Bloomberg Technology 08/21/2023
>> 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. CAROLINE: I'M CAROLINE HYDE. BLOOMBRG TECHNOLOGY. THIS IS BLOOMBRG TECHNOLOGY. -- THIS IS BLOOMBRG TECHNOLOGY. WE KEITH RABOIS WILL SIT DOWN WITH -- WE WILL SIT KEITH RABOIS DOWN WITH CASH WE WILL SIT DOWN WITH -- WE WILL SIT DOWN WITH KEITH RABOIS. IT IS A SUMMER DAY IN THE MARKETS. ABIGAIL: WE HAVE RELATIVELY SMALL MOVES FOR THE INDEX. THE S&P 500 HAS FLIPPED LOWER
SO WE MAY BE LOOKING AT THE LONGEST LOSING STREAK OF THE YEAR. A PIECE OF IT HAS TO DO WITH SOME OF THE BIG TECH LAGGARDS WE ARE LOOKING AT. A BRIGHT SPOT IS APOLLO ALTO NETWORKS, STOCK SOARING, THE BEST DAY IN A FEW YEARS. GUIDANCE STRONG. INVESTORS EXCITED FOR THAT. THEY REPORTED AFTER THE ABOUT
FRIDAY A VERY UNUSUAL THING TO DO. THAT'S THE QUARTER WAS CLEAN AND BETTER THAN EXPECTED, IT IS NOT BEING REPORTED. NVIDIA COME UP 4.7%, ANALYSTS RAISING PRICE TARGETS.
APPLE DABBLES A LITTLE. DESPITE THE FACT THAT IT IS A SMALL DECLINE, WITH A BIGGER DECLINE, INTEL DOWN 1.6%, THEY HAVE CUT 146 POSITIONS IN CALIFORNIA. IT IS THE DEVELOPER CONFERENCE.
ELLA TOOK TO OTHER BIG STOCKS BEING DOWN, IT IS PART OF A TREND BECAUSE WE HAD THE NASDAQ 100 HEADING LOWER IN THE MONTH OF AUGUST, HEADING TO ITS WORST MONTH OF THE YEAR SINCE DECEMBER, DOWN 6.3%, A LOT HAVING TO DO WITH THE CORNERS THE COMPANY'S REPORTED IN TERMS OF GROSS BEING NOT AS EXCITING. AND FROM A MACRO STANDPOINT, YIELDS ARE HIGHER AS CENTRAL BANKS CONTINUE TO CONTEND WITH INFLATION.
THE BLOOMBERG DOLLAR INDEX OF 3% IN A MONTH IF YOU CAN BELIEVE IT. THAT WILL PRESSURE STOCKS HAVE BEEN UP. NVIDIA, WE LOOK AT THIS LAST FRIDAY, IT HAS BEEN UP AS MUCH AS 200 20% OR 230% ON THE YEAR ON THE AI BOOM.
THEY WERE HEARD THE CUTE -- REPORTED THE HUGE QUARTER LAST YEAR. IT WAS BASICALLY 50% HIGHER THAN EXPECTED, BIG NUMBERS. THE NEXT DAY, THE ADDED 143 BILLION DOLLARS, THE MOST FROM A PUBLICLY TRADED COMPANY. YOU CAN SEE THE DIFFERENCE BETWEEN NVIDIA IN THE S&P 500. WILL THE RESULTS PLAY OUT IN A BULLISH WEIGHT WHEN THEY REPORT OR WORTHY GAP NARROW? CAROLINE: LET'S TALK ABOUT A PRIVATE COMPANY THAT WILL BECOME PUBLIC. THE DESIGNER OF CHIPS, ARM
EXPECTED TO FILE PAPERWORK FOR ITS IPO, REPORTED TO BE THE BIGGEST OF THE YEAR. LET'S GO TO LEANNA BAKER FOR THE LATEST. WHEN WE ARE LOOKING TOWARDS THESE NUMBERS, HOW MUCH CLARITY WILL BE GET ON THE ACTUAL AMOUNT THEY WILL BE SELLING ON THE VALUATION? LEANNA: THEY ARE GOOD QUESTIONS AND WE WILL NOT GET THE ANSWERS IN THE FILING. FOR EXAMPLE, MUCH ARE THEY
TRYING TO RAISE, WE HAVE REPORTED A BILLION TO $10 BILLION BUT NOW WE ARE HEARING IT COULD BE LOWER THAN THAT FOR SOFTBANK IS NOT SELLING AS MUCH ORIGINALLY RAID THERE WAS INSIDER TRANSACTION WHERE THE FUND THAT OWNS 25% SOLD THEIR. SO THEY ARE NO LONGER A SELLER. IT IS A LITTLE COMPLICATED AND THAT LOOKS LIKE THEY WON'T NEED AS MUCH PROCEEDS AS BEFORE. CAROLINE: VISION FUND SAW A BIT OF AN UPLIFT.
