2021 WERE META WAS HAVING TOPLINE GROWTH AT THAT LEVEL. A LOT OF FOCUS ON WHAT WILL BE NEEDED FOR THE METAPHORS -- METAVERSE.
WHAT IS AI DOING RIGHT NOW AND REELS. THE MARKET LIKES WHAT IT HAS HEARD DESPITE EXPENSES MOVING UP A BIT THIS YEAR. CAROLINE: WE NOW WANT TO WELCOME , MARK ZUCKERBERG SAYING WE CONTINUE TO HAVE MUCH ENGAGEMENT.
OUR INVESTMENTS IN AI WILL CONTINUE AND REMAIN FULLY COMMITTED TO THE METAVERSE VISION AS WELL. SUSAN LI IS JOINING US. IT'S AN EXCITING ECONOMY FOR THE LEARNED -- WORLD AT LARGE. HOW EXCITED ARE YOUR CLIENTS RIGHT NOW? SUSAN: FIRST OF ALL THANK YOU FOR HAVING ME IT IS A PLEASURE TO BE WITH YOU GUYS AND WITH THE REVIEWERS THIS MORNING.
YOU NOTED WE REPORTED STRONG Q2 RESULTS. OBVIOUSLY THE RE-ACCELERATION AND OUR AD REVENUE WE THINK THAT'S A REFLECTION IN THE MACROECONOMIC LANDSCAPE ALONG WITH THEIR OWN EFFORTS TO CONTINUING INVEST IN QUARTERS AND YEARS OF WORK AND MAKING SURE OUR AD SYSTEMS ARE DELIVERING RESULTS FOR OUR ADVERTISERS AND WE HAVE SEEN THOSE RESULTS BEAR FRUIT. THAT'S SOMETHING WE'RE REALLY EXCITED ABOUT. WE ALSO TALKED ABOUT HOW OUR YEAR OF EFFICIENCY WORK SUBSTANCE OF GOING FORWARD. WE'VE IMPROVED OUR COST STRUCTURE AND ITS ENABLING US TO MOVE FASTER TO HELP DELIVER NEW EXPERIENCES TO OUR CUSTOMERS. THREATS IS A GOOD EXAMPLE OF THAT.
THAT'S SOMETHING WE BUILT WITH THE SMALLER TEAM ON A TIGHTER TIMELINE AND IT IS A GOOD REFLECTION FOR THE YEAR OF EFFICIENCY PAYING FOR US. THE LAST THING I WANT TO HIGHLIGHT FROM 2024 WE HAVE COMPELLING OPPORTUNITIES TO INVEST IN. WE TALKED ABOUT AI INVESTMENTS, WE TALKED ABOUT HIRING TOP-TIER TALENT AS WE EVOLVE OUR WORKFORCE INTO A MORE TECHNICAL MIX. IN OUR VISION FOR THE METAVERSE. ED: AI RECOMMENDATIONS ON THE TIMELINE TO HAVE A REAL IMPACT ON ENGAGEMENT ON THE FACEBOOK PLATFORM. HOW MUCH IS THAT A DRIVER ON THE FORECAST OF 45 BILLION IN SALES? SUSAN: I WANT TO SAY WE HAVE BEEN INVESTING IN AI FOR A LONG TIME. WE USE THE TERM CORE AI WHICH ARE THE FOUNDATION OF OUR RECOMMENDATIONS FOR THE CONTENT YOU SEE AS LONG AS THE AD -- AS WELL AS THE ADS. ONE OF THE BIG DRIVERS OF
GROWTH THAT STRONG ON OUR PLATFORMS AND INCREMENTAL IS AROUND RECOMMENDING CONTENT FROM ACCOUNTS YOU DON'T ALREADY FOLLOW. THAT HAS REALLY BEEN GOOD FOR CORE ENGAGEMENT TRENDS IN THE AI INVESTMENTS AS WE PUT CAPACITY TOWARDS OUR ODD RANKING. I THINK THAT'S TRANSLATING BOTH INTO THE RESULTS YOU HAVE SEEN. THAT FACTORS INTO OUR GUIDANCE ALONG WITH THE RANGE OF POSSIBLE MACROECONOMIC OUTCOMES. WE ARE REALLY EXCITED ABOUT A NEW OPPORTUNITY AHEAD OF US IN THE GEN AI SPACE.
