Bloomberg Technology 10/18/2023
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 AM CAROLINE HYDE. ED: I AM ED LUDLOW IN SAN FRANCISCO. CAROLINE: CHIPMAKERS WORN ON THE IMPACTS
OF THE U.S. CURB ON CHINA. WE WILL BREAK DOWN EVERYTHING YOU NEED TO KNOW. ED: WE PUSH AHEAD TO EARNINGS AS NETFLIX AND TESLA PREPARED TO RELEASE RESULTS. CAROLINE: WE RETURN TO OUR NEW YORK COVERAGE, GEOPOLITICAL CONCERNS AT PLAY. WE KNOW HOW DIFFICULT THE CONVERSATIONS WILL BE FROM A DIPLOMATIC PERSPECTIVE. BIG MEGA CAPS ARE ON THE DOWNWARD TRAJECTORY AS YIELDS ARE PRESSING HIGHER AS WE ANTICIPATE AN AUCTION.
MANY ANTICIPATING THEY WILL BE PUSHED HIGHER AS THE FED WILL HAVE TO PUSH BACK ON INFLATIONARY PRESSURES. WE ARE SEEING DOWNWARD TRAJECTORY ON CHINESE STOCKS TRADED HERE IN THE U.S.. WE HAVE SEEN BETTER THAN ANTICIPATED MACRO PICTURE COMING FROM CHINA QUESTIONING THE VERACITY OF THE DATA AND WHEN WE PLUG IN TERMS OF MOMENTUM AMID THE GEOPOLITICAL TENSION AND THE PUSHBACK OF SALES INTO CHINA.
BITCOIN IS UP .73%. ED: CHINA IS THE KEY STORY PARTICULARLY IN THE CONTEXT OF U.S. TECHNOLOGY CURBS TO CHINA. I WANT TO GO TO A SML, A PROPORTION OF THEIR ORDERS ARE COMING FROM CHINA SO THEY HAVE HAD TO ADDRESS THE LATEST EXPANSION OF CURBS.
10-15% OF THEIR SHIPMENTS WILL BE IMPACTED BY THESE STRUCTURES. THE MORE DIRECT IMPACT ON NVIDIA DROPPING FOR THE SECOND DAY. THEY REITERATED WHAT THEY TOLD US ON BLOOMBERG TECHNOLOGY, NO NEAR-TERM IMPACT ON FINANCIALS. THIS IS GOING TO IMPACT HER
ABILITY TO SERVICE OUR EXISTING CUSTOMERS. THAT'S A CONCERN FOR NVIDIA. LET'S GET MORE DETAIL ON THIS FROM MANDEEP SINGH. WE ARE TALKING ABOUT CHINESE
SPECIFIC CHIPS BEING HURT BY THESE CURBS. HOW CAN YOU ANALYZE THE IMPACT? THERE IS LIKELY SOME PULL FORWARD OF THAT REVENUE GIVEN THAT THIS WAS NOT A COMPLETE SURPRISE. WE WERE TALKING ABOUT THESE CURBS AND I THINK THERE WAS A PULL FORWARD ELEMENT WHICH IS WHY THE COMPANY IS SAYING THEY WILL NOT BE ANY NEAR-TERM IMPACT. DOWN THE LINE YOU HAVE TO ASK YOURSELF ABOUT THE CUSTOMER BASE OF NVIDIA CHIPS AND IT IS MOSTLY THE HYPER SCALARS.
THEY ARE ABOUT 50% AND THERE ARE A FEW IN CHINA. IF THEY ARE NOT ABLE TO GET THESE CHIPS FOR AI TRAINING IT WILL HAVE AN IMPACT. BUT NEAR-TERM IMPACT IS MUTED BECAUSE OF THAT PULL FORWARD ASPECT. CAROLINE:
WE ARE DOWN 10% OVER THE PAST FEW DAYS AND 70 BILLION DOLLARS HAVE BEEN SHED FROM THE CHIP STOCKS. HOW ARE YOU ANTICIPATING THE CHINA AND U.S. TO PULL BACK ON THE VALUATION BECAUSE IT IS SUCH A MIXED PICTURE FOR CHIPMAKERS. MANDEEP: WITH NVIDIA THAT YOU HAD UPWARD REVISIONS. WHEN YOU LOOK AT THE INCREMENTAL DATA SPENT EVERY DOLLAR IS GOING TOWARDS AI CHIPS AND NETWORKING. NONE OF THAT WILL CHANGE. THOSE CHIPS THAT THEY CAN'T
SELL TO CHINA WILL BE TAKEN TO SOMEBODY ELSE. I HAVE NO DOUBT THEY ARE UNDER SHIPPING DEMAND. THAT 80 BILLION NUMBER IS A BOGEY BECAUSE THE SECTOR SPEND IS CLOSER TO 50, 60 MILLION. FOR NVIDIA TO REACH THE TARGET THEY NEED DEMAND FROM EVERYWHERE INCLUDING CHINA. THAT IS WHAT IS AT STAKE HERE.