LIANA: 64 BILLION DOLLARS WHICH WAS AN INTERESTING NUMBER. THEY HAVE DOUBLED THEIR MONEY. THAT IS GREAT FOR SAUDI ARABIA AND WHOEVER IS INVOLVED IN THE VISION FUND. BUT WHAT DOES THAT MEAN FOR ARMS VALUATION? TO ME IT WOULD SEEM THEY NOW NEED TO GET ABOVE $64 BILLION ALTHOUGH THAT IS JUST AN INSIDER MARK ON IT. THERE WILL BE A LOT OF QUESTIONS , HOW DO YOU VALUE THIS COMPANY AND HOW DOES IT VALUE AGAINST ITS PEERS. WE HAVE REPORTED ON FINANCIALS IN TOTAL REVENUE IS DOWN FROM LAST YEAR. THERE WILL BE MORE TO UNCOVER AND UNPACK IN THE FILING. CAROLINE:
LET'S GET TO THE NITTY-GRITTY OF THE BUSINESS MODEL READ THIS COMPANY HELPS BASICALLY DEFINE A BLUEPRINT FOR A SHIP AND UNDERSTAND HOW PRODUCTIVE IT CAN BE. IT IS SO WEIGHTED TO THE MOBILE PHONE INDUSTRY AND THAT HIS -- THAT HAS BEEN WHAT HAS BEEN SLOWING. LIANA: MOBILE AND ARM IS UBIQUITOUS. BUT THE CEO HAS BEEN TRYING TO
DIVERSIFIED FASHION DIVERSIFY ARMS INTO DATA AND SERVERS. -- TWO DIVERSIFY ARM INTO DATA AND SERVERS. WE WON'T KNOW WHAT THE FUTURE HOLDS BUT WE WILL BE TRYING TO FIGURE THAT OUT. CAROLINE:
TRYING TO GET INTO THE HEAD OF WHAT SOFTBANK WOULD HOLD BACK A LITTLE BIT FOR. COULD THEY GET BETTER VALUATIONS LATER, WHICH IS STILL A TESTING MARKET. LIANA: WE LOOK LIKE SOFTBANK WOULD LOOK FOR 10% OF THE COMPANY. THAT WOULD SEEM THEY HAVEN'T OWNED IT SINCE 2016 AND THEY NEED A WIN. THEY ARE NOT WILLING TO JUST GET RID OF THIS. ALTHOUGH THEY DID TRY TO SELL
IT TO NVIDIA. CAROLINE: THE REGULATION WAS A HEADACHE FOR EVERYONE. LET'S GET AN UPDATE OF WHAT THIS SAYS ABOUT THE BROADER IPO MARKET. AN EQUITY MARKET. I DON'T THINK I CAN ACCESS EQUITY BECAUSE ARE THAT MANY SECONDARY SALES GOING ON RIGHT NOW BUT ULTIMATELY WHAT HAS DESIRE BEEN LIKE TO BE BUYING COMPANY EQUITY IN THE PRIVATE MARKET? >> WE HAVE SEEN HISTORICALLY THAT TRANSACTIONS ON THE SECONDARY MARKET COINCIDE WITH WHAT WE SEE IN THE SECONDARY MARKET. THINGS HAVE BEEN SLOWER OVER
THE LAST YEAR AND A HALF. A NUMBER OF OTHER COMPANIES WILL TEST THE MARKET BUT IT IS WORTH SAYING THAT ARM IS NOT YOUR CLASSIC MEASURE BACKED COMPANY. IT WAS A COMPANY THAT WAS PUBLIC UNTIL 2016. IT IS A VERY DIFFERENT KIND OF BEAST. CAROLINE: ONE THAT I AM SURE MANY ARE RUBBING THEIR HANDS WITH GLEE TO GET BACK INTO THE FINANCIALS OF THIS BUSINESS. I AM INTERESTED WHAT WE ARE HOPING FOR IF THIS IPO GOES SUCCESSFULLY WHO IS THEIR STANDING BY? PHIL: UNFORTUNATELY, I CAN'T GIVE SPECIFIC NAMES BECAUSE WE WORK WITH LETTER THE COMPANIES BUT I WOULD SAY THAT WHAT INVESTORS WILL BE LOOKING AT IS HOW SUCCESSFUL IS THIS IPO IN SEPTEMBER AND IS THAT MEAN WE HAVE TIME TO GET OUR AFFAIRS IN ORDER? HISTORICALLY, THE WEEKS LEADING UP TO LABOR DAY HAVE BEEN QUIET. I WOULD IMAGINE IF WE SEE A
COUPLE VENTURE BACKED TECH IPOS WE WILL SEE FILING AND PAPERWORK BETWEEN NOW AND LABOR DAY BECAUSE THAT IS THE ONLY WAY THESE COMPANIES WILL BE READY ENOUGH TO LIST AND START TRADING BY SAY OCTOBER OR NOVEMBER BEFORE IT GETS TO THE NEXT QUIET SEASON. CAROLINE: READING THE TEA LEAVES, THERE HAVE BEEN SOME RELATIVELY SUCCESSFUL INITIAL PUBLIC OFFERINGS. REMIND US OF WHAT THE SIGNAL IS FOR THE REST OF THE MARKET. PHIL: IN THE LAST TWO YEARS IT HAS BEEN INCREDIBLY QUIET ON THE TECH FRONT INSTEAD OF -- DESPITE SOME SPINOUTS.
WE HAVE SEEN SOME SPINOUTS WORK. ARM IS GOING TO BE CLOSER TO TECH. ARM WAS ACTUALLY STARTED BY AN INVESTMENT FIRM SO IT HAS SILICON VALLEY WRITTEN ALL OVER IT. HOW MUCH DO PEOPLE THINK AI IS WORTH AND HOW IS IT VALUABLE TO YOU? NVIDIA HAS INDICATED IT IS WORTH A LOT. IF THERE ARE OTHER COMPANIES BUILDING ON TOP OF THE NEW AI FOUNDATION THEY CAN PERFORM WELL IN THIS PARK IT. -- MARKET.
IN THE LAST TWO PLUS YEARS WE HAVEN'T SEEN IN IPO. GROWTH FUNDINGS ARE DOWN. THERE ARE A LOT OF INVESTMENTS AND FOUNDERS AND CEOS EAGER TO SEE IF THIS IS A NEW CHANNEL FOR FUNDRAISING. CAROLINE: A FRUSTRATING HAS IT BEEN FOR THOSE WHO NEED A LIQUIDITY EVENT, STARTUPS AND NEEDING TO MANAGE THEIR LIFE AND BUY A HOME AND PUT KIDS THROUGH SCHOOL? PHIL: SOMETIMES THEY ARE NO LONGER WORKING AT THE COMPANY AND THAT IS EVEN MORE FRUSTRATING. THE COMBINATION OF LAYOFFS AND EQUITIES -- IN EQUITIES, AND WE HEAR THEM DESPERATELY LOOKING FOR EQUITIES. THEY ARE TALKING TO THEIR COMPANIES AND SHAREHOLDERS ABOUT WAYS TO GET TENDER OFFERS OR FUTURE IPO'S.