MARK TALKED ABOUT THE THINGS WE ARE WORKING WITH ON THE CALL YESTERDAY. MAKING IT EASIER FOR PEOPLE TO CREATE MORE INDIVIDUALIZED CONTENT AND MAKING IT EASIER FOR BUSINESSES TO COMMUNICATE WITH THE CONSUMERS THEY WANT TO REACH. THAT IT HAS NOT FACTORED INTO OUR REVENUE GUIDANCE OR OUTLOOK IN ANY MEANINGFUL WAY BUT IT IS SOMETHING WHERE EXCITED ABOUT THE OPPORTUNITY TO BRING INCOME IMPOUNDING -- COMPOUNDING EXPERIENCES. ED:
WHY DID META CHANGE ITS MIND ABOUT CHARGING CLOUD USERS? SUSAN: I'M NOT SURE WHAT YOU MEANT BY CHANGING HER MIND. WE HAVE MADE IT MORE FREE AND WIDELY ACCESSIBLE. THERE ARE LARGE CLOUD PROVIDERS WE ARE WORKING ON BUT BROADLY SPEAKING WE EXPECT THIS TO BE FREE AND WE WANTED TO BE ACCESSIBLE TO A WIDE RANGE OF POSSIBLE USE CASES. CAROLINE: CAR PROVIDERS WILL THEY BE CHARGED ANYTHING? SUSAN: WE ARE WORKING WITH CASE SPECIFIC BUSINESSES. CAROLINE: I'M WONDERING HOW MUCH AND BOUND YOU ARE GETTING FROM CLIENTS? SUSAN: WE ARE VERY PLEASED WITH THE RISE. IT'S A STANDALONE APP WE
RELEASED EARLIER THIS MONTH AND WHERE IT IS A NEW GROWTH TERMS AS WELL AS ENGAGEMENT AND RETENTION TRENDS A IS I HAD OF WHAT WE EXPECTED. THIS IS NOT SOMETHING WE WILL MONETIZE IN THE NEAR TERM. WHEN WE LAUNCHED A PLAYBOOK AROUND THE PRODUCT FOUNDATION WORK THAT NEEDS TO BE DONE AND CORE FEATURES THAT USERS WILL ASK FOR. SCALING IT OVER TIME TO A MUCH LARGER USER BASE, FOCUSING ON DRIVING RATES AND RETENTION. IT IS A PLAYBOOK WE HAVE EXECUTED MULTIPLE TIMES AND WHERE EXCITED FOR THE OPPORTUNITY TO DO IT AGAIN HERE. ED: YOU ARE FACEBOOK EMPLOYEE 408, HOW IS THE LAUNCH OF THREADS COMPARED INTERNALLY TO BRINGING IN INSTAGRAM, WHATSAPP, THE LAUNCH OF THE HARDWARE BUSINESS AND QUEST? SUSAN: I JOINED FACEBOOK BACK IN 2008 WHEN THERE WAS AROUND 400 PEOPLE SO I HAVE SEEN US LAUNCH A LOT OF THINGS.
SOME OF THOSE EXAMPLES THAT YOU MENTIONED INSTAGRAM WERE ALREADY POPULAR WHEN WE ACQUIRED THEM. OVER THE COURSE OF THE TIME WE'VE LEARNED A LOT OF THINGS ABOUT HOW TO BRING PRODUCTS TO MARKET, THINKING ABOUT THE TRADE-OFFS BETWEEN STANDALONE APPS, WE'VE LEARNED A LOT IN OUR GROWTH PLAYBOOK ON HOW TO DRIVE ENGAGEMENT AND RETENTION. WE WILL BRING A LOT OF THOSE LESSONS THREADS. ED: CAROLINE ASKED YOU ABOUT THE INBOUND INTEREST, EXISTING ADVERTISERS SAYING WHEN CAN I PUT SOMETHING ON THE THREADS PLATFORM. I KNOW YOU ARE BEING CONSERVATIVE ABOUT THE
DEVELOPMENT AND MARK EMPHASIZED A LOT OF PRODUCT WORK NEEDS TO BE DONE. HOW DO YOU SEE THE ROADMAP TO THREADS GOING? HOW DO YOU CHANGE THE PRODUCT SO THAT IT IS MONETIZE A ABLE. SUSAN: IT IS REALLY TOO EARLY TO BE SPECIFIC ABOUT WHAT THE ADS BUSINESS ON THREATS WILL LOOK LIKE IN DETAIL.