ED: THIS IS A STORY IF THERE IS ONE. AMSL MAKES THE MACHINES THAT MAKE THE CHIPS AND ITS BOOKINGS ARE DOWN 42% BECAUSE THERE IS NOT DEMAND OUT THERE. DEMAND FROM CHINA DOUBLED. THE PROPORTION OF ORDERS
DOUBLED IN CHINA BUT THIS COMPANY LEARNED ABOUT EXPANDED EXPORT CURBS ON CHIPMAKING EQUIPMENT. MANDEEP: LOOK AT THE SUPPLY CHAINS RIGHT NOW. THE FAB IS IN TAIWAN, MANUFACTURING IN CHINA. IT'S NO SURPRISE THE EQUIPMENT
IS NEEDED IN CHINA BECAUSE THEY WANT TO DOUBLE DOWN ON THEIR ABILITY TO ASSEMBLE AND MANUFACTURE THESE CHIPS. THE BIG DRIVER FOR A COMPANY LIKE ASML IS THE DIVERSIFICATION ASPECT GEOGRAPHICALLY AND EVERY GOVERNMENT IS TRYING TO MAKE SURE THEY HAVE LOCAL MANUFACTURING AND THEY WANT TO GET THAT EQUIPMENT IN THE REGION WHERE THESE COMPANIES ARE OPERATING. LONG-TERM, I THINK THE DRIVERS ARE THERE FOR EQUIPMENT COMPANIES. BUT THE NEAR-TERM DYNAMICS, YOU CANNOT TAKE CHINA OUT OF THE EQUATION GIVEN THE MANUFACTURER HE BEING DEAD OVER THERE. CAROLINE:
OUR CHINESE CUSTOMERS SAY THAT THEY ARE HAPPY TO TAKE THE MACHINES THAT OTHERS DON’'T WANT. IT IS ALWAYS GOOD TO HAVE YOU ON. WE HAVE THE CFO OF ASML TALKING ABOUT A DYNAMIC MACRO PICTURE COMING FROM CHINA. LET'S GET INTO THAT PICTURE
WITH AMY SELLICO . THERE WERE SO MANY CLOUDS WHETHER IT BE THE U.S. PROCEED AGAINST SHIPMENTS TO CHINA AND THE CHINESE ECONOMY THEY WE CAN GET A READ ON. HOW MUCH DEMAND IS THERE FOR A TECHNOLOGY FROM INTERNATIONAL IMPORTS RIGHT NOW? >> DEMAND IS HUGE BECAUSE INTERNATIONAL TECHNOLOGY IS SO IMPORTANT FOR CHINA TO CONTINUE TO PUSH IS ECONOMIC RECOVERY. THE GOOD NEWS COMING OUT OF CHINA WITH THE Q3 NUMBERS BEATING EXPECTATIONS IT IS A SLOWING ECONOMY AND THE RECOVERY IS FAR FROM CERTAIN IF CHINA DOES NOT HAVE ACCESS TO THAT TECHNOLOGY. CLEARLY, INVESTMENT IS GOING TO CONTINUE TO BE IN TECHNOLOGY, TO HAVE INDIGENOUS TECHNOLOGY REPLACE UNCERTAINTY AROUND ACCESS.
BUT IN THE SHORT-TERM, CHINESE DEMAND WILL CONTINUE TO BE SIGNIFICANT FROM THESE TECHNOLOGY IMPORTS. ED: LET'S HEAD OVER TO CHINA, PRESIDENT XI MADE THIS THINLY VEILED COMMENT DIRECTED AT THE U.S. THAT DOWNPLAYS THE EMPHASIS YOU SHOULD HAVE ON THEIR PROGRESS AND DEVELOPMENT OF OTHERS AND THE RISK OF ECONOMIC INTERDEPENDENCE. I AM ASSUMING HE WAS TALKING IN
THE CONTEXT OF TECHNOLOGY AND TECHNOLOGY EXPORTS. DO YOU WORRY ABOUT THE POSTURING ON BOTH SIDES HERE? AMY: FOR ALL THE CLIENTS THAT WE SERVE IT IS A SIGNIFICANT WORRY ABOUT WHERE ARE THOSE GEOPOLITICAL RISKS GOING IN THE WAKE OF WHAT IS HAPPENING IN GAZA RIGHT NOW AND THE FACT THAT RUSSIA AND CHINA ARE TOGETHER IN BEIJING AS THE PRESIDENT IS IN ISRAEL. HE WILL COME BACK TO THE UNITED STATES TO WELCOME THE LEADERSHIP OF THE EUROPEAN UNION. THERE ARE DISCUSSIONS ABOUT HOW GEOPOLITICAL'S ARE IMPACTING INTERDEPENDENCE AND THAT IS WHAT PRESIDENT XI WAS GETTING AT. HE IS CELEBRATING HIS 10 YEAR ANNIVERSARY OF THE BELT AND ROAD INITIATIVE AND WELCOMING FORWARD LEADERS FROM 130 COUNTRIES. TRY TO TOUT THE RELEVANCE OF CHINA ON THE GEOPOLITICAL STAGE AT THE SAME TIME THE U.S. AND CHINA DISAGREE ON
FUNDAMENTAL ISSUES. AND WHILE COMMUNICATING AGAIN, WE ARE WAITING TO SEE WHAT THAT COMMUNICATION DOES. WILL IT STABILIZE THE RELATIONSHIP OR IS IT ONLY A TEMPORARY BALL AS IT CONTINUES TO GET MORE CHALLENGING BECAUSE OF THE EXPORT CONTROLS IN THE U.S. AND CHINA DISAGREEING ON ISSUES AROUND UKRAINE AND THE WAR ISRAEL IS WAGING AROUND THOMAS AND INTERDEPENDENT ECONOMICS.