IT IS SOMETHING WE HEAR A LOT. THERE IS DISCONNECT ON WHAT MANAGEMENT THINK IS NOT THE ISSUE AND HOW EMPLOYEES ARE ASKING CAN WE SELL SHARES. THERE IS A BIT OF A BOILING SENSATION HAPPENING AMONGST EMPLOYEES AND OPTIMISTIC WE WILL SEE A BIT OF THAT. CAROLINE:
YOU ARE ALL ABOUT ACCESS TO STARTUPS, PRIVATE COMPANIES WITH ACCREDITED INVESTORS. WHAT ABOUT THE GLOBAL NATURE OF THAT NOW? WE ARE IN A TIME OF GEOPOLITICAL TENSION TO PUT IT MILDLY BETWEEN THE U.S. AND CHINA. WHICH DO YOU THINK WE WILL SEE A GLOBAL INBOUND INTEREST IN BUYING U.S. COMPANIES OR YOU KATE COMPANIES -- U.K. COMPANIES? PHIL: WILL WORK WITH INDIVIDUAL INVESTORS THAT INVEST ON THAT PLATFORM FROM 90 COUNTRIES.
THERE IS A LARGE CONCENTRATION AMONGST THE U.S. AND THE U.K., WE ARE EAGER TO SEE MORE U.S. COMPANIES RAKING THROUGH AND WORKING ON HARD TECHNOLOGY PROBLEMS. IT IS REALLY EXCITING. WE HAVE SEEN THE EMERGENCE OF TECH, DIFFICULT PROBLEMS COMPANIES ARE TRYING TO SOLVE.
THAT HAS PEAKED THE CURIOSITY OF PEOPLE AROUND THE WORLD. WE SEE INTERESTING U.S.-BASED COMPANIES IN CYBERSECURITY AND AI, THE MOST COMMON THEMES WHICH HAS BEEN SURPRISING GIVEN THE AFTER MENTIONED GEOPOLITICAL RISKS. ULTIMATELY, OUR GOAL IS TO BRING THIS MARKET OPPORTUNITY TO NOT JUST THE WEALTHY BUT EVERYONE. CAROLINE:
THANKS SO MUCH FOR GIVING US YOUR EXPERTISE. PHIL HAZLETT, COFOUNDER OF EQUITYZEN. TROPICAL STORM HILLARY, WHETHER EVENT IN CALIFORNIA KNOCKING OUT POWER ACROSS PARTS OF THE STATE. THE SOUTHWEST REGION, HISTORIC AMOUNT OF RAINFALL EXPECTED TO CAUSE LIFE-THREATENING TO CATASTROPHIC FLOODS WITH MUDSLIDES. THIS IS ACCORDING TO THE NATIONAL HURRICANE CENTER. FROM NEW YORK, THIS IS BLOOMBRG TECHNOLOGY.
CAROLINE: CHINA, A SLUGGISH ECONOMY WITH SETBACKS AND A KEY SEGMENT OF ITS BUSINESS CAUSED THE LOWER EXPECTATIONS. BAIDU HAS HAD A BIG RUN UP. >> BROKERS HAVE LOWERED EXPECTATIONS. THEY EXPECT A SLOWDOWN IN THE INCOME GROWTH. THIS IS A COMBINATION OF MANY THINGS. BAIDU WAS ONE OF THE FIRST WILL RECEIVE INTO THE AI SPACE.
IT CREATED THE CHATGPT LINK AND THEN DISAPPOINTMENTS ARE PILING UP IN THE MAIN KEY REASON -- AND THE KEY REASON IS CONSUMER CONSUMPTION, FINDING IT HARD FOR PEOPLE TO USE THE MACHINE. ANALYSTS ARE SAYING, MAYBE THIS ISN'T AS PROMISING AS WE IMAGINED AND THEY ARE SLOWER AT LOWER -- SLOWLY LOWERING EXPECTATIONS. OPTIONS TRADERS ARE MOVING. THE CALL RATIO IS A SIGN OF BEARISH SENTIMENT IS RISING THIS MONTH. PEOPLE ARE CONDITIONING -- POSITIONING AGAINST THAT. MAYBE EARNINGS WILL SURPRISE US. CAROLINE: THEY HAVE BEEN NERVOUS , HIS NUMBERS BECAUSE THERE HAS BEEN MORE PROFIT TO TAKE OFF THE TABLE AS IT COMES TO BAIDU. IT IS UP 13% -- ISABELLE: IT IS UP 13% YEAR TO DATE.
BAIDU MAYBE A LITTLE AHEAD ITS COMPETITORS ARE CLOSELY BEHIND, ALIBABA AND OTHERS CREATING THEIR OWN AI CHATGPT. YOU'RE THE FIRST MOVER BUT YOU HAVE TO MAINTAIN THAT. IF SOMEONE LEAPS OVER YOU, THEN THAT IS GOING TO SPELL TROUBLE WITH YOU. IT IS NOT LOOKING THAT GOOD. CAROLINE: IT IS SUCH EARLY DAYS WHEN IT COMES TO GENERATIVE AI BUT WHAT IS REVENUE FOR BAIDU IS THE ACTUAL CHINESE ECONOMY SPENDING ON AI RELATED PRODUCTS. HOW HAVE WE SEEN THAT CONCERNING THE MACROECONOMY? ISABELLE: IT IS JUST ONE ARM. THEY HAVE A CLOUD ARM BUT IT IS NOT LOOKING GOOD FOR CHINA.
RICES ARE DOWN -- PRICES ARE DOWN. ONE IN FIVE YOUNG PEOPLE DON'T HAVE JOBS. IT IS NOT LOOKING AT GOOD OVERALL IN THE BIG REBOUND PEOPLE WORK OPEN -- HOPING -- PEOPLE WERE HOPING TO SEE HAS NOT PANNED OUT.
YOU ALSO DON'T WANT TO BE ALL THE GLOOM AND DOOM. IT MIGHT BE TO RELATE. YOU BIGGEST FACTOR -- SECTOR, THE TECH SECTOR IS BEING AFFECTED. A LOT OF INTERNATIONAL PEOPLE USE WHATEVER PRODUCTS SILICON VALLEY MAKES BUT NOT THE SAME IN CHINA. A LOT OF PRODUCTS ARE USED DOMESTICALLY. CAROLINE: REALLY TO THE POINT THAT SOME OF THE GDP FIGURES, DOWNGRADING WITH A THINK CHINA IS GOING TO GO.