WE ARE FOCUSED ON EXECUTING THE CONSUMER EXPERIENCE. FIRST MAKING IT A GREAT AND FRIENDLY SPACE FOR PEOPLE TO HAVE CONVERSATIONS. GROWING AT THIS SCALE, INVESTING IN THE FEATURES PEOPLE WANT AND THEN LOOKING AT MONETIZATION AT THE RIGHT TIME. CAROLINE: WE HAD A FIELD DAY THINKING ABOUT THE COMPETITIVE FORCE IN THE COMPETITION WITH TIKTOK. HOW DOES META CULTURE SPINNER HERE WHERE PEOPLE START TRENDS DO YOU HAVE THAT NOW ON META? SUSAN: WE HAVE CONSTANTLY BEEN FOCUSED ON INNOVATION AND I THINK WE HAVE BROUGHT THAT TO PAIR WITH THE EXPERIENCES IN OUR FAMILY OF APPS AND AT THE SAME TIME WHEN THERE ARE CLEAR SECULAR TRENDS IN TERMS OF FORMATS OR EXPERIENCES THAT PEOPLE ARE LOOKING FOR WE LOOK TO INTEGRATE THOSE TWO AND WE HAVE DONE A GREAT JOB ON EXECUTING ON BOTH OF THOSE FRONTS. LOOKING FORWARD, WE ARE EXCITED
ABOUT THE INNOVATION OPPORTUNITIES AHEAD OF US WITH GEN AI. AND OVER THE VERY LONG TERM WITH OUR VISION FOR LABS IN REALITY FORCE. CAROLINE: SUSAN, LET'S TALK ABOUT EVERYTHING APPS. DO YOU THINK ABOUT EVERYTHING UP? IS THERE A RACE ON TO SEE THAT WE CAN BUILD THAT IN THE U.S.
AND THAT YOU ARE A PART OF IT? SUSAN: I KNOW THERE ARE OTHER REGIONS AROUND THE WORLD WHERE APPS HAVE GONE DOWN THIS MODEL. THAT IS NOT A MODEL WE HAVE RIGHT NOW. WE HAVE NOT SEEN THAT USE CASE TO THE SAME EXTENT AND NORTH AMERICA. I WOULD SAY WE ARE INVESTED IN OPPORTUNITIES WE HAVE AHEAD OF US AND OUR FAMILY OF APPS INCLUDING THREADS.
THERE IS A LOT THAT WE CAN DO TO MAKE THE EXPERIENCE ACROSS OUR FAMILY OF APPS RICHER AND MORE ENGAGING WITH THE INVESTMENTS WE HAVE MADE ALREADY IN AI AND RECOMMENDING CONTENT THAT YOU DON'T ALREADY FOLLOW AND WE KNOW THAT HAS BROUGHT RICHER CONTENT EXPERIENCES TO PEOPLE, THIS GROWING ENGAGEMENT ACROSS APPS AND WE WILL RELEASE FEATURES OVER THE COURSE OF THE NEXT YEARS BUT WHERE EXCITED ABOUT WHERE THIS WILL BRING TO BEAR FOR THE CONSUMER EXPERIENCE AND ALSO, FOR BUSINESSES TO CONNECT WITH CONSUMERS ACROSS A FAMILY OF APPS TWO. ED: INVESTORS WERE SANGUINE ABOUT THE IDEA THAT EXPENSES COULD CREEP UP. COULD YOU TELL US WHAT YOUR PRIORITIES ARE WHETHER IS TO INVEST IN TALENT OR THE CONTENT SIDE OR THE HARDWARE SIDE? SUSAN: QUICK QUESTION. WE TALKED ABOUT THIS ON THE CALL YESTERDAY WOULD BE GAVE SOME CALL TO THE 2020 FOR OUTLOOK. THE THREE THINGS I WANT TO TALK ABOUT THEIR, FIRST WE EXPECT INFRASTRUCTURE WILL GROW. BUILDING GPU CAPACITY THAT WILL GO TOWARDS THE COURT AI AND RANKING RECOMMENDATION ENGINES ALONG WITH THE GEN AI INVESTMENTS.
