Disney Takes on Peltz, Bitcoin Reverses Course | Bloomberg Technology
IN SILICON VALLEY AND BEYOND, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: I AM CAROLINE HYDE. ED: AND I AM ED LUDLOW. THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: A WIN OF SUPPORT. WE WILL BREAK DOWN THE LATEST. ED: BITCOIN REVERSES COURSE AND HEAD OF THE ETF DECISION. CAROLINE:
AND IS 2020 FOR THE YEAR THAT U.S. CHINA TENSIONS FINALLY HIT APPLE? FIRST WE CHECK ON THE MACRO PICTURE. SOME OF THE DATA NOT COMING IN AS STRONG. THEY WERE NOT GIVING US ANY PARTICULAR HINTS OF A TIMING. BUT STILL WE CONSIDERATION AT WHAT THEY SHOULD BE VALUED AT.
THIS IN YOUR YIELD IS UPCOMING COMING OFF OF ITS HIGHS. BLOOMBERG DOLLAR INDEX NOW FOUR STRAIGHT DAYS. THERE HAS BEEN VOLATILITY AND THAT HAS BEEN A SELLOFF JUST OVER 41,000. INSTEAD OF THE $43,000 LEVEL, ALL IN ANTICIPATION OF THE JANUARY 10 DATE DEADLINE. MORE ON THAT IN A MOMENT. ED: THE MAIN STORY ON THE PUBLIC EQUITY SIDE IS DISNEY. BOB IGER HAS -- SECURE THE SUPPORT TO BACK THE DISNEY PROPOSALS FOR THE BOARD.
BLACKWELL'S CAPITAL HAS OTHER PROPOSALS BUT IS IN LINE WITH BOB IGER. THAT IS IMPORTANT BECAUSE BOB IGER IS TRYING TO WARD OFF ANOTHER ACTIVIST WHO HAS NOT BEEN HAPPY WITH DISNEY'S PERFORMANCE OVER THE PAST TWO YEARS. YOU CAN SEE THE VOLATILITY IN TRADING. LET'S BRING IN LUCAS. WHAT DO WE NEED SNOW HERE? LUCAS: IT IS AN UNUSUAL SITUATION TO HAVE A KNEE OF THIS MAGNITUDE WITH ALL THESE DIFFERENT ACTIVIST INVESTORS SWIRLING AND AGITATING.
THERE HAVE BEEN QUESTIONS ABOUT WHAT EXACTLY THEY WANT AND WHAT THEY ARE SEEKING FROM DISNEY BECAUSE IT SEEMS LIKE DISNEY HAS DONE A LOT OF THE THINGS THAT THEY ADVOCATED FOR. THE APPEARANCE OF VALUE ACT GIVES SOME BALLAST AHEAD OF THIS YEAR. IT SEEMS TO PUT HIM IN A PRETTY GOOD POSITION. IT GIVES BOB IGER A VOTE OF CODS -- CONFIDENCE. CAROLINE: NELSON PELTZ ONCE HIMSELF ON
THE BOARD. DIZZY ONCE WHO, EXACTLY? LUCAS: WANT THE CFO UNDER BOB IGER A LONG TIME AGO. HE WAS ONCE THOUGHT TO BE A POTENTIAL SUCCESSOR BUT BOB IGER ENDED UP ANOINTING TOM STAGGS AS A SUCCESSOR INSTEAD. HE DID NOT END UP SUCCEEDING
HIM BECAUSE BOB IGER DID NOT WANT TO GO ANYWHERE. STAGGS AND HIS COUNTERPART HAVE BEEN -- AT ONE POINT TIME HE THOUGHT HE WOULD BE SUCCEEDING HIM. BOB IS BASICALLY SAYING, LET ME DO WHAT I AM DOING BECAUSE WE HAVE A PLAN AND HAVE ALREADY ADDED RECENTLY.
PROPOSING BOARD MEMBERS THAT HE THINKS WOULD JOIN. HE THINGS HIS CANDIDATE ARE FINE. CAROLINE: WE'LL KEEP AN EYE ON THE COMINGS AND GOINGS. MEANWHILE, LOOKING AT THE
INTRICACIES OF WHAT THIS MEANS FOR A BUSINESS CASE AND HOW IT FITS INTO THE CONSOLIDATION THAT WE ANTICIPATE FOR 2024. LUCAS MADE THAT POINT THAT A LOT OF THE WORK THAT BOB IGER HAS BEEN DOING SEEMS TO BE IN-LINE WITH WHAT ACTIVISTS ARE WANTING. ELIMINATING COSTS. WHAT MORE COULD INVESTORS WANT RIGHT NOW? >> HE HAS DONE A LOT OF THINGS THAT THE INVESTORS WANTED.
AS FAR AS EXPENSES, THEY BROUGHT DOWN CONTENT RINSES TO 25 BILLION. THE BIGGEST TAKE AWAY FROM THE LATEST EARNINGS CALL WAS THAT THEY ARE GETTING THEIR FREE CASH FLOW TO PRE-PANDEMIC LEVELS. THEY ARE RESTORING THE DIVIDENDS. THERE IS A LOT THAT THEY ARE
DOING, BUT THERE IS STILL SOME REGISTRATION WITH DISNEY'S MANAGEMENT. BOB IGER SPOKE ABOUT HOW THE ASSETS ARE IN LINEAR DECLINE. HE TALKED ABOUT HOW THE FUTURES FOR THOSE ARE VERY BLEAK, BUT WE ARE NOT SEEN ACTION FROM HIM ABOUT WHAT HE IS GOING TO DO ABOUT THOSE ASSETS. WE HAVE HAD A WHOLE STRING OF MISFIRES. IT IS JUST NOT WHAT WE EXPECT FROM DISNEY. BUT WE HAVE TO REMEMBER THAT THESE THINGS -- CHANGE TAKES TIME. IT WILL NOT HAPPEN OVERNIGHT.