BRILLIANT TO GET ISABELLE AHEAD OF THIS. NAVER WHO DOMINATES SOUTH KOREA AND CHINA'S AI. THE COMPANY IS EXPECTED TO TAKE THE LID OFF SEVERAL GENERATIVE AI SERVICES AS SOON THIS WEEK. COMING UP, WE WILL TALK ABOUT TO EMPLOYEES RESPONSIBLE FOR A DATA BREACH FROM TESLA. NIKOLAI STOCK -- NICO KLA IS A DOWN GRAPPLING WITH THE FALLOUT FROM BATTERIES. THIS IS MERCK TECHNOLOGY.
CAROLINE: AFTER PLUNGING, ANALYSTS EXPECTING WERNER -- FURTHER DECLINES AND MAINTAINS HIS RATING ON THE STOCK. BROADCOM'S $61 MILLION TAKEOVER OF VMWARE WAS CLEARED BY THE U.K. THEY CONFIRM THE PROVISIONAL DECISION TO CLEAR THE DEAL AFTER FINDING THE COMPETITION IN KEY PRODUCTS. LET'S TALK ABOUT THE TESLA
DATED REACH BACK IN MAY IMPACTING 35,000 PEOPLE AND INCLUDED EMPLOYEE RELATED RECORDS. POSTED FROM THE OFFICE OF THE MAINE ATTORNEY GENERAL, THE BREACH WAS THE RESULT OF INSIDER WRONGDOING. TESLA SAYS TO FORMER EMPLOYEES SHARED INFORMATION WITH A FOREIGN MEDIA OUTLET. LET'S GET THE DETAILS. IT WAS A GERMAN PUBLICATION THAT CONTACTED TESLA. WHAT DO YOU THINK WAS BEING SHARED AND BY WHO? >> PLATE INFORMATION, THINGS LIKE NAMES AND ADDRESSES AND SOCIAL SECURITY NUMBERS. THE STATE OF MAINE IS FEW AND THE UNITED STATES THAT REGULARLY POSTS DATA BREACH INFORMATION. TESLA IS NOW INFORMING FORMER
AND CURRENT EMPLOYEES THAT THEY WERE IMPACTED. APPARENTLY NINE OF THEM LIVE IN THE STATE OF MAINE. THEY ARE SAYING TO FORMER EMPLOYEES SHARED DATA AND TESLA HAS TAKEN LEGAL ACTION AGAINST THEM. THE THING I DON'T KNOW IS WHERE EXACTLY THE FORMER EMPLOYEES LIVE. I ASSUME IT IS IN EUROPE. I AM GUESSING IT COULD BE IN GERMANY BUT IT DOES NOT APPEAR THESE FOLKS ARE IN THE UNITED STATES. I CAN'T FIND ANY RECORD OF A LAWSUIT BEING FILED IN THE U.S.
WHERE ARE WONDERING, WHERE IS THE LAWSUIT FOR THE EMPLOYEES AND IS THERE ANY KIND OF EU GDPR RESTRICTION COMING? CAROLINE: TESLA HAS SAID THEY HAVE COOPERATED. IS THERE ANY RAMIFICATION OF WHAT THEY SHOULD HAVE BEEN DOING OR COULD HAVE BEEN DOING. INTERNAL WRONGDOING MUST BE HARD TO PREVENT.
DANA: IT SOUNDS LIKE INTERNAL WRONGDOING WITH TWO EMPLOYEES BASICALLY SHARING EMPLOYEE DATA. NO CONSUMERS WERE IMPACTED BY THIS THAT WE KNOW OF. IT SEEMS TO BE IMPACTING TESLA EMPLOYEES. WHY THERE WERE NO CONTROLS AND HOW THE EMPLOYEES HAD ACCESS TO THE DATABASE I AM NOT ENTIRELY CLEAR. THE TESLA STATEMENT IS VAGUE ON
COOPERATING WITH LAW ENFORCEMENT. ARMY TALKING ABOUT THE REGULATORY 30'S, THE EU, OR ANY -- GERMANY? CAROLINE: AND AUTOPILOT, THE DRIVER ASSISTANCE SEEMED TO BE FLAGGED IN THE DATA THAT WAS LEAKED WHY IS THAT SOME IMPORTANT TO TESLA? DANA: AUTOPILOT IS A PART OF TESLA'S VALUATION. ELON MUSK SAID THE FUTURE OF SELF-DRIVING IS A BIG PART OF THE COMPANY. THIS DATA BREACH COVERED ALL KINDS OF THINGS AND WHAT WE LEARNED ON FRIDAY IS MORE ABOUT THE EMPLOYEE INFORMATION. AUTOPILOT IS IMPORTANT TO INVESTORS AND A BIG DIFFERENTIATOR. ELECTRIC VEHICLES ARE NOW
BECOMING MORE COMMON BUT TESLA'S AUTOPILOT IS SOMETHING TESLA STILL MARKETS AS BEING SOMETHING THAT SETS IT APART FROM OTHER EV'S. CAROLINE: CONCERNING JUST HELP GLOBAL TESLA IS AN SHINING A LIGHT ON ACCESS PERHAPS BY CHINA AS WELL. WE THANK YOU FOR COMING TO US ON THAT DATA BREACH AND THE NUANCES WITHIN IT. WE ARE GOING TO BE SPEAKING
WITH KEITH RABOIS. HE IS ROLLING OUT NEW PRODUCTS TO E-COMMERCE BUSINESS OWNERS. PALO ALTO NETWORKS, THE SECURITY FIRM JUMPING THE MOST IN TWO YEARS AFTER PROJECTING STRONGER BILLINGS FOR THE YEAR. CAROLINE: WELCOME BACK TO BLOOMBRG TECHNOLOGY. LET'S GET A CHECK ON THE
MARKETS. SOME ARE TRADING. BIG TECH MANAGING TO SHAKE OFF WHAT IS A SETTLE FOR THE BOND MARKET. THE NASDAQ IS UP ALMOST .9%. 10 YEAR YIELD IS UP EIGHT BASIS POINTS.