IN THE SHORT TERM, HE NEEDS THAT TECHNOLOGY INPUT FROM AMERICAN COMPANIES INTO CHINA. CAROLINE: I THINK GEOPOLITICAL RISK COULD BE MORE COMPLEX. YOU HAVE PUT THAT CLEARLY TO US AND NOT GLOBAL PICTURE.
TALK TO US ABOUT THE CLIENTS I THINK ABOUT ARM CEO THAT IS INTERNATIONAL IN HIS FOCUS AND THE CEO YESTERDAY SAYING THIS IS SO DIFFICULT TO CUT OFF THE TECHNOLOGY FROM FLOWING INTO CHINA. IT'S A HARD PROBLEM TO SOLVE JUST COMING UP WITH THE LIST OF COMPONENTS DEEMED CRITICAL. HOW DIFFICULT IS IT FOR YOUR CLIENTS TO NAVIGATE THIS RIGHT NOW? AMY: IT IS HARDER THAN EVER BECAUSE COMPANIES ARE TRYING TO GAUGE WHERE ARE THERE TRULY NATIONAL SECURITY BASED APPLICATION BECAUSE OF POLICIES AND WASHINGTON DC? THEY HAVE TO NAVIGATE BOTH OF THOSE ISSUES THAT YOU ARE TALKING ABOUT ASML, AND VIDEO WORRIED ABOUT POLITICS -- NVIDIA FOCUSING ON DIFFERENT OPPORTUNITIES SO THEY CAN CONTINUE TO GROW. IN BEIJING, THE POLICY RESTRICTIONS ARE WE ABLE TO SELL OUR PRODUCTS UNTIL CHINA INNOVATES ITS OWN COMPETITION TO OUR PRODUCT S? SO YOU DON'T HAVE CONTINUE CONFIDENCE IN CHINA. AND IN WASHINGTON, THE IMPACT
OF YESTERDAY'S ANNOUNCEMENTS, HOW WILL IT IMPACT THESE COMPANIES ABLE TO GAIN GLOBAL PROFITS THAT ARE DERIVED OUT OF THE CHINA MARKET? COMPANIES ARE TRYING TO BALANCE THESE ISSUES OF NATIONAL SECURITY CONCERNS THAT ARE COMING NOT ONLY OUT OF ONE COUNTRY. I MENTIONED BEIJING AND WASHINGTON BUT WE ARE HEARING THE SAME CONCERNS FROM BRUSSELS, TOKYO AND ELSEWHERE. COMPANIES HAVE TO BALANCE THESE ISSUES IN TRYING TO ADVOCATE FOR THE NEED TO CONTINUE TO PROMOTE SALES THAT ARE NOT IMPACTING NATIONAL SECURITY AND NATIONAL MARKETS SO THAT THEY CONTINUE TO INNOVATE AND REMAIN GLOBAL LEADERS LIKE NVIDIA AND ASML. ED: LET'S END ON THE DATA. GDP CAME IN 4.9% JUST BELOW THE 5% TARGET. GIVE US YOUR CHINESE ECONOMY SCORECARD BASED ON THAT DATA? AMY: CHINA IS RELIEVED TO SEE CONSUMPTION RESUMING ON THE GROUND. THIS IS SHORT-TERM AND NOBODY
IS FINISHED BEING WORRIED, LEAST OF ALL CHINESE POLICYMAKERS WHO ARE GOING TO CONTINUE A STIMULUS IN ORDER TO GET THIS ECONOMY RESTARTED AGAIN AND ME THIS 5% GROWTH TARGET AND LOOKING AT NEXT YEAR BEING EVEN MORE CHALLENGING. MAYBE WE ARE LOOKING AT DECEMBER FOR WHAT THEY SAY ABOUT CONTINUED STIMULUS IN 2024. PUTTING MORE INVESTMENT INTO THE ECONOMY AS SAID THAT DEBT TO GDP RATIO. IT IS NOT A LONG-TERM SOLUTION. CHINESE AND INTERNATIONAL AND ECONOMISTS ARE SAYING THAT. THEY NEED TO EMPOWER THEIR CONSUMERS TO SPEND BY INVESTING IN PROGRAMS THAT WILL HELP CONSUMERS BE LESS WORRIED ABOUT THE OUTLOOK FOR THE CHINESE ECONOMY.
THAT WILL BE A DIFFERENT SITUATION FOR CHINA TO MANAGE. ED: AMY CELICO FROM DENTON. COMING UP WE WILL HAVE THE LATEST ON THE ISRAEL/HAMAS WAR AND A DEADLY BLAST AT A HOSPITAL IN GAZA. CAROLINE:
SUCH COMPLEXITY AND CONCERN. IN THE UNITED STATES THERE IS A SECOND VOTE FOR REPUBLICAN JIM JORDAN HE WAS LOOKING TO BE THE NEXT SPEAKER. WE WILL KEEP YOU UP-TO-DATE WITH HOW THAT SECOND VOTE GOES. THIS IS BLOOMBERG.
>> I AM DEEPLY SADDENED AND OUTRAGED AT THE EXPLOSION AT THE HOSPITAL IN GAZA. BASED ON WHAT I HAVE SEEN IT APPEARS IT WAS DONE BY THE OTHER TEAM, NOT YOU. THERE IS A LOT OF PEOPLE OUT THERE WHO ARE NOT SURE. WE HAVE TO OVERCOME A LOT OF THINGS. CAROLINE: U.S.