BOB IGER IS DEFINITELY THE RIGHT PERSON TO DO IT. THERE IS A LOT OF CONFIDENCE, BUT IT WILL TAKE TIME. CAROLINE: SHAREHOLDERS OBSERVE THE OPPORTUNITY TO SUPPORT DISNEY'S TURNAROUND UNDER BOB IGER.
NAVAN ISSUES THAT HAVE BEEN PLAGUING THE COMPANY FOR DECADES. WHAT CAN BE DONE ON THOSE THREE? >> SUCCESSION HAS BEEN A THEME POINT FOR BOB IGER, BUT CFO WAS A HUGE ISSUE. THEY HAVE A SLEW OF BOARD MEMBERS THAT THEY ACTUALLY BROUGHT TO THE BOARD.
LUCAS POINTED OUT SOMEONE WHO HAS A RICH EXPERIENCE IN CONTENT CREATION. AND THEN YOU HAVE JAMES WHO IS A REAL HEAVYWEIGHT. THEY CAN GET A LOT OF PERSPECTIVE THERE. AGAIN, I THINK THEY HAVE ALL THE THINGS IN PLACE. WE HAVE TO SEE WHAT THEY DO IN
TERMS OF STRATEGIC ACTION. THERE IS ALSO THE OUTSTANDING ISSUE WITH HULU. ED: THEY BASICALLY STATE THAT IS THE IS THE WORLD LEADING ENTERTAINMENT COMPANY. THEY SAY IN THE STATEMENT THIS MORNING, AS LEGACY TECHNOLOGY TRANSITIONS TO DIGITAL PLATFORMS, WE BELIEVE DISNEY CAN LEAVE THE MEDIA INDUSTRY FORWARD. DOES BLOOMBERG INTELLIGENCE SHARE THIS THESIS ABOUT DISNEY? >> ABSOLUTELY. THEY HAVE CLASS BRANDS. THERE IS NO DOUBT ABOUT THAT. WE HAVE SEEN A LITTLE BIT OF
UNDERPERFORMANCE IN TERMS OF THE STUDIO SIDE, BUT THEY HAVE ALL THE LEVERS IN PLACE. LOOK AT THE MEDIA ASSETS THEY HAVE AND THEY HAVE FANTASTIC PROPERTIES, WHETHER IT IS MARVEL, PIXAR OR STAR WARS. AND THEN YOU HAVE THE PARKS BUSINESS THAT HAS BEEN PERFORMING EXTREMELY WELL. I DO NOT THINK THEY ARE GETTING ENOUGH CREDIT FOR IT. ED: THE QUESTION IS, WHAT HAPPENS NEXT? THERE ARE DIFFERENT BOARD PROPOSALS. THERE WILL BE A SHAREHOLDER MEETING.
IF YOU GAME PLAN AND MODEL THE SCENARIO, WHERE NELSON PELTZ IS APPEASED -- WE SET IT LAST YEAR. DOES HE GET APPEASED BASED ON THE RAPPORT THAT YOU READ ABOUT THIS MORNING? >> I THINK HE IS GOING TO FIGHT THE HARD. THIS WILL BE A REALLY CONTENTIOUS FIGHT. HE OBVIOUSLY WANTS TO PUT
HIMSELF ON THE BOARD. I DO NOT THINK DISNEY NEEDS THAT DISTRACTION RIGHT NOW. IT WILL COME DOWN TO WHAT BOB IGER -- HE HAS BEEN SHORING UP HIS DEFENSES. IT WILL COME DOWN TO IF HE CAN
ANNOUNCE SOMETHING, IF THERE ARE ANY NEAR-TERM CATALYSTS AND INITIATIVES THAT CAN APPEASE NELSON PELTZ. WHETHER THEY CAN COME UP WITH SOMETHING ON THE LINEAR TV SIDE, PLANS FOR THOSE LINEAR TV ANNOUNCEMENTS OR WITH RESPECT TO ESPN. WE KNOW THAT THEY HAVE BEEN SEARCHING FOR A STRATEGIC PARTNER. THOSE STOCKS HAVE REALLY NOT GONE ANYWHERE. ANYTHING COMES UP ON THAT FRONT, I THINK IT WE INVIGORATE THE STOCK PRICE. ED: REALLY DETAILED ANALYSIS FROM
BLOOMBERG INTELLIGENCE. IT IS CALLED IT A UNUSUAL SITUATION. STICKING WITH ACTIVIST INVESTORS, ANOTHER STORY BE ARE CHUCKLING -- WE ARE TRACKING. SHAREHOLDERS HAVE BEEN FOOD PUSHING TO IMPROVE THE BRITISH COMPANY'S PERFORMANCE. IT HAS BEEN CRITICAL OF THE COMPANY'S DEALMAKING APPROACH.
THEY COULD DIVEST SOME OR ALL OF ITS STAKE IN THAT -- MGM -- BUT MGM -- BET MGM. CAROLINE: WE WILL BE DISCUSSING HOW THE IPHONE MAKER COULD GET DRAGGED INTO GEOPOLITICAL TENSIONS, UP NEXT. JUST CHECK IN ON THE STOCK BECAUSE IT IS ONCE AGAIN SHOWING VALUE. BARCLAYS WENT UNDULY. REALLY THINKING ABOUT SOME OF THE CONCERNS AND DEMAND FOR THE IPHONE 15 AND 16.