INDEED WE ARE SEEING A SELLOFF ACROSS THE CURVE. WE ARE WORRIED ABOUT WHAT JACKSON HOLE PROVIDES AS CHAIRMAN POWELL DISCUSSES THE DIRECTION OF RATES. WHAT DOES IT MEAN FOR RISK ASSETS? THANKFULLY IT MEANS MAYBE WE SUSTAINED TO THE DOWNSIDE. WE HAVE BROKEN OUT OF THE CALM RANGE WE HAVE HAD FOR THE LAST MONTH OR SO. WELL OFF OF THE 29,000 OR 30,000 LEVEL WE GOT USE TO. S&P AND THE DOW, LOOKING AT NVIDIA, THE OUTPERFORMER OF THE DAY, UP ALMOST 6% ON THE DAY AS WE SEE THE OPTIMISM AROUND WEDNESDAY AND THE FACT THAT THESE ARE COMING OUT AND HOW MUCH HAS AI DRIVEN THE BOTTOM LINE.
PALO ALTO NETWORKS, THE RELIEF THIS ENDED UP BEING PAIRED THE CEO APOLOGIZED FRIDAY ON THE CALL BECAUSE THEY PUT NUMBERS OUT AFTER THE BELL TRYING TO ANNOUNCED SOMETHING DIFFICULT TO UNDERSTAND AND DIGEST AND THEY HAD EVENT AND WANTED TO HAVE ANALYSTS GET AHEAD OF THAT. THEY HAVE MANAGED TO SHOW GOOD GROWTH FOCUSED ON AI. I AM LOOKING AT THE ADR'S OF WHAT IS A DUTCH PAYMENT GIANT, UP 9%. REMEMBER IT TUMBLED, $20 BILLION IN MARKET CAP LOST IN THE PREVIOUS WEEK BECAUSE OF EARNINGS THAT DISAPPOINTED. WHAT ABOUT PAYMENTS ASSESSING IN THE WORLD AND E-COMMERCE MORE GENERALLY AND OUR ENTHUSIASM AROUND IT? TAKING A CLOSE LOOK AT IT IS OPENSTORE.
IT IS A WAY TO SUPPORT SMALLER PLAYERS AND GIVING THEM A BOOST TO HELP THEM GROW. JOINING IS THE CEO KEITH RABOIS. ,WE LOVED THE INTRICATE DETAIL OF JUST WHO IS ON SELLING AND HOW SMALL THE RP WAS IT A SURPRISE HOW SMALL SOME OF THESE COMMERCE PAYERS ARE? KEITH: WE ALWAYS KNEW OF 2 MILLION SHOPIFY STORES, THE OH -- WHOLE PREMISE OF OPENSTORE IS THEY ARE ALLOWING THE OWNER TO TURN IT INTO A CASH FLOW AND TAKE A BREAK.
IN STUDYING THE MARKET SINCE WE HAVE BEEN IN BUSINESS, WE REALIZE 85% OF SHOPIFY SERVERS ARE VERY SMALL AND THEY DON'T HAVE THE TOOLS TO GROW TO SCALE. 85% OF BUSINESSES EARN US THAN $50,000 A YEAR. WE ARE GOING TO FIX THAT. ANYONE WHO IS EARNING $50,000 TO $500,000, WE WILL GIVE THEM ACCESS TO ALL THE TOOLS AND EXPERTISE TO GROW TO 10 X IN A FEW MONTHS. CAROLINE: AND THEN THEY GET INTO THE
SWEET SPOT. DOES YOUR SWEET SPOT CHANGE AT ALL OR DO YOU CONTINUE TO WANT TO BE LOOKING AT BUYING AND RUNNING COMPANIES THAT ARE $1 MILLION TO THE LIKES OF $10 MILLION? KEITH: BIGGEST MARKET OPPORTUNITY IS WHERE PEOPLE DON'T HAVE ACCESS TO CAPITAL AND WITH A DON'T HAVE A LOT OF LIQUIDITY OPTIONS AND CONFRONTING A CHALLENGING CHOICE, WHICH IS TO RUN A BUSINESS 24/7 FOREVER OR ALLOW US TO DRIVE THE BUSINESS THAT WILL GUARANTEE IT THEM THE CASH FLOW OR SELL THE BUSINESS AND WALK AWAY AND DO WHATEVER IS NEXT. THIS AREA HAS NEVER HAD OPPORTUNITIES BEFORE. AS YOU GROW A BUSINESS, THERE ARE OTHER OPTIONS BUT MOST PEOPLE DON'T HAVE THOSE OPTIONS AND THAT IS WHY WE EXIST. CAROLINE: YOU EXIST TO MAINLY HELP U.S.-BASED COMPANIES WHAT WOULD YOU GO GLOBAL AND LOOK AT COMPANIES THAT ARE PERHAPS INTERNATIONAL OR AT LEAST WITH A B BUILDING AND SELLING IN THE U.S. -- WILL BE BUILDING AND SELLING IN THE U.S.? KEITH:
WILL GO WHEREVER IN THE GLOBE WHERE THE BUSINESSES LOCATED BUT FOR NOW IT IS BUILDING THE VALUE PROPOSITIONS FOR U.S. CONSUMERS AND AT SOME POINT WE WILL EXPAND THAT. CAROLINE: U.S. CONSUMERS HAVE A LOT OF CHOICES AND THEY ARE GETTING A LOT OF CHOICES FROM ABROAD. THINKING ABOUT TIKTOK THAT IS POTENTIALLY GOING TO START ADDING SHOPPING. HOW IS THE WORLD OF E-COMMERCE
IN THE U.S. FROM YOUR PERSPECTIVE? KEITH: THE DIGITALIZATION OF COMMERCE HASN'T BEEN SUCCESSFUL. WE ARE 30 YEARS INTO E-COMMERCE AND ROUGHLY IT HAS GROWN TO 12%, 13%, 14%. NOBODY HAS A WAY OF DISCOVERING ITS PRIOR PURCHASES, PRODUCTS YOU SERENDIPITOUSLY DISCOVER WHEN YOU ARE AT A SHOPPING MALL OR DEPARTMENT STORE. YOU SEE THINGS THAT INSPIRE YOU.