PRESIDENT EXPRESSING THE OUTRAGE AT THE EXPLOSION AT A GAZA HOSPITAL THAT KILLED HUNDREDS. HE WAS SPEAKING AT A BILATERAL MEETING IN TEL AVIV. WE WANT TO BRING IN JOE MATHIEU. HOW DIFFICULT DIPLOMACY ALWAYS IS AND IT HAS GOTTEN A WHOLE LOT TOUGHER. CAN YOU BREAK US UP TO SPEED? >> THIS IS AN INCREDIBLE TEST AND IT'S GOTTEN A LOT HARDER WITH THE NEWS OF THIS BLS AST. HE IS SAYING THAT THE DATA
SHOWS THAT THIS WAS NOT THE RESPONSIBILITY OF ISRAEL BUT WAS A MISSILE SENT FROM A TERROR GROUP IN GAZA. LET US REMIND OURSELVES THIS WAS SUPPOSED TO BE A MULTI-DAY TRIP AND FOLLOWING THAT BLAST ASSIGNMENT OF ARAB LEADERS WAS CANCELED IN JORDAN. HE WILL BE HEADING BACK TO WASHINGTON SO THE STAKES ARE VERY HIGH. CAROLINE: IT WAS ALSO ANNOUNCED 100 MILLION IN AID TO GAZA AND THE WEST BANK. TELL US HOW WE ARE ABLE TO SEE AID FLOW WHEN WE ARE LOOKING AT A HOUSE GOING THROUGH A SECOND HOUSE TO FIND A SPEAKER. JOE:
THEY CAN'T WHICH IS WHY THERE IS URGENCY BEHIND THIS PHOTO. JIM JORDAN US UP FOR A SECOND ROUND AND IS NOT EXPECTED TO WIN THIS ROUND AND THERE ARE QUESTIONS ABOUT WHAT HAPPENS AFTER THAT. THE WHITE HOUSE IS PUTTING A SUPPLEMENTAL BUDGET REQUEST, 100,000,000,004 ISRAEL, UKRAINE, TAIWAN AND BORDER SECURITY. ONE OF THESE THINGS WILL BE AN IMPORTANT ELEMENT TO ANY REPUBLICAN OR DEMOCRAT BUT AT THIS POINT IT IS UNCLEAR WHO WILL HOLD THE GAVEL AND WHEN. ONE MONTH FROM TODAY THE
GOVERNMENT IS SET TO SHUT DOWN. CAROLINE: JOE MATHIEU, WE THANK YOU SO MUCH. COMING UP, VENTURE CAPITALIST MARK VANDREESEN IS CALLING FOR ACTION. WE WILL HAVE MORE ON HIS
CAROLINE: TIME NOW FOR WORK SHIFTING. IT IS WHERE WE TAKE A LOOK AT THE CHANGING LANDSCAPE OF EMPLOYMENT. PROPOSALS SEEN BY BLOOMBERG OUTLINED A THREE-TIER APPROACH FOR AI'S SYSTEMS AND THE RULE THAT WOULD APPLY.
CEO WILL BECOME THE FIRST WESTERN GOVERNMENT TO PLACE RULES ON AI. INFLECTION AI WANTS TO LIMIT THE ABILITY FOR CHATGPT TO ADVOCATE FOR CANDIDATES. A WHOPPING 17 POINT 9 BILLION HAS BEEN POURED INTO AI STARTUPS THIS YEAR. THE VALUE OF FUNDING HAS GROWN 27 PERCENT. ED: THIS IS A NEWSLETTER THAT THE WORLD PAYS ATTENTION TO. MARC ANDREESSEN IS PUSHING FORWARD A NEW MANIFESTO.
HE SAYS THE ONLY PERPETUAL SOURCE OF GROWTH IS TECHNOLOGY. GIVE US A REAL WORLD PROBLEM AND WE CAN INVENT TECHNOLOGY THAT WILL SOLVE IT. LET'S GO DEEPER ON THIS AND BRING YOU KATIE RUTH. WHEN HE PUTS OUT ONE OF THESE BLOG POST IT IS SHARED IN THROUGH PLATFORMS AND DEBATED.
JUST OUTLINE HIS LATEST ARGUMENT IN THIS EXERCISE. KATIE: HE IS DEFINITELY GOOD AT GETTING ATTENTION. HE DID ONE CALLED SOFTWARE EATING THE WORLD. IT IS ALWAYS A BULLISH CASE FOR TECHNOLOGY. IT MAKES SENSE HE IS A TECHNOLOGY INVESTOR IS TO STOP TO SEE THE FUTURE. HE ALWAYS INCLUDE SOME SINGERS
AND CONTROVERSIAL STATEMENTS WHICH HELP TO GET MORE ATTENTION. YOU SHOULD LOOK AT THIS AS MARKETING. HE IS TRYING TO GET AN EDGE ON SOME OF THE START OF DEALS. CAROLINE: HE HAS ALSO PUSHING BACK AGAINST REGULATION. HE CALLS ABOUT DECELERATING WILL COST LIVES. KATIE: HE'S A LEADING VOICE IN VENTURE CAPITAL.