WE WILL DIG INTO THE GEOPOLITICS OF IT ALL, NEXT. CAROLINE: LET'S TALK ABOUT CHINA AND THE U.S. BECAUSE ONE COMPANY HAS BEEN ABLE TO NAVIGATE THE ROCKY RELATIONSHIP, AND IT HAS BEEN APPLE. BUT MOUNTING TENSIONS ARE MAKING THINGS EVERMORE COMPLICATED. ULTIMATELY, THERE SEEMS TO BE TWO KEY ISSUES THAT WILL MAKE APPLE'S LIFE ETHICAL. >> HUAWEI WAS HOBBLED BY EXPORT CONTROLS INSTITUTED UNDER DONALD TRUMP AND MAINTAINED BY JOE BIDEN EARLY LAST YEAR THEY CAME OUT WITH A NEW PHONE THAT HAS A CHIP THAT IS CLOSE TO STATE-OF-THE-ART. IT IS THE FIRST PHONE THAT HAS
COME CLOSE TO THE IPHONE IN RECENT YEARS. ON THE OTHER HAND, YOU HAVE RESTRICTIONS. YOU HAVE THE GOVERNMENT PREVENTING THEM. THIS IS A PROBLEM FOR APPLE. ALL OF A SUDDEN, SOME GENUINE
COMPETITION IS PRESENTING ITSELF. ED: THIS IS A CHART THAT SHOWS THE BREAKDOWN OF REVENUES. BACK TO NOVEMBER ON THE EARNINGS CALL, CHINA WAS OVERALL SOFT AND NARRATIVE FROM EXECUTIVES WAS THIS WAS SIMPLY TO DO WITH MAC AND IPAD. BUT THE CAVEAT THAT APPLE TRIED TO PUT IN THEIR, THAT GREEN BAR BEING PROPPED UP BY A RECORD FOR IPHONE SALES. IN YOUR PIECE, IS IT THE IPHONE SPECIFICALLY THAT IS THE BATTLEGROUND HERE OR IS IT THE WHOLE BUSINESS OVER IN CHINA? >> IT IS CERTAINLY THE WHOLE BUSINESS.
APPLE IS COMPLETELY INTERTWINED WITH CHINA. IT RELIES ON CHINA FOR IT SUPPLY CHAIN AND SHOWS -- THE GROWTH OF THE CHINESE MARKET HAS BEEN GOOD FOR APPLE. THE IPHONE DOMINATES AND IT MATTERS A LOT HERE. THESE ARE FAINT SIGNALS THAT WE SAW LAST YEAR. THEY ARE SEEING GROWTH IN
HUAWEI SALES. THEY ARE EXPECTING SOME PAIN FOR APPLE IN CHINA. BUT CHINESE CONSUMERS STILL LOVE THE IPHONE AND HAVE STILL BEEN BUYING IT.
THERE WERE LINES AT APPLE STORES IN DECEMBER, EVEN AS RESTRICTIONS WERE BEING REPORTED BY BLOOMBERG AND OTHERS. CAROLINE: COOK WAS THE SUPPLY CHAIN GUY BEFORE HE BECAME THE CEO. THEY HAVE NOT STEPPED AWAY FROM CHINA. >> PART OF THE PROBLEM THAT APPLE HAS IS THAT THEY ARE A MAJOR EMPLOYER IN CHINA. CHINA DOES NOT NECESSARILY WANT THEM TO DIVERSIFY THEIR SUPPLY CHAIN, WHILE APPLE WOULD LIKE TO NOT BE TOTALLY DEPENDENT ON A COUNTRY, VERY SOLDERING COVID AND THE DEMONSTRATIONS IN FRONT OF THESE IPHONE FACTORIES IN 2022 -- IT COMES WITH RISKS. YOU HAD A PUSH AND PULL. SOME PEOPLE HAVE SEEN AS
RESTRICTIONS AS A MESSAGE FROM CHINA SAYING, YOU DO NOT WANT TO MOVE OUT OF THIS COUNTRY TOO MUCH BECAUSE THAT COULD CREATE PROBLEMS FOR THE LOCAL MARKET. IT IS A DELICATE BALANCE, BUT THE ONE THING APPLE HAS GOING FOR IT I THESE DEVICES. EVEN IF THEY HAVE COMPETITION, THEY ARE GENUINELY LOVED BY ZOOMERS. LOOK AT THE CHIPS AND SOMEONE. ED: HIS LATEST IN BUSINESS WEEK IS A MUST READ. STICKING WITH CHINA, IN AN EFFORT TO TAKE A SOFTER TONE ON THE GAMING INDUSTRY, CHINA HAS REPORTEDLY FIRED THE TOP OFFICIAL OF THE GAMING WATCHDOG AGENCY. WE ARE IN LONDON WITH MORE.
THIS HAPPENED OVERNIGHT, U.S. TIME. IT IS WALKED BACK ON STRONG REGULATIONS THAT ROCKED EQUITY MARKETS AT THE TIME. >> TWO MEDIA REPORTS INDICATE THAT THE HEAD OF CHINA'S PUBLISHING UNIT OF THE PUBLICITY DEPARTMENT WOULD DEPART FROM HIS ROLE. JUST A CAVEAT HERE. THERE IS NO OFFICIAL GOVERNMENT STATEMENT SAYING THAT HE WOULD DEPART OR BE FIRED FROM THIS ROLE, BUT IT DOES SEEM THAT CHINA'S GAMING REGULATOR IS TOWARDS THE VIDEOGAME SECTOR. IN LATE DECEMBER, THEY PUBLISHED A SWEEPING SALE, LIMITING CHINESE PLAYERS, PLAYING TIME AND ENDING ON VIDEO GAMES. THEY WERE BADLY RECEIVED BY THE
MARKET. WE HAVE SEEN A DROP. THEY HAVE BEEN OTHER SMALL VIDEOGAME STOCKS IN LATE DECEMBER. CAROLINE: WHIPLASH IS THE TAKEAWAY FOR NOW. IT SEEMS TO BE A CHANGING OF SENTIMENT WHEN IT COMES TO GAMING. WE WILL TALK ALL THINGS AI AND SECURITY.