THE WAY THAT WORKS ONLINE TODAY IS THROUGH INSTAGRAM ADDS TO SHOPIFY STORES WHICH IS A VERY INEFFICIENT WAY TO DISCOVER PRODUCTS. MOST OF THE TIME YOU ARE LOOKING AT YOUR FRIENDS CONTENT AND DON'T WANT TO BE INTERRUPTED BUT YOU ARE INTERESTED WITH ADS AND PEOPLE CLICK ON THEM AND BUY SOMETHING. IT IS NOT THE BEST WAY BUT WE ARE BUILDING AGGREGATION THAT INSPIRES PURCHASES. NOBODY IN THE WEST HAS EVER DONE THAT SUCCESSFULLY. CAROLINE: SO HOW, WHEN YOU HAVE DOORDASH ENGINEERS REALLY THINKING ABOUT THE WAY IN WHICH WE ENGAGE AND SHOP? WHAT ARE THE INNOVATIONS WE CAN SEE AROUND THE CORNER YET? KEITH: WE ARE GOING TO SHARE SOME PRODUCTS IN THE NEXT QUARTER THAT WILL SHOW EXPIRED PURCHASES. WE NEED TO ACQUIRE BRANDS AND A CUSTOMER BASE. YOU ARE A PROVERBIAL
CHICKEN-EGG PROBLEM. NOW THAT WE HAVE ACQUIRED 2 MILLION CONSUMERS ABOUT SOMETHING FROM US, WE CAN STITCH THEM TOGETHER AND FIGURE OUT A VALUE PROPOSITION THAT IS STANDALONE. CAROLINE: WHAT IS INTERESTING ABOUT YOUR BUSINESS IS THAT YOU ARE BUYING OTHER BUSINESSES AND SOMETIMES MANAGING, WHAT IS THAT LIKE FROM A VALUATION PROPOSITION? ARE THEY WILLING TO SELL THE BUSINESS WHEN PERHAPS THINGS DON'T LOOK AS PRETTY FROM A VALUATION PERSPECTIVE? KEITH: WE STUDY THIS EMPIRICALLY AND 7% OF BRAND OWNERS WANT TO SELL THE BUSINESS RIGHT NOW AND 74% WENT TO SELL AT SOMETIME IN THE FUTURE. THE OPPOSITION PROCESS WORKS WELL FOR THE 7% WHO WANT TO SELL. MAKE THEM AN ATTRACTIVE OFFER. FOR PEOPLE WHO ARE IN THE 74%, THEY MAY OPPORTUNISTICALLY WANT TO SELL BUT IF THEY CAN GET THE CASH LOW, WE HAVE CREATED A SUITE THAT APPEALS TO A WIDE SET OF BRAND OWNERS ON SHOPIFY.
CAROLINE: YOU HAVE ABOUT 130 EMPLOYEES. WHAT IS THE MARKET LIKE FOR TALENT? KEITH: I THINK THE TALENT IS WIDELY AVAILABLE. LARGE COMPANY BUREAUCRACY AND WILLING TO JOIN NEW COMPANIES AND TRANSFORMING INDUSTRIES. IT HAS BECOME EASIER.
THERE IS A LOT OF VALUE METRICS AND FAKE FUNDINGS. SOME PEOPLE ARE MIGRATING TO CREATE TALENT AROUND COMPANIES WITH HIGH POTENTIAL. CAROLINE: YOU CAN SHOW OFF YOUR HIGH POTENTIAL BECAUSE OF THE MONEY YOU WERE ABLE TO RAISE, 150 MILLION DOLLARS IN EQUITY AND VALUED AT $1 MILLION. YOU ALSO SITS ON THE OTHER SIDE AT THE TABLE AND OFTEN IS WRITING THE CHECKS IN THIS ENVIRONMENT. HOW ARE EVALUATIONS -- HOW ARE VALUATIONS FOR BIG TECH STARTUPS? KEITH: HAVE BEEN CONSISTENTLY DISCIPLINED EVEN BEFORE THE MARKET CHANGED.
A MASSIVE TRANSFORMATION IN LATE STAGE COMPANY VALUATIONS WE ARE INVESTING VERY SELECTIVELY. THE FOUNDERS WITH A COMPELLING VISION BUT WE HAVE TO HAVE PRICES AND VALUATIONS THAT -- WE DID IT WHEN IT WAS WORSE FOR VALUATIONS. INTO 2000, 3-4 YOUR WINDOW WAS ON. YOU SEE THE ARK OF 40 YEARS AND YOU INVEST AT RIGHT PRICES, THINGS WORK OUT WELL IN TECHNOLOGY. CAROLINE:
IS THAT JUST MEMENTO OF -- MOMENTUM INVESTING AROUND AI RIGHT NOW? KEITH: WE THINK SO PAIRED WE DON'T THINK THAT IS A GOOD PLACE FOR THEM TO SPEND THEIR TIME. CAROLINE: REALLY? WHAT MAKES YOU RETICENT, BECAUSE YOU DON'T THINK THEY ARE INTEGRITY AI AT THEIR CORE? KEITH: NO, I THINK THERE ARE STRUCTURAL ADVANTAGES IN TECHNOLOGIES AND SOME TECHNOLOGIES ARE DISRUPTED. AI IS MOST LIKELY GOING TO GENERATE MORE POWER FOR LARGE MARKET CAP TECH COMPANIES. IF THERE IS A SUBSTITUTE, IT
WILL BE OPENAI WHICH WE HAVE INVESTED IN. CAROLINE: SO HOW ARE YOU SEEING THE GLOBAL NATURE OF AI AND THE FIERCE COMPETITION THERE IS? DO YOU THINK THE U.S. GIANTS WILL BE AHEAD OR CHINA? KEITH: I AM NOT SERIOUSLY CONCERNED ABOUT CHINA'S PROGRESS IN AI. IT HAS BEEN UNDERREPORTED AND REGULARS HAVE NOT PAID ENOUGH ATTENTION. THERE ARE A LOT OF ADVANTAGES CHINA HAS IN AI, LESS PRIVACY, MORE PEOPLE. OUR DATA MAKES AI BETTER.