THAT IS WHERE WERE INVESTING IN HARDWARE ALONG WITH INFRASTRUCTURES SUCH AS DATA CENTERS AND EQUIPMENT TO SUPPORT THAT. THE SECOND AREA IS THAT WERE EVOLVING THEIR WORKFORCE TOWARDS A TECHNICAL MIX. WE WANT TO HIRE TOP-TIER TECHNICAL TALENT WHERE WE CAN TOWARD SOME OF OUR COMPELLING OPPORTUNITIES INCLUDING AI AND MACHINE LEARNING ENGINEERS TO WORK ON THE AI EFFORTS. THUS A PLACE WHERE WE WILL BE INVESTING BUT WE WILL DO IT IN A VERY THOUGHTFUL WAY MAKING SURE WE ARE FOCUSING ON THE CORE PRIORITIES AND MAKING TRADE-OFFS WHERE APPROPRIATE.
THE THIRD THING IS ON THE REALITY BOB SIDE. THAT'S A LONG TIME HORIZON AND WE WILL BE DEPLOYING CAPITAL TOWARDS IT. CAROLINE: ARE YOU LOOKING AT THE BOND MARKET, RAISING MORE FUNDS? SUSAN: WE GENERATE ENOUGH FREE CASH FLOW RIGHT NOW FOR US TO INVEST ACROSS ORGANIC OPPORTUNITIES WE SEE IN FRONT OF US THAT ARE COMPELLING. WE HAVE BEEN RAISING US EVOLVING OUR CAPITAL STRUCTURE GOING FORWARD AND THAT IS SOMETHING WE WILL LOOK AT AND DEAL WITH A MEASURED PACE GO GOING FORWARD. IN TERMS OF THINKING OF THE CAPITAL AVAILABLE TO US NOW, WE GENERATE A LOT OF CAPITAL THAT WERE LOOKING TO ALLOCATE ACROSS ORGANIC OPPORTUNITIES WE HAVE. AND THEN OF COURSE, SHAREHOLDER
RETURNS. ED: HOW DO YOU AND MARK SPLIT UP RESPONSIBILITIES, WHAT IS THIS -- WHAT IS IT LIKE WORKING WITH MARK? SUSAN: I'VE HAD THE PRIVILEGE OF WORKING WITH MARK FOR 15 YEARS. AS THE CEO HE SHEPHERDS THE PRODUCT ROADMAP AND HAS DEFINED THE LONG-TERM VISION FOR A LOT OF THE THINGS WE ARE INVESTING IN WITH INCREDIBLY AMBITIOUS GOALS AND THAT IS THE MOTIVATOR FOR US. I TRY TO MAKE SURE WE HAVE THE FINANCIAL FRAMEWORK AND TARGETS THAT WILL ENABLE US TO INVEST AGAINST THOSE THINGS. INNOVATION IS NOT FREE AND THAT IS SOMETHING WE ARE MINDFUL OF AND RECOGNIZE AGAINST SOME OF OUR LONG AMBITIOUS WE HAVE THE RIGHT TO PUT CAPITAL TORSO THINGS. I WILL SAY HAVING WORKED WITH MARK IS THAT HE IS TREMENDOUS AT ADAPTING TO THE TIME THAT WE ARE IN. WHETHER THAT WAS LEADING A 400
PURSES START UP WHEN I JOINED. OVERSEEING OUR TRANSITION TO THE PUBLIC MARKETS DURING THE SHIFT TO MOBILE OR THIS PAST YEAR HELPING US RETOOL OUR COST STRUCTURE IN THE WAY WE OPERATE IN THE MEETING ON THE YEAR OF EFFICIENCY. THE MARKET IS GOOD AT MAKING HARD DECISIONS AND ACTING ON THEM WITH CONVICTION AND MOVING FORWARD. ED:
ED: TIME FOR VC'S SPOTLIGHT, ENERGIZE BENCHES RACES 300 MILLION FOR A NEW GROWTH FUND. IT COMES AT A TIME WHERE STARTUPS ARE REELING, CLIMATE TECH HAS DIPPED. JOHN TOUGH JOINS US NOW. WE ALWAYS ASK THIS, HOW QUICKLY DID YOU REALLY -- RAISE THAT 300 MILLION? JOHN: THE FUNDING ENVIRONMENT HAS BEEN DIFFERENT THAN THE PREVIOUS CYCLE. FORTUNATELY, THE LIMITED PARTNER INTEREST IN CLIMATE AND SUSTAINABILITY HAS STAYED. BOTH DOMESTIC AND INTERNATIONAL LIMITED PARTNERS HAVE BUOYED THE CAPITAL BASE. IT TOOK AS LONG AS IT EXPECTED. CAROLINE:
INTERESTING AS YOU SAY INTERNATIONAL, WHILE CLIMATE FOCUS HAS GOTTEN POLITICIZED, OVER IN EUROPE WE ARE STILL VERY FOCUSED. IS THAT WHERE YOU ARE SEEING SOME OF THE STARTUPS YOU WANT TO LOOK MONEY TO PUT WORK INTO AS WELL? JOHN: THE CLIMATE OPPORTUNITY IS GLOBAL WHICH IS EXCITING. ENERGIZE B INVEST AT THE INTERSECTION OF SOFTWARE AND CLIMATE. BOTH OF THOSE ARE INTERNATIONAL MEGATRENDS IN CERTAIN COUNTRIES AND REGIONS ARE AHEAD OF OTHERS. EUROPE AS WE THINK ABOUT IT IS
A FEW YEARS AHEAD OF THE U.S. AND SUSTAINABLE TRENDS AND THAT HAS RESULTED IN ABOUT A THIRD OF OUR PORTFOLIO COMING FROM EUROPE AS OPPOSED TO NORTH AMERICA. ED: IS THERE ANYTHING DISTINCT AND CLIMATE RELATED SOFTWARE ABOUT VALUATIONS? HAVE THEY COME DOWN OR GONE UP? JOHN: THE CLIMATE THEME OVERALL HAS REMAINED ELEVATED AND WE ARE SEEING A NUMBER OF CAPITAL PARTNERS ATTEMPT TO ENTER THE SPACE.
CLIMATE SOFTWARE, WE HAVE SEEN SOME NEW INSURANCE BUT IS FROM THE FRENCH. WE BELIEVE THIS IS THE THEME YOU HAVE TO HAVE DOMAIN EXPERTISE. A LOT OF OUR TEAM COME FROM SOLAR, WIND, BATTERY.
WE THOUGHT ABOUT VALUATIONS, WE KNOW THE INDUSTRY SO WERE INVESTING FOR THE GREAT RETURN. WHILE SOME FIRMS HAVE COME IN WITH LOFTY VALUATIONS THOSE WHO HAVE BEEN AROUND FOR A CYCLE OR TWO LIKE US, WE HAVE MAINTAINED A STEADY CADENCE. ED: JOHN HAS RAISED 300 MILLION AND HE WANTS TO TALK ABOUT CLIMATE SOFTWARE. REALLY, THERE IS ONE SPACE WE WANT TO TALK TO HIM ABOUT. CAROLINE:
ARTIFICIAL INTELLIGENCE, HOW MUCH IS THE DRIVING THE COMPANY'S WANT TO INVEST IN OR A KEY THEME OF WHAT YOU HAVE TO INVEST IN? JOHN: IS THE TOPIC OF THE YEAR. EVERY COMPANY IN OUR PORTFOLIO WE ALSO HAVE THEIR ADOPTING THESE TOOLS TO MAKE SOLUTIONS BETTER. ABOUT HALF OF OUR PORTFOLIO WAS ALREADY USING ARTIFICIAL INTELLIGENCE TOOLS PRIOR TO THIS YEAR. THE FUNNY PART IS, THE CUSTOMER DIDN'T EVEN KNOW. WHEN YOU ARE SELLING INDUSTRIAL OPERATIONS, AGRICULTURAL, THEY WANT THE PRODUCT TO WORK.