I AM SURE THEY WOULD TALK TO AN ARRAY OF PERSPECTIVES. HE HAS TAKEN OF LIBERTARIAN POINT OF VIEW. NOT EVERYONE HAS THE SAME POLITICAL PHILOSOPHIES THAT HE DOES. HE IS ON THE BOARD OF FACEBOOK AND HAS ALWAYS BEEN VOCAL ABOUT BEING ANTI-REGULATION. THIS IS JUST PART OF THE COURSE FOR HIM. CAROLINE:
IT'S GREAT TO HAVE SUCH EXPERTISE IN THE HOUSE TODAY. WE WILL HAVE A RETURN TO TECH WEEK IN NEW YORK. WE WILL SIT DOWN WITH THE FINTECH COMPANY TO TALK ABOUT TALENT HERE AND IN WASHINGTON. ED: AS IT STANDS, REPUBLICAN JIM
JORDAN LACKS THE VOTES TO BE ELECTED. WE WILL KEEP TRACK OF THIS CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY. RIGHT HERE IN THE BIG APPLE WE ARE COVERING THE TECHNOLOGY INDUSTRY.
WE ARE JOINED BY ONE OF THE KEY FOUNDERS IN THE AREA WHO CONTINUES TO OPERATE THEIR FINTECH BUSINESS IN THE CITY. BEFORE WE GET INTO WHAT YOU ARE BUILDING, WHY BELTED HERE? >> I HAD A HUGE OPPORTUNITY TO PICK UP AND MOVED TO NEW YORK A NUMBER OF YEARS AGO TO PURSUE MY PASSIONS AND HERE WE ARE AS I SET UP TO FOUND MY COMPANY THERE'S NO BETTER WAY TO ATTRACT TALENT I HAD MEANT EVERY TIME I SEE THE SKYLINE I THINK WOW. CAROLINE: TALK ABOUT THE OPPORTUNITY WHEN IT COMES TO WHO WANTS YOUR PROGRAMS. YOU HAVE BEEN AT SEVERAL OTHER STARTUPS.
WHAT IF YOU SEE THAT NEEDED TO BE FIXED. >> LET ME TELL YOU WHAT ORUM DOES, WE ARE THE BEST FOR VERIFIED PAYMENTS AND KEYPAD VERIFICATION. WHEN I WAS INSIDE OF BIG FINANCIAL SERVICES I SAW THIS BIG PROBLEM WITH TIME TO MONEY. HALF AMERICANS DON'T HAVE
ENOUGH MONEY AND IF THEY DO IT'S IN A HIGH-YIELD SAVINGS ACCOUNT. THEY CAN'T GET ACCESS TO IT. CAROLINE: I THOUGHT THAT IS WHAT CRYPTO WAS FOR? >> WITH THE ADVENT OF INSTANT PAYMENTS WE THINK IT'S IMPORTANT TO REBUILD OUR FINANCIAL SYSTEM. CAROLINE: YOU HAVE THIS NEW RAIL THAT IS PUT FORWARD BY THE FEDERAL RESERVE.
HOW DOES THIS ECOSYSTEM COMPARED TO ABROAD? >> WE ARE BEHIND RELATIVE TO EUROPE WHERE INSTANT PAYMENTS HAVE BEEN THE NORM. BUT WE ARE CATCHING UP. WHAT I LOVE ABOUT WHAT THE FED HAS DONE WITH THE INSTANT PAYMENTS PRODUCTS AND WHAT WE HAVE HAD WITH REAL-TIME PAYMENTS ARE THE BEGINNINGS FOR CONSUMERS TO SEE THE ADVANTAGES OF SOMETHING HAPPENING INSTANTLY. IN OUR FINANCIAL LIVES EVERYTHING RUNS VERY SLOWLY. THAT'S NOBLE LONGER POSSIBLE TO SAYING.
NOW YOU GET THE TOP 400 BANKS THROUGH THE FED IS TO PAYMENTS BUT YOU GET ALL THE COVERAGE FOR SMALLER BANKS AS WELL AS COMMUNITY FOCUS BANKS. WE ARE GETTING INSTANT DISTRIBUTION IN THE DYNAMIC HAS CHANGED FOR THE AMERICAN WALLET WHEN INSURANCE CLAIMS, WAGES, ANY FINANCIAL EXCHANGE CAN HAPPEN 24 HOURS A DAY SEVEN DAYS A WEEK. CAROLINE: I THINK ABOUT THE CRUX POINT WHERE WE WERE CONCERNED ABOUT SILICON VALLEY BANK. WHAT TUMULTUOUS 2023? IT'S ONLY BEEN SIX MONTHS SINCE THAT DEBACLE. FOR YOU, BECAUSE YOU ARE WATCHING THIS NEW PRODUCT, DO YOU HAVE VC'S KNOCKING? >> WE WERE BOOTS ON THE GROUND IN NEW YORK BEFORE IT WAS POPULAR. I BELIEVE IN THE ECOSYSTEM HERE. THERE ARE PEOPLE KNOCKING ON THE DOOR BECAUSE OF THE IMPORTANCE OF THE PROBLEM. FUNDRAISING IS A SPECIFIC THING
AND IT SHOULD NOT BE DONE CASUALLY. IN THE CURRENT ENVIRONMENT THERE IS TIME BELTED UNLIKE 2020 WHEN YOU ARE DECIDING AND WEEKEND. BETWEEN YOU AND YOUR INVESTORS YOU CAN MAKE A DECISION ABOUT WHAT THIS WILL LOOK LIKE.