SICK -- STICK WITH US FOR IT. ED: TIME FOR TALKING TECH. SAMSUNG IS LEANING INTO AI AS THE KEY TO UNLOCKING RATERS SALES THIS YEAR. THE TEASER TO THE LAUNCH PROMISES THE GALAXY AI IS COMING . SPACEX LAUNCHED ITS FIRST SIX SATELLITES CAPABLE OF OFFERING MOBILE PHONE SERVICES WITH T-MOBILE. OPERATING LIKE A CELL TOWER
SPACE, THE STARLING SATELLITES EXIST WITH -- WORK WITH EXISTING VOTES TO BRING CONNECTIVITY TO REMOTE AREAS. ATOS IS IN TALKS TO SELL ITS BUSINESS TO AIRBUS. THAT WOULD BE FOR ABOUT $2 MILLION U.S. CAROLINE: THE OUTLOOK FOR SECURITY -- CYBERSECURITY IN 2024. GEORGE PARIS JOINS US NOW TO
ALLOW WHAT YOU ARE SEEING ON THE GROUND. WE ARE ALL THINKING ABOUT ARTIFICIAL INTELLIGENCE IS NOT ONLY A RENT, BUT ALSO A DEFENSE. HOW ARE YOU SEEING GENERATIVE AI COMING INTO PLAY FOR CONTRITE? GEORGE: THAT WAS THE HOT TOPIC 2023. IT IS, CAN AND WILL BE USED FOR NEFARIOUS PURPOSES BY ADVERSARIES, BUT WHEN YOU THINK ABOUT COMPANIES LIKE CROWD STRENGTH, IT IS PART OF OUR SUCCESS GOING FORWARD.
IT IS OUR PLAY HELPING CUSTOMERS PROTECT THEMSELVES AND LEVERAGE THEIR KNOWLEDGE. BUT MORE THAN JUST A CHATBOT, DOING WORK ON BEHALF OF CUSTOMERS, USING OUR TECHNOLOGY. WE THINK IT IS A GAME CHANGING. WE THINK WE WILL GET BETTER
OUTCOMES FOR OUR CUSTOMERS. WE ARE EXCITED ABOUT A. CAROLINE: KEEPING HUMANS IN THE LOOP WHEN IT COMES TO AI. I WONDER IF YOU CAN PINPOINT ANY AREAS WHERE GENERATIVE AI HAS MADE AN IMPACT IN TERMS OF CYBER THREAT. WHAT ARE YOU SEEING? GEORGE:
THERE IS A CONCEPT OF DARK AI, WHERE YOU COULD USE CHATGPT WITHOUT RAILS. THERE ARE SOME TECHNOLOGIES OUT THERE WHERE YOU CAN ESSENTIALLY LEVERAGE AND TO CREATE THINGS LIKE FISHING EMAILS, RESEARCHING VULNERABILITIES, TO AUTOMATE THE CREATION OF OF -- CREATION OF CAMPAIGNS. WHAT IT DOES COME IF YOU THINK ABOUT GENERATIVE AI AND WHEN IT HAS DONE FOR EVERYONE ELSE, IT TAKES COLLECTIVE KNOWLEDGE AND MAKES IT AVAILABLE TO THE MASSES.
THE CHALLENGING PART IS, IT MAKES CYBERATTACKS EVEN MORE AVAILABLE TO FOLKS WHO DO NOT HAVE ALL THE KNOWLEDGE BUT CAN ASK THE GENERATIVE AI TECHNOLOGY TO DO SOMETHING ON THEIR BEHALF. CYBERCRIME WILL BE EVEN MORE PREVALENT THAN IT IS TODAY. ED: ALMOST A YEAR TO THE DAY, WE SAT DOWN TOGETHER. THERE WERE LARGE-SCALE ATTACKS. I THINK YOU CALLED THEM BIG GAME HUNTING, AND THE TRACKING OF THESE KIND OF SCALES OF ATTACKS. GOING INTO 2024, THAT HAS CONTINUED. WHAT ARE THE REASONS FOR THAT?
WHY ARE YOU SEEING A CONTINUATION OF THE WIDESCALE ATTACK? GEORGE: THE OLD ADAGE, GO WHERE THE MONEY IS. THE ADVERSARIES HAVE BEEN SO SUCCESSFUL AT BEING ABLE TO RANSOM AND GET PAID. WHEN WE THINK ABOUT WHAT WE SAW OVER THE LAST YEAR, YOU ARE SPOT ON. IT WAS REALLY THE FACT THAT WE SAW THIS DOUBLE EXTORTION, WHICH IS THAT THEY COULD ENCRYPT ALL THE DATA OR IF ORGANIZATIONS BACKED UP THEIR DATA AND RESTORED IT, THEY WOULD TAKE A COPY AND THEN DELETE IT. WE SAW A LOT OF THAT IN 2023, AND NOW I THINK IT IS THE TRIPLE THREAT. WE ARE SEEING THE SEC RULES COMING IN AND WE HAVE SEEN ADVERSARIES ENCRYPT AND GO TO THE SEC AS A WAY TO GET COMPANIES PAID QUICKER.
SO NOW, IT REALLY OPENS UP THE APERTURE FOR THE ADVERSARIES. ED: A GREAT WAY TO KICK OFF 2024. I WOULD SAY THE CONVERSATION HAS NOT STOPPED AT ANY POINT. THANK YOU SO MUCH FOR YOUR TIME. AS WE AWAIT THE DECISION, WE WILL DISCUSS WHAT TO EXPECT WITH THE HEAD OF RESEARCH. THIS IS BLOOMBERG TECHNOLOGY.
CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY. I AM CAROLINE HYDE AND NEW YORK. ED: WE ARE HALFWAY THROUGH THE TRADING DAY. THE NASDAQ 100 IS A MORE FOCUSED INDEX THAT DISTILLS DOWN SOME OF THE FACTORIES THAT ARE HAPPENING. LONGEST ONE OF DECLINES SINCE OCTOBER. THERE IS A COUNTDOWN.
INVESTORS ARE PULLING OUT OF TECHNOLOGY STOCKS. IT KIND OF IS AN EXAMPLE OF THE WORRIES OVER TECH. MAYBE THERE IS SOME PROFIT HEADING INTO THE NEW YEAR, BUT THE PRESSURE IS QUITE CLEAR THERE.
CAROLINE DID A GREAT JOB AT THE TOP OF THE SHOW TALKING ABOUT THE CLAIM. VOLATILITY. THE IS THE SAYING THERE IS A CLEAR CATALYST BECAUSE THERE ARE A LOT OF REPORTS OUT THERE. ALL TOLD, WE ARE TAKING STOCK OF WHERE WE ARE OR NOT WITH BITCOIN AND ETF DECISIONS. CAROLINE: PRECISELY.
SOMEONE TO HELP BREAK US DOWN WITH THIS, HEAD OF RESEARCH. YOU ARE FOCUSED ON MARKETS AND MARKET INFRASTRUCTURE. SHOULD WE ANTICIPATE THAT SORT OF VOLATILITY FOR A JANUARY 10 WHEN WE FEEL THEY HAVE TO MAKE A VIEW ON A COUPLE OF ETF'S AND THEREFORE MAY BE ALL OF THE ETF SCIACCA >> IT IS AN INTERESTING QUESTION ABOUT TIME. WE WOULD BE WONDERING IF AND ETF WOULD EVER BE APPROVED, NOW WE ARE TALKING ABOUT AN IMPORTANT MOMENT IN CRYPTOCURRENCY'S HISTORY. LAYING IT IS GOING TO HAPPEN IS NOT REALLY IMPORTANT. WE KNOW THAT IT WILL HAPPEN AND BLACKROCK HAS A GREAT TRACK RECORD IN GETTING THEIR APPLICATIONS APPROVED, SO THERE IS NOT WORRY ABOUT GETTING IT APPROVED AT THIS POINT. IT WILL BE SOMETHING THAT
MARKETS WILL LOOK AT AND IT WILL CAUSE A LITTLE BIT VOLATILITY. THEY WANT VOLATILITY. LONG-TERM INVESTORS, THEY ARE GOING TO HANG ON A LITTLE BIT. THAT'S ALL. ED: CAROLINE AND I ALWAYS SAY THAT THEY CLAIM IS OUR RISK ASSET OF CHOICE.
SOMETIMES IT MOVES IN CORRELATION WITH EQUITIES AND SOMETIMES IT DOES NOT. WE KNOW THAT THERE IS SOME SELLING BROADLY. HOW MUCH OF THIS IS GOING INTO THE NEW YEAR, NEW MARKETS, FRESH PERSPECTIVE? >> YOU MENTIONED NASDAQ. IF WE WERE LOOKING AT THIS A COUPLE YEARS AGO, WE WOULD SAY BITCOIN IS TRADING LIKE A TECH STOCK. IT IS AT ITS HIGHEST SINCE 2023, SO IT IS THERE ABOUT BITCOIN IS NOT GOING DRASTICALLY DOWN AS WE HAVE SEEN. BITCOIN IS ACTUALLY DOING QUITE WELL, EVEN IF IT HAS BEEN SEEING A LITTLE BIT OF VOLATILITY ON THE BACK OF SOME NOT SO VETTED NEWS. ED: I THINK I KNOW WHAT YOU ARE
REFERENCING. THIS IS LESS THAN SCIENTIFIC, BUT I HAVE SEEN POST ON OTHER BLOGS THAT MAKE THE ARGUMENT THAT BITCOIN CURRENTLY IS NOT PRICING IN A ROADMAP FOR APPROVAL. ARE YOU ABLE TO MAKE THAT ARGUMENT THAT THE PRICE OF BITCOIN, EVEN THE SURGE OF RECENT WEEKS CANNOT REFLECT THAT POTENTIAL OUTCOME? >> I THINK WE ARE STILL AT A STAGE OF LITTLE BIT OF GAMBLING. THERE IS STILL A BIT OF LEVERAGE IN THE SYSTEM. IF YOU LOOK AT THE TRADES OF SOMEONE WHO WANTS A RISK-FREE RETURN. FOR YOU TO TAKE ADVANTAGE OF THAT, YOU NEED TO PUT IT UNDER CUSTODY, TRADE IT ON GLOBAL MARKETS AND TAKE ADVANTAGE OF THAT YIELD.
PEOPLE WILL HAVE TO BUY MORE BITCOIN AND DO THE WHOLE PROCESS OVER AGAIN. IT FEEDS OFF EACH OTHER. THAT IS ALL. CAROLINE: THERE HAS BEEN A FLURRY OF ACTIVITY. YOU THINK OF COMPANIES TALKING
ABOUT AUTHORIZED PARTICIPANTS INVOLVED, ABLE TO CREATE AND REDEEM SHARES. A BIT OF A BASHFUL PEOPLE TO HAVE OVERRULED THE CLEAR LANGUAGE THAT THE SEC IS WANTING TO SEE WHEN IT COMES TO CASH ONLY CREATION. IF WE DO NOT GET ALL THE BOX TICKING NECESSARY AND IF THE SEC DOES NOT WANT TO MAKE A KINGMAKER OUT OF ONE OR TWO ETF'S, WE WILL HOLD OUT. IF WE DO NOT SEE SOMETHING BY JANUARY 10, DO WE HAVE TO FADE THIS RALLY? QUESTION COULD SEE BITCOIN DROP AS WELL. IT IS NOT INCONCEIVABLE. A LOT OF ANALYSTS TO LOOK OUTSIDE THE MARKETS AND BLOCKCHAIN ACTIVITY ARGUING THAT WE COULD SEE A CORRECTION.