DID THEY CARE ABOUT IS SOLAR SOFTWARE TOOL USING AI BUT THEY WANTED TO WORK. LUCKILY FOR US, A LOT OF OUR TALENT COMES FROM INCREDIBLE INSTITUTIONS THAT WERE TEACHING THIS YEARS AGO. IT IS HERE TODAY IN A FAR MORE HANDS THAN MOST EXPECT IN CREATING TREMENDOUS VALUE AND WERE EXCITED TO FUND COMPANIES THAT USE THOSE TOOLS TO DRIVE CLIMATE INNOVATION. CAROLINE: DWELL ON THE STARTUP SCENE
RIGHT NOW. IT HAS BEEN UNDER STRESS AND INTERESTINGLY YOUR RAISING THIS FUND RIGHT NOW. WHAT ABOUT THE AMOUNT OF COMPANIES BEING BORN? THERE WAS TALK ABOUT TALENT BEING LET GO AND BUILDING BUSINESSES, INSIDE HAPPENING? JOHN: THERE'S A GENERATION OF EMPLOYEES WHO WANT TO WORK ON THINGS THAT MATTER. WHEN YOU WAKE UP IN IS 20 DEGREES ABOVE NORMAL IT IS RIGHT IN YOUR FACE. THE CLIMATE PROBLEM IS ATTRACTING TALENT.
WHILE THERE ARE LAYOFFS ACROSS TECH WE HAVE HUNDREDS OF POSITIONS OPEN AND WE HOPE FOR THOU TO GROW. ED: TECH INVESTORS ASSESS A PORTFOLIO COMPANY BY ITS ABILITY TO TAP INTO PUBLIC SECTOR FUNDS. IT IS NOT A PRIORITY FOR US -- YOU? JOHN: WE LOVE IT. WE LOVE THAT IT IS HERE BUT OUR INVESTMENT CRITERION DOES NOT DEPEND ON KNIGHT CAPITAL TO MAKE A SUCCESSFUL BUSINESS. WE BELIEVE A LOT OF THE TOOLS WE NEED TO FIGHT THE CLIMATE CRISIS ARE HERE TODAY. THE COST OF WIND, SOLAR, BATTERIES.
IT IS THE SKILLS THAT EVEN FIVE YEARS AGO PEOPLE COULD IMAGINE. WE LOOK FOR SOFTWARE COMPANIES THAT CAN HELP THOSE COMPANIES SCALE OUR PRICE POINTS THAT ARE ALREADY EFFECTIVE. IT'S NICE TO HAVE SOME NEW TECHNOLOGIES LIKE NUCLEAR AND HYDROGEN BUT WE NEED SOFTWARE THAT CAN DRIVE RETURNS TODAY.
ED: WHY THE RENAME, CHANGING A SINGLE WORD IN THE NAME? JOHN: IT IS A SMALL CHANGE BUT I HAS A BIG IMPACT. FOR US, I HAVE BEEN IN THIS INDUSTRY FOR 15 YEARS. THE LAST TIME THERE WAS A DIP IN FUNDING THE WHOLE MARKET LOVE. WE WANTED TO SEND A SIGNAL TO OUR STAKEHOLDERS WHICH ARE OF LIMITED PARTNERS AND OUR TEAM, WE WILL BE HERE FROM VENTURE TO GROWTH AND BEYOND WE THINK THIS CASE IS BIG ENOUGH TO SUPPORT TENS OF HUNDRED BILLION DOLLAR COMPANIES. ED: JOHN TOUGH, THANK YOU FOR YOUR TIME. CAROLINE: THAT DOES IT FROM WHAT WAS THE REUNITED TEAM TODAY.
IT FELT TOO SHORT. ED: IT HAS BEEN A FANTASTIC TEAM WITH YOU CAROLYN. WE WILL BE BACK TOGETHER IN THE COMING WEEKS.
YOU CAN LISTEN TO EVERYTHING ON THE PODCAST WHEREVER YOU GET YOUR PODCAST. APPLE, SPOTIFY AND HIERARCH, INSIGHTFUL CONVERSATION WITH THE META CFO. SOMETIMES THE UNSUNG HERO INVOLVED IN THE STRATEGY IN MORE WAYS YOU REALIZE. FROM HERE IN SAN FRANCISCO AND IN NEW YORK WITH CAROLINE HYDE. THIS IS BLOOMBERG TECHNOLOGY.
2023-07-28 21:24