YOU ARE SETTLING INTO A LIFELONG RELATIONSHIP WITH PEOPLE ON THE BOARD. OUR BOARD IS 50% FEMALE. I CAN'T RUSH THE PROCESS. DESPITE THE INTEREST IN THE ENVIRONMENT, IT'S IMPORTANT TO ESTABLISH GOOD RELATIONSHIPS SO WHEN YOU SAY LET'S HANDSHAKE AND PUT CAPITAL INTO A BUSINESS IS GROWING YOU KNOW THAT YOU ARE DOING IT IN A WAY THAT WILL FUEL THE NEXT CHAPTER AND NOT BECAUSE OUT IS WHAT THE ENVIRONMENT IS PROMOTING TODAY. CAROLINE: YOU HAVE A REAL FOCUS ON A DIVERSE BOARD AND DIVERSE TALENT. IS THE TALENT MORE DIVERSE IN
NEW YORK? >> WE ARE ACTUALLY A COVID BP. WE WERE DOING OUR FUNDRAISING DURING COVID SO WE HAVE AN ADVANTAGE OF HAVING A FOOTPRINT AND NEW YORK AND A CHANCE TO THINK ABOUT OUR CORE VALUES OF DIVERSITY OF THOUGHT AND TALENT. THE DIVERSITY OF TALENT IS EXCEPTIONAL BECAUSE PEOPLE COME TO NEW YORK FOR THE WORLD-CLASS PROGRAMS BASED IN MANHATTAN. AS A RESULT OF THAT, YOU HAVE TALENT FROM OTHER WELL-BUILT COMPANIES YOU ALSO HAVE AN INFLUX OF FOLKS WITH ENGINEERING TALENT COMING OUT OF THE EDUCATION SYSTEM. NEW YORK CREATES A POPULATION OF OPPORTUNITY.
WE WOULD NOT BE REMISS IN LOOKING ABROAD TO FIND THE MOST DIVERSE TALENT TO BUILD A DIVERSE TEAM. INCREDIBLE TALENT COMES FROM EVERYWHERE. CAROLINE: IT IS GREAT TO HAVE YOU HERE IN THE BUILDING. SHE HAS A WHOLE TON OF EVENTS TO RUNOFF TWO. WE WANT TO DIG INTO THIS ANGLE.
I WANT TO REALLY GET YOUR ASSESSMENT OF WHAT THE TALENT POOL LOOKS LIKE IN NEW YORK. HOW BIG OF AN ECOSYSTEM IS A COMPARED TO OTHER INDUSTRIES? >> NEW YORK IS UNIQUE BECAUSE I HAS A LARGER SHARE OF TECH JOBS THAN THE NATION AS A WHOLE BUT IT STILL MAKES UP A RELATIVELY SMALL PERCENTAGE OF JOBS IN NEW YORK. ED: AI HAS HAD A PRETTY DRAMATIC IMPACT ON CITIES AROUND THE WORLD FROM A WEALTH CREATION STANDPOINT. CAROLINE AND I SIT THERE AND LOOK AT SOME OF THE JOB POSTINGS AND THE SALARIES ON OFFER HERE IN THE BAY AREA.
DO YOU SEE THAT HAPPENING IN NEW YORK AS WELL WHERE THERE IS A FIGHT FOR TALENT AND THEY ARE PAYING OVER THE NOSE FOR IT? >> YES AND NO. AS A GOOD ECONOMIST I WILL TELL YOU TAKING A STEP BACK AND LOOKING AT TECH AS A CATEGORY AS A WHOLE PARTICULARLY NEW YORK SAW THIS BOOM AND BUST DEVELOPMENT. WE SOLVE A LOT OF TECH COMPANIES HIRING WE SAW THAT IN ARE INDEED JOB POSTINGS AND THEN AROUND 2022 WE SAW THAT DEMANDS GO BACK. TECH COMPANIES HAVE RIGHT SKILLED. WE HAVE SEEN A LOT OF HEADLINES WHERE TECH COMPANIES ARE GOING THROUGH LAYOFFS AND THAT PARTICULARLY ITS SOFTWARE DEVELOPERS AND ENGINEERS AND WITH THAT, WE HAVE SEEN JOB POSTINGS PARTICULARLY IN THE METRO AREA TAKE A STEP BACK. DEMAND HAS COME DOWN QUITE A BIT AND WE ARE BELOW PRE-PANDEMIC LEVELS. WE ARE 30% BELOW IN TERMS OF
JOB POSTINGS IN THE NEW YORK METRO AREA TO WHERE WE WERE AND 2020. WE HAVE TAKEN A STEP BACK ON TECH IN NEW YORK. HOWEVER, WHAT YOU ARE TALKING ABOUT IN TERMS OF GEN AI JOBS, JOBS THAT REQUIRE GEN AI SKILLS AND YOU SEE TREMENDOUS GROWTH. YOU ARE REALLY STARTING TO SEE A LOT OF DEMAND THERE.