THEIR COMPUTING POWER AND CHIPS ARE ACTUALLY PRETTY FIRST-RATE. SO THE COMBINATION IS VERY SCARY. THIS IS A MAJOR THREAT TO THE UNITED -- UNITED STATES. THE FUTURE GEOPOLITICAL IS WHO WINS THE AI RACE.
WE NEED TO PAY ATTENTION TO THIS EVERY DAY. CAROLINE: THANKS FOR SHINING A LIGHT ON SOME OF THE CHINESE COMPETITION IN E-COMMERCE AND JUST THE WHOLE WORLD LENDS YOU GET. WE APPRECIATE IT SO MUCH. COMING UP, WE HAVE TO TALK ABOUT SOCIAL MEDIA. LET'S TALK THREADS X, AND THREADS COMING ONTO DESKTOPS AND WHAT X IS DOING TO BLOCK.
THIS IS BLOOMBERG TECHNOLOGY. ♪ CAROLINE: TIME FOR GOING VIRAL, A LOOK AT WHAT THE INTERNET IS LOOKING ABOUT. ACCORDING TO REPORTS, META IS GOING TO BE INTRODUCING THREADS TO HIT THE WEB. THERE WAS A LOT OF HYPE AND REINFORCED HYPE WHEN IT CAME TO THREADS.
>> BACK WHEN META LAUNCHED THREADS, THE CRITICISM WAS THEY ARE TAKING THE AUDIENCE FROM INSTAGRAM, WHICH IS A HUGE PLATFORM AND GRAFTING IT ONTO THE NEW SOCIAL NETWORK. CRITICS ARE QUESTIONING WHETHER THAT AUDIENCE WOULD STAY. WE SELL 100 MILLION PEOPLE DOWNLOAD THE APP. WHAT HAS HAPPENED IS THE AUDIENCE HAS KIND OF FALLEN OFF. IT IS STILL GETTING USED. IF IT WERE TO FACEBOOK PRODUCT, I THINK PEOPLE WOULD BE IMPRESSED BY IT. BUT NOW THEY ARE BACK DOWN AND
WE ARE SEEING THE COMPANY DO THESE THINGS ARE WEB INTERFACE DOESN'T SOUND THAT EXCITING. THERE IS A LITTLE BIT OF 2000 CALLED AND NOT NORMALLY WHAT YOU THINK OF HIS AD PRODUCT UPDATE -- NORMALLY THINK OF AS A PRODUCT UPDATE. HAVING A HEAVY WEB INTERFACE WILL HELP. CAROLINE: THEREIN LIES THE ISSUE WITH BRANDS WANTING TO SAVE SPACE. USERS ONE THINGS WE ARE STILL FAMILIAR WITH.
INTERESTINGLY, X IS DOING THAT. MAX: ELON MUSK SAYING HE IS GOING TO GET RID OF THE BLOCK FEATURE THAT ALLOWS YOU TO PREVENT PEOPLE FROM READING YOUR TWEETS WHILE YOU ARE LOGGED INTO THE ACCOUNT. IT ALSO MEANS YOU DON'T SEE MESSAGES FROM TROLLS AND SO ON.
A LOT OF PEOPLE LIKE THIS. BRANDS LIKE IT. IT IS A LITTLE SURPRISING TO SEE ELON MUSK KNOWING THIS. MUSK HAS SEEN FEET TRYING TO DO WHATEVER HE CAN TO GOOSE ENGAGEMENT. WE HAVE SEEN REPORTS AND IT IS DISPUTED AS TO WHAT THIS TRAFFIC ON HAS GONE UP OR DOWN AND THIS MAY BE AN EFFORT TO GET MORE PEOPLE LOGGING IN MORE OF THE TIME THERE IF YOU'RE GETTING TROLLED AND INTO FIGHTS, THEN YOU ARE USING THE PLATFORM. AND IT IS ALL BOLD AS FAR AS ELON MUSK IS CONCERNED THERE THE RESPONSE IS RANCH DO NOT WANT AS APPEARING NEXT TO TROLLS AND THAT HAS BEEN ONE OF THE CENTRAL CRITICISMS FROM MADISON AVENUE OF TWITTER, NOW X. CAROLINE:
ON THE CENTRAL FOCUS ON THE CEO, DEFECT OUT WHETHER SHE IS NOT IN CONTROL OR IS TRYING TO DRIVE REAL CHANGE BUT IT IS ABOUT BRAND SAFETY FROM THEIR PERSPECTIVE. MAX: SHE IS TALKING A LOT ABOUT RAND AT SAFETY BECAUSE IT IS WHAT THE BRANDS CARE ABOUT. THERE HASN'T BEEN A LOT OF ACTION AROUND THAT. A LOT OF ADVERTISING PEOPLE ARE
SORT OF TAKING A WAIT AND SEE APPROACH. THEY LIKE HER IN OVER TRACK RECORD BUT ARE NOT SEEING STEPS TOWARD BRAND SAFETY AND THEY MAY QUESTION WHERE THERE HAS BEEN REAL EFFORT IN BRAND SAFETY AND THIS IS NOT GOING TO HELP AND ASSURE THOSE CONCERNS IN ANY WAY ALTHOUGH IT MAY ADD WORK TRAFFIC AND MORE ENGAGEMENT WHICH SOCIAL NETWORKS NEED AND THREADS ENGAGEMENT SEEMS TO BE FALLING. ELON MUSK CRAVES THAT ATTENTION. CAROLINE: MEANWHILE HE SAID THERE ISN'T A GOOD SOCIAL MEDIA NETWORK OUT THERE AT THE MOMENT. ALWAYS GREAT TO CATCH UP WITH YOU.