IF YOU ASK ME, IF I LOOK AT A REVISION, YOU COULD ARGUE THAT IT COULD GO TO 27,000. ULTIMATELY, WHEN WE ARE TALKING ABOUT ETF APPROVAL, WE ARE TALKING ABOUT LONG-TERM INVESTORS. AT THAT POINT, IT IS A COMPLETELY DIFFERENT ARGUMENT. IT IS INEVITABLY GOING TO GO UP. THE IDEA THAT AN ETF IS GOING TO MAKE OR BREAK BITCOIN AND THE NEXT SIX MONTHS IS A LITTLE BIT WRONG.
WE HAVE TO WONDER WHAT THE ETF WILL BE INTERESTING AS A MARKET RATHER THAN INVESTORS AND TRADERS WHO THRIVE ON THE VOLATILITY THAT WE ARE SEEING TODAY. CAROLINE: THEY HAVE BEEN DOING THAT FOR A FEW YEARS. I'M INTERESTED. HAVE YOU QUANTIFIED WHAT SORT OF SCALE OF MONEY YOU THINK WILL COME IN WHEN BITCOIN IS APPROVED? WHAT KIND OF INFLOWS ARE YOU ANTICIPATING? >> I DO NOT REALLY HAVE A NUMBER FOR YOU, TO BE HONEST. I THINK IT IS A NARRATIVE THAT CRYPTOCURRENCY MARKETS HAVE REALLY SORT OF LATCHED ONTO SOMETHING POSITIVE AS A CATALYST AFTER A COUPLE OF YEARS OF REALLY DIFFICULT THINGS HAPPENING WITHIN THE MARKET. WHAT IS REALLY GOING TO HAPPEN IS THAT WE ARE GOING TO SEE LARGER INVESTORS UNDERSTAND THAT BUYING BITCOIN ETF IS GOING TO BE A LOT MORE EXPENSIVE THAN ACTUALLY TAKING CUSTODY OF THEIR OWN ASSETS. THE OPPORTUNITIES ON A ROUND-THE-CLOCK COME AROUND THE YEAR MARKETS ARE GOING TO BE A LOT MORE GOOD IN THAN BUYING SOMETHING THAT IS TREATED ON A U.S. BASED EXCHANGE ONLY.
WE ARE ENTERING A VERY DIFFERENT INFRASTRUCTURE. THEY OFFER A LOT MORE OPPORTUNITIES. ED: URINALYSIS IS REFERENCED IN THE MAIN STORY THIS MORNING. YOU ARE LISTED AS HEAD OF RESEARCH. A CRYPTO CUSTODIAN.
DOWN THE RABBIT HOLE. EXPLAIN THE COMPETITION IN THE MARKET AND WHAT IT IS. >> I THINK WE ARE ADDRESSING DIFFERENT MARKET. I THINK IT ADDRESSES A MORE -- A DIFFERENT FOCUS.
I DO NOT THINK THE CRYPTO INDUSTRY WOULD BE WHERE IT IS AT WITHOUT WHAT COINBASE HAS PUT FORWARD. REMOVING AND MITIGATING THE RISKS THAT WE HAVE SEEN. OTHER EXCHANGES ARE NOT SO REPUTABLE AND HAVE BEEN HACKED. THEY USE COPPER AND STILL ARE ABLE TO TRADE ON ALL THESE EXCHANGES.
THAT IS THE DIFFERENCE THAT FOCUSES ON STRUCTURE AND PROVIDING OTHER TOOLS. COINBASE HAS A LOT OF RETAIL FOCUSED OUTFITS BUT IT IS A DIFFERENT KIND OF OFFERING TO THE CLIENTS. ED: GREAT TO HAVE YOU ON THE PROGRAM. AND FOR YOUR TIME. COMING UP ON THE SHOW, WE WILL TALK ABOUT THE STATE OF THE VENTURE CAPITAL INDUSTRY WITH REBECCA LYNN. THAT IS COMING UP NEXT. THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: IN DECEMBER, IT WAS OPENVIEW.
NOW ANOTHER IS SHUTTING DOWN. COUNTDOWN CAPITAL. AN EARLY STAGE INVESTOR FOCUSED ON AEROSPACE. POSTING ON THAT DESPITE DELIVERING STRONG PERFORMANCE COME HE BELIEVES THE FUTURE LOOKS AT OTHER FIRMS. ED: LET'S TALK ABOUT WHAT THIS MEANS FOR THE FUTURE. SOME FUNDS WERE STARTED AND SOMEWHERE CLOSE. WE WANT TO BRING IN REBECCA LYNN.
I HAVE BEEN LOOKING AT THIS CHART. 2021, A LOT WAS GOING ON BUT ALSO JUST TRADITIONAL LISTINGS. THE MARKET CLOSED IN 2022. CAROLINE AND I GOT A LITTLE EXCITED AND WE ARE TRYING TO WORK OUT WHAT HAPPENS IN 2024.