THOSE JOBS ARE GETTING PAID VERY WELL AND THERE IS A SMALL POOL OF PEOPLE THAT HAVE THE SCHOOLS TO BE ABLE TO WORK WITH THESE MODELS AND THEY ARE IN VERY HIGH DEMAND. ED: OUR LAST GUEST BROUGHT THE FINTECH PERSPECTIVE WHICH IS AN INDUSTRY WE ASSOCIATE WITH NEW YORK. IN WHICH CORNER OF THE TECHNOLOGY SECTOR IS THE HIGHEST CONCENTRATION OF EAST COAST JOBS? SVENJA: IN NEW YORK WE ARE SEEING A HIGH CONCENTRATION IN SOFTWARE DEVELOPMENT AND ENGINEERS AND WE ARE STARTING TO SEE THE PICKUP IN GEN AI JOBS AND THEY HAVE A LOT OF FINTECH AS WELL GIVEN THAT IT IS NEW YORK. WE SEE THAT CONCENTRATION THERE
BUT IT IS WORTH NOTING THAT REMOTE WORK HAS PLAYED A ROLE HERE AS WELL. WE HAVE SEEN SOME DILUTION ON THAT FRONT BECAUSE COMPANIES THAT HAVE MULTIPLE BASES AROUND THE COUNTRY ARE ABLE TO DIVERSIFY THEIR WORKFORCE AND HIRE PEOPLE IN OTHER LOCATIONS AND HAVE THEM WORK FROM HOME. PARTICULARLY ON THE TECH FRONT THE SHARE OF REMOTE JOBS IS VERY HIGH AND IT HAS THE DILUTION EFFECT. CAROLINE: I KNOW YOU HAVE AN ECONOMIST HOT BUT I AM INTERESTED IN YOUR REGULATORY TAKE. NEW YORK HAS TRIED TO LEAD THE
CHARGE ON REGULATING AROUND THE USE OF AI AND HIRING TO MAKE SURE THERE IS NOT BIAS BUILT INTO THE SYSTEM. HOW IS THAT CHANGING THE LANDSCAPE FOR HIRING IN NEW YORK? SVENJA: IT IS TOO EARLY TO TELL HOW WE INTEGRATE THESE NEW TECHNOLOGIES AND TOOLS BECAUSE THEY ARE CONSTANTLY EVOLVING HOW COMPANIES ARE USING THEM AS EVOLVING. I DO THINK IT'S INCREDIBLY IMPORTANT TO THINK ABOUT BIAS AND HOW WE USE THESE TOOLS.
WE OFTEN THINK ABOUT GENERATIVE AIS ITS OWN ENTITY THAT IS BEING IMPOSED ON US AND WE DON'T KNOW WHAT TO DO WITH IT. THE GOOD NEWS IS THAT WE HAVE THE CONTROL HERE AND ARE ABLE TO FIGURE OUT HOW WE WANT TO APPLY IT AND WHERE TO APPLY IT AND MAKE SURE TO SUPPLIED APPLIED IN A FAIR AND EQUAL WAY ACROSS DIFFERENT INDUSTRIES, PEOPLE AND JOBS. FROM A POLICY PERSPECTIVE THAT IS REALLY IMPORTANT. NOW IS THE TIME TO THINK ABOUT THESE ISSUES SO THAT WE CAN USE THESE TOOLS TO THEIR GREATEST ADVANTAGE WITHOUT CAUSING ADDITIONAL ISSUES. CAROLINE: IT IS REALLY GREAT TO GET YOUR TAKE AND WE WILL LOOK INTO THAT DATA THAT YOU PREPARED ON GENERATIVE AI. ED: TECHNOLOGY JOBS HAS BEEN ONE OF THE BIG DROPS OF THE YEAR AND THE OTHER IS TESLA SHARES DOUBLING AND 2023.
WE WILL TALK ABOUT TESLA EARNINGS FROM STEVE WESLEY FROM THE WESLEY GROUP. CAROLINE: LET'S GET INTO TECH EARNINGS. NETFLIX REPORTING TODAY. SO MUCH TO MONITOR HERE. THE WRITERS STRIKE THAT'S IMPACTED ALL OF HOLLYWOOD. NETFLIX SAYS THERE ARE GOOD THINGS AHEAD. >> WE HAVE TON OF ROOM TO GROW.
WE ARE PRETTY UNDERPRICED BASED ON STATISTICS. CAROLINE: TED SARANDOS SAT DOWN WITH OUR VERY OWN BLOOMBERG REPORTER. >> THEY HAVE SPENT MUCH OF THIS YEAR INSTITUTING SOME OF THEIR BIG NEW STRATEGIES, THEIR ADVERTISING TEAR WHICH HAS A LOWER-PRICED OPTION IN THE CRACKDOWN ON PASSWORD SHARING WHICH AMOUNTS WITH A LOT OF QUESTIONS. THERE HAS BEEN SOME REPORTING THAT THEY WILL RAISE THEIR BASED HERE AGAIN. I'M NOT SURE ABOUT US WHAT TED SARANDOS WAS GETTING OUT THERE WHEN HE WAS SAYING THEY WERE UNDERPRICED. WHETHER THEY ANNOUNCED THAT AFTER EARNINGS REMAINS TO BE SEEN. ED:
THAT PUTS INTO PERSPECTIVE THE AD SUPPORTING TEAR WHICH WILL INFORM THE DECISION ON RAISING PRICES. THERE SEEMS TO BE A MICRA FOCUS ON NETFLIX ABILITY TO FEED ITS AD SUPPORTING TEAR. >> WE JUST WENT THROUGH THE MIDDLE OF ADVERTISER WEEK. ONE OF THE SENIOR ADVERTISERS UNVEILED WHOSE NEW FEATURES.
THE CHALLENGES THAT THEY DON'T HAVE A LOT OF SKILL. THEY HAVE TAKEN A DIFFERENT APPROACH AND HAVE MADE IT AN OPT IN TEAR WHICH MEANS YOU CAN CHOOSE TO SIGN UP FOR IT BUT EXISTING CUSTOMERS CAN OPT OUT. THEIR APPROACH IS MORE CONSUMER FRIENDLY THAN MOST OF THEIR PEERS. CAROLINE: WHAT ABOUT THE GAMING LANDSCAPE?