COMING UP, WE WANT TO TALK ABOUT JACQUELINE CANNEY. TALKING ABOUT WORK FROM HOME, ZOOM IS WHAT EVERYONE USED WHAT WE DID IT, THEY ARE DISCUSSING A RETURN TO THE OFFICE AND LOOKING AT EARNINGS OUT LATER TODAY. TRADING HIGHER IN THIS NERVOUS ENVIRONMENT AND THE MACRO PERSPECTIVE. THIS IS BLOOMBRG TECHNOLOGY. CAROLINE: THIS YEAR CONTINUES TO MARK GRADUAL RETURN TO A FIVE DAY IN OFFICE WORK WEEK AS MORE COMPANIES REQUIRE STAFF TO RETURN TO THE OFFICE AT LEAST FOUR DAYS. HOWEVER, SOME ARGUE THAT
LIMITING FROM HOME HIT WOMEN THAT TOOK ADVANTAGE OF THE FLEXIBILITY HARDER THAN MEN. HOW WILL THIS IMPACT WHAT DIVERSITY LIKE? SOMEONE PUTTING A LOT OF THOUGHT INTO THIS IS JACQUI CANNEY. NEW TALKING ABOUT MAKING SURE PEOPLE CAN WORK MOST EFFECTIVELY FROM WHERE THEY ARE, ARE YOU ASKING PEOPLE TO COME BACK TO THE OFFICE? ARE YOU GETTING CLICKS ABILITY AROUND SERVICENOW? JACQUI: THANK YOU FOR HAVING US HERE. IT GIVES ME AN OPPORTUNITY TO TALK ABOUT WHAT I LOVE. WE HAVE BEEN LEADING WITH FLEXIBILITY AND TRUST FOR OUR PEOPLE, EVEN BEFORE COVID AND IS DURING COVID.
NOW WE STILL HAVE THE OPPORTUNITY BEING A REMOTE PERSON OR A FLEXIBLE PERSON WHERE YOU ARE ONE TO THREE DAYS IN THE OFFICE OR ARE YOU IN THE OFFICE ALL OF THE TIME? WE CONTINUE TO LET OUR PEOPLE LET THAT UNFOLD AND IT HAS BEEN WORKING GREAT FOR US. CAROLINE: I WAS TALKING TO SOMEONE WORKING IN KEY TECH OFFICES HAVING TO MAKE THAT DECISION NOW AND THEY MAY BE WORRIED ABOUT WHAT THE WINTER LIKE. HOW THEY WILL BE FEELING IN THE MONTHS TO COME AND HOW THAT ULTIMATELY UNFOLDS.
HOW DO YOU MAKE SURE FLEXIBILITY REMAINS? JACQUI: IT IS THE CONVERSATION BETWEEN A MANAGER AND A PERSON HERE. HAVE FLEXIBILITY IN THE CONVERSATION. WE CONTINUE TO ADD REQUESTS AND MANAGE THEM ALSO PEOPLE GET TO PUT THEIR POINT OF VIEW AND IF WE CAN MAKE IT HAPPEN THEY CAN PICK THE PERSONA FOR WANT TO BE IN. I SUSPECT THE WINTER COULD CREATE A DIFFERENT ENVIRONMENT. THERE IS SUMMER IN THE U.S. AND PEOPLE NEED MORE FLEXIBILITY AND WE HAVE BEEN ABLE TO KEEP THOSE PROMISES. CAROLINE: WITHOUT A MANDATORY OFFICE ATTENDANCE, ARE YOU THE BIGGEST FLEXIBLE WORKFORCE. JACQUI: I WOULD LIKE TO THINK IT.
WE ARE ABOVE THE BIGGEST. FLIX ABILITY IS IMPORTANT. IF YOU'RE NOT GOING TO BE ONE TO THREE DAYS THEN YOU HAVE TO TALK TO YOUR MANAGER ABOUT WHY YOU ARE NOT GOING TO BE THERE. YOU CAN CONTINUE WITH CIVILITY AND ACCOUNTABILITY GET GROWTH AND INNOVATION AND SHOULDER TO SHOULDER CAMARADERIE AND WE CAN DIAL IT IN. I AM IN THE NEW YORK OFFICE TODAY. ONE OF THE JOBS I TAKE SERIOUSLY IS TO REPRESENT THIS WORKFORCE IN NEW YORK, WHETHER IT IS COMING IN OR HAVE OTHER VISITORS COMING IS THAT YOU CAN LEARN FROM OR THERE IS A COMMUNITY SOCIAL EVENT. THAT IS WHAT IS ACTUALLY
BRINGING PEOPLE IN MORE THAN A MANDATE OR BEING SPECIFIC. I THINK THOSE MOMENTS THAT MATTER WILL CONTINUE TO HAVE US EARN THE COMMUTE FOR OUR PEOPLE TO COME IN. CAROLINE: I AM SURE TO COMING IN -- I'M SURE THAT COMING INTO TALKING ABOUT THE TECHNOLOGY THEY ARE BUILDING, YOU THINK ABOUT GENERATIVE AI AND AI, HOW MUCH IS THOUGHT ABOUT THAT IN THE MOMENT IN THE WAY IN WHICH YOU DEPLOY IT AT SERVICENOW? JACQUI: YOU HAVE PROBABLY HEARD BILL MCDERMOTT TALK TO US ABOUT BECOMING THE DISCO 21 CITY, WHICH IS THE DEFINING ENTERPRISE FOR COMPANIES IN THE 21ST CENTURY, INNOVATION, TECHNOLOGY, GENERATIVE AI ARE ALWAYS AT THE TOP OF EVERYONE'S MIND. IT IS AN EXCITING AND OPTIMISTIC PLACE TO BE TO TALK
ABOUT THOSE THINGS, SPECIFICALLY AROUND BIAS AND THOSE THINGS. I BELIEVE TECHNOLOGY CAN HELP US TAKE THAT OUT. YOU HAVE A JOB DESCRIPTION AND YOU CAN USE GENERATIVE AI TO REVIEW THAT AND SAY THESE OTHER THINGS THAT ARE COMING OUT BECAUSE IT DOES CREATE BIAS. IT IS THE DARKER SIDE OF AI AND WE TAKE IT SERIOUSLY AND HOW WE BUILD GOVERNANCE AND TRUST. CAROLINE: WE LOVE THE OPTIMISM. THANK YOU SO MUCH. ULTIMATELY, THAT DOES IT FOR THIS EDITION OF BLOOMBRG TECHNOLOGY.
2023-08-22 22:40