YOU HAVE BEEN OUT THIS FOR 10 TO 15 YEARS. THIS IS YOUR SWEET SPOT. THERE MUST BE LOADS OF COMPANIES THAT HAVE MATURED. YOU MUST BE WONDERING, HOW DO I
GET OUT? REBECCA: YOU DO NOT TIME THE MARKET. YOU BUILD REALLY PROFITABLE COMPANIES BUILT ON FUNDAMENTALS. IT IS A PROBLEM THAT WE HAVE SEEN. IT IS NOT REALLY WHAT CREATES THIS PROFITABLE COME ALONG ENDURING COMPANY. I DO NOT THINK THE ANSWER IS
HOW YOU GET OUT, IT IS HOW YOU CREATE A PROFITABLE COMPANY WITH OPPORTUNITIES WHEN THE WINDOW IS OPEN. WHEN YOU LOOK AT THE BIG HITS THAT WE HAVE HAD, THEY WERE ACTUALLY PROFITABLE AND GROWING YEARS BEFORE THEY WENT PUBLIC. AS A COMPANY, YOU WANT TO CONTROL YOUR DESTINY, AND YOU DO NOT BY FOCUSING ON FUNDAMENTALS. ED: IF YOU LOOK AT THE DATA FOR LAST YEAR, IT LOOKS LIKE WE WILL HIT 150 BILLION OF VENTURE FUNDING TO DROP OFF, BUT ONE OF THE ARTIFICIAL BRIGHT SPOT WAS ARTIFICIAL INTELLIGENCE.
THERE WAS A LOT OF ACTIVITY AND LARGE ROUNDS. IS THAT ENOUGH TO CARRY MOMENTUM OR HAS THAT ENDED? REBECCA: I THINK I WILL CONTINUE TO AN EXTENT. THERE WAS A HUGE DROP-OFF. WE HAVE NOT SEEN THAT LOW OF A NUMBER SINCE 2015 TO EMPHASIZE HOW MUCH OF A DROP OFF WE FELT LAST YEAR. WITH AIA, YOU SAW ONE IN EVERY FOUR DOLLARS WAS INVESTED IN THAT SPACE AND I THINK WE WILL CONTINUE TO SEE THAT, BUT IT WILL BE A DAY OF RECKONING FOR COMPANIES THAT NEED TO FIND PROFITABLE BUSINESS MODELS.
THEY ARE STRUGGLING WITH HOW TO MAKE AIA PROFITABLE AND HOW TO WORK THOSE BUSINESS MODELS. CAROLINE: TASTE TEXT. WE ARE SEEING MORE AND MORE COMPANIES COME TO THE FORM. WE ARE ABOUT TO INTERVIEW
ANOTHER ONE. ARE THEY GOING TO BE ABLE TO OPERATE INDEPENDENTLY? DO THEY HAVE ENOUGH OF THE DATA THAT IS MITCH TO FIGHT OFF OPENAI OR GOOGLE ABLE TO REPLICATE THEMSELVES? REBECCA: THAT IS A GREAT QUESTION IN TERMS OF WHAT IT REALLY TAKES FOR NAI COMPANY TO SUCCEED. WE HAVE HAD A FRONTMOST SEAT SINCE WE INVESTED IN SERIES E BACK IN THE FIRST ROUND OF THIS. CASE TEXT WAS A UNIQUE SITUATION. THEY HAD BEEN OPERATING FOR 10
YEARS IN THIS SPACE. ALL THE DATA BEHIND THAT. THEY HAD ACCESS TO THE LARGE LANGUAGE MODELS FOR PROBABLY SIX OR SEVEN YEARS AND HAD BEEN WORKING WITH THAT PRIDE DECADE. WE ARE ONE OF THE FIRST PEOPLE IN THE SANDBOX BECAUSE OF THAT. NOT ALL LEGAL SIGN-UPS ON THIS THEME. THEY HAD THIS LARGE CUSTOMER BASE. THE ANSWER IS MAYBE BUT I WOULD BE FAIRLY CONCERNED STARTING A COMPANY RIGHT NOW IN A SPACE WITHOUT HAVING A UNIQUE CUSTOMER BASE AND PROPRIETARY DATA, GOING UP AGAINST GOOGLE, FACEBOOK AND AMAZON.
CAROLINE: WE CAME INTO THIS CONVERSATION TALKING ABOUT COUNTDOWN. ANOTHER FIRM IS SHUTTING UP SHOP. CAN YOU SPEAK TO YOUR OWN INDUSTRY BEING FORCED TO CONSOLIDATE WERE WINDING DOWN? NOT JUST THE PORTFOLIO COMPANIES THAT YOU HAVE BACKED. REBECCA: IT HAS BEEN INTERESTING . THIS ENVIRONMENT LOOKS VERY
MUCH LIKE THE ENVIRONMENT THAT I ENTERED IN 2008. WE LAUNCHED OUR FUND PRETTY MUCH THAT SAME WEEK AND IT WAS A GREAT TIME TO INVEST IN COMPANIES. WHEN IT COMES TO VENTURE CAPITAL FIRMS, THERE ARE THREE TIMES MORE VENTURE CAPITAL FIRMS TODAY IN EXISTENCE THAN WHEN I STARTED IN 2008. APPROACHING 3000 FIRMS RIGHT NOW. WHAT WE HAVE SEEN IN EVERY
INDUSTRY CYCLE IS THAT VENTURE IS A CYCLICAL INDUSTRY AND IT EBBS AND FLOWS. AND WHAT WE SEE FROM THAT IS WE SEE FROM THAT IS REDUCED DECONSOLIDATION IN EVERY CYCLE, BUT WHAT THAT CREATES IS AMAZING FIRMS LIKE BENCHMARK WHERE THE BEST OF PARTNERS AND OTHER FIRMS JOIN TOGETHER AND FORM NEW FIRMS. YOU WILL SEE A LOT MORE OF THAT IN THE UPCOMING YEAR OR TWO. THAT IS AN EXCITING THING FOR VENTURE OVERALL. ED: WHAT IS THE BIG AREA THAT YOU ARE FOCUSED ON IN 2024? REBECCA: I THINK HEALTH CARE REMAINS AN UNTAPPED OPPORTUNITY.