>> IT STILL FEELS VERY EARLY. THERE WAS A PRETTY GOOD PIECE IN THE WALL STREET JOURNAL LOOKING AT THE STATE OF THINGS WITH THEIR GAMING. THEY HAVE COMMISSIONED A TON OF GAMES AND RELEASED A LOT OF GAMES. WE HAVE YET TO HEAR OF ANY NETFLIX GAME THAT HAS BEEN A BIG BREAK OUT. THEY HAVE BEEN CAUTIOUS IN THEIR LANGUAGE AROUND IT.
MY GUESS IS, WE ARE STILL OF A FEW YEARS AWAY FROM SEEING ANYTHING MEANINGFUL FROM THEM WITH GAMES. ED: TESLA IS DOWN 4% BUT IT'S UP MORE THAN 100% YEAR TO DATE. IT IS RAISING DOUBTS ABOUT MAINTAINING AND SALES GROWTH AFTER THE STARTED WAGING A PRICE WAR. STEVE, THE EQUATION FOR TESLA HAS BEEN VERY SIMPLE. THEY ARE HAPPY TO SACRIFICE THE BOTTOM LINE, CUT PRICES BUT MAINTAIN 50% ANNUAL GROWTH. THE QUESTION FOR INVESTORS IS HOW MUCH CONFIDENCE EROSION THEY ARE WILLING TO TAKE, WHAT IS THE ANSWER? >> THEY DELIVERED 400 35,000 DOWN FROM A RECORD IN Q2.
THEY ARE ON TRACK YEAR-OVER-YEAR WITH GROWTH. THAT IS NOT BAD BUT EXPECT TESLA TO COME ROARING BACK IN Q4. THEY HAVE CUT PRICES 25% AND THEY ARE STILL PROFITABLE. THE MARGINS HAVE COMPRESSED BUT YOU CAN NOW BUY A MODEL THREE OR WHY AT 35,000.
THEY ARE SELLING 50% OF ALL EV'S IN AMERICA. THERE WILL BE AT LEAST 1.9 MILLION UNITS BUT CAN THEY HOLD OFF THE CHINESE MAKERS. THAT WILL BE THE BIG SMACK DOWN.
ED: I RAISE YOU ONE OTHER BIG QUESTION. IS TESLA A CAR COMPANY OR IS IT A TECHNOLOGY COMPANY? WHAT WE ARE WRITING ABOUT AND BLOOMBERG IS THE GROSS MARGIN THUS FORECAST SELF-INVOLVED FROM 28 PERCENT TO 19% WHICH IS IN LINE WITH TRADITIONAL CARMAKERS? STEVE: HERE'S THE ANSWER YOU MAY NOT EXPECT. TESLA IS A CAR COMPANY. IT'S ABSOLUTELY A TECH COMPANY. THEY ARE ALSO AN ENERGY COMPANY. IT SHOULD BE NO SECRET OR SURPRISE THAT THE TWO DOMINANT LEADERS IN THE TV VEHICLE WORLD -- EV VEHICLE WORLD, ARE ALSO ENERGY COMPANIES. THE BIG BATTLE IS CAN TESLA PULLED OFF BYD, THE CLEAR LEADER IN CHINA, SOUTH AMERICA WHERE YOU ARE SELLING CARS IN THE 15-25,000 RANGE. TESLA HAS 13% NET MARGINS WHILE BYD IS AT 4-5 PERCENT.
BUT AS LONG AS THEY CONTINUE TO GROW THIS RATE TESLA WILL BE IN THE DRIVER SEAT FOR LONGER THAN PEOPLE THINK. ED: CHINA AND IMPORTANTLY IMPORTANT STORY. STEVE WESTLY FORMER BOARD MEMBER OF TESLA. CAROLINE: TIM COOK SAYING THAT HE APPROVES WIN-WIN DEVELOPMENT THAT COMES FROM THE CHINESE MINISTRY. THE SALES OUTLOOK HAS BEEN UNDER SCRUTINY. AS THE U.S. IS TIGHTENING RULES ON CHIPMAKERS, NVIDIA SAID THEY WOULD BUILD AI FACILITIES TOGETHER.
SEE HOW WE TIED THAT AN ONE BEAUTIFUL BOWTIE. CHINA AND THE IMPACT ON U.S. TECH. CAROLINE: ASK FORMERLY KNOWN AS TWITTER IS PROPOSING A USER'S FEE IN THE COMPANY SAYS THE MEASURE HAS THE POTENTIAL TO REDUCE SPAM. THIS IS ALL OF COURSE AND ELON MUSK CALLED IT ONE MILLION -- ONE DOLLAR A YEAR. ED: WHEN THEY FIRST INTRODUCED SUBSCRIPTION IT WOULD DISINCENTIVIZE PEOPLE WHO WANTED TO BE SPAM OPERATORS. WHO WILL PAY NINE DOLLARS TO BE
A SPAM OR ABOUT. THEY ARE JUST DOING IT AT A LOWER BAR. BUT NOW THEY HAVE A CASE STUDY. CAROLINE: THEY HAVE A 1.2 BILLION TO PAY IN INTEREST PAYMENTS. THERE MAY BE A THREE-TIER SUBSCRIPTION LEVEL THAT WE WILL BE SEEING. ED:
HOW PERVASIVE ARE BOTS ON THE PLATFORM. EXPERIENCES DOWN FROM WHAT MOST OF US EXPERIENCE DAY-TO-DAY.
2023-10-20 22:05