IT IS UNIQUELY SUITED FOR AI BECAUSE THERE IS A LOT OF MONEY GOING INTO IT. PEOPLE ARE SPENDING A LOT OF MONEY TO SOLVE THESE PROBLEMS AND I THINK IT IS A REALLY RICH AREA FOR APPLICATION AI. ED: ONCE AGAIN CALLING OUT AI AND HEALTH CARE. CAROLINE: WE WILL BE JOINED BY RICHARD ROBERTSON TALKING ABOUT A FUNDING BOOST AND WHAT THE NEXT COPILOT TO WATCH OUT FOR IS. THIS IS BLOOMBERG TECHNOLOGY.
CAROLINE: LAKERS SAYS IT HAS RAISED $23 MILLION. HERE TO TALK MORE ABOUT THIS, THE IMPACT OF AI MORE BROADLY IS THE CEO, RICHARD ROBERTSON. LESS THAN 12 MONTHS. ONLY 10 MONTHS. WHY DID YOU HAVE TO GO AND RAISE THE FUNDS? >> IT WAS OPPORTUNISTIC. WE ARE SEEING A SHIFT AND SO,
IN LIGHT OF A LOT OF DEMAND AND A NEED TO REALLY EXPAND, WE TOOK THE OPPORTUNITY TO THINK ABOUT RAISING MORE CAPITAL. ED: THE SINGAPORE ANGLE IS REALLY INTERESTING. THERE IS A PLAN TO OPEN YOUR PRESENCE IN SINGAPORE. WHY? >> WE WANT TO BE A GLOBAL BUSINESS. FUNDAMENTAL TECHNOLOGY GAVE RISE TO MASSIVE GLOBAL BUSINESSES LIKE GOOGLE AND FACEBOOK. WE THINK THAT AI IS GOING TO USHER IN MORE COMPANIES OF THAT SIZE AND SCALE. WE HAVE ALWAYS BEEN
SIGNIFICANTLY AMBITIOUS. WE HAVE CUSTOMERS IN ASIA AND WE WANTED TO EXPAND THAT PRESENCE. CAROLINE: YOU TALK ABOUT THE SHIFT AND BASICALLY A COPILOT CONCEPT.
IN FACT, THIS PARTICULAR COPILOT THAT YOU HAVE BEEN USING IS FREE ON MICROSOFT ADD-ONS, SO WITH WHAT YOU ALREADY HAVE, YOU HAVE A LOT OF KEY NAMES. WHERE IS YOUR REVENUE GENERATION COMING FROM? >> PRIMARILY, OUR REVENUE COMES FROM BIG COMPANIES. WE WANT TO HELP COMPANIES GO FASTER, SO OUR CUSTOMERS ARE THE FORTUNE 500, THE WORLD'S LARGEST EQUITY FUNDS, PEOPLE TO DO TRANSACTIONS. WHAT HAS INVESTORS EXCITED IS THAT THEY SEE AIA IS CHANGING THE WHOLE INDUSTRY. THE LEGAL INDUSTRY IS GOING TO CHANGE AND IT WILL BE JUST -- IT WILL BE TRANSFORMED BY AI BUT THEY ARE SEEING A STARTUP THAT HAS REAL TRACTION WITH REAL AND DISCERNING CUSTOMERS. WE COULD BUILD SOMETHING QUITE DEFENSIBLE HERE. ED:
WE HAVE BEEN SHOWING HOW IT WORKS AND IT IS AN AD IN TO MICROSOFT WORD, BUT MICROSOFT IS DOING A LOT WITH ITS OWN COPILOT IN TERMS OF PRODUCTIVITY. ARE YOU WORRIED ABOUT THE KIND OF DESIGN OF THE SYSTEM, THAT MICROSOFT IS OFFERING SOMETHING SIMILAR? >> NOT REALLY. IT IS SIMILAR, BUT IT IS A GENERAL TOOL. IT IS DESIGNED TO DO A LITTLE OF EVERYTHING.
THE LEGAL INDUSTRY WILL BE WORTH $1 TRILLION NEXT YEAR. IT IS ONE OF THE BIGGEST INTEREST -- ONE OF THE BIGGEST INDUSTRIES ON THE PLANET AND IT NEEDS ITS OWN BESPOKE SYSTEM THAT UNDERSTANDS LEGAL DOCUMENTS, THAT UNDERSTAND THE LAW. THE MICROSOFT COPILOT IS NOT GOING TO DO THAT. IT IS CATERING TO A MUCH WIDER AUDIENCE.
I THINK IT WILL BE ITS OWN RACE. ED: THE CEO RICHARD ROBERTSON. THE IDEA OF AUTOMATING DRAFTS AND THE LEGAL CONTEXT. I KNOW A FEW PEOPLE IN MY WORLD THAT WOULD BE VERY INTERESTED IN THAT.
THANK YOU FOR YOUR TIME. CAROLINE: LOOK, WE HAVE BACK TO IT. HE FOCUSED ON AI AND FIBER, FOCUSED ON MAYBE SOME OF THE VALUATIONS. THAT DOES IT FOR THIS EDITION OF BLOOMBERG TECHNOLOGY. ED: RECAP ON THE PODCAST WHEREVER YOU GET YOUR PODCASTS. THIS IS BLOOMBERG.
2024-01-04 16:20
