UK Tech Summit, China Targets Foxconn, Actors & Studios Negotiate | Bloomberg Technology
THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: WE ARE LIVE FROM LONDON FOR THE BLOOMBERG TECHNOLOGY SUMMIT. I’M CAROLYN HYDE, AND THIS IS "BLOOMBERG TECHNOLOGY." COMING UP, WE’LL SPEAK TO U.K.-BASED ENTREPRENEURS TO DISCUSS EVERYTHING FROM CYBERSECURITY AND SO MUCH MORE. PLUS CHINA RATTLES FOREIGN
FIRMS AGAIN AS IT OPENS AN INVESTIGATION INTO ONE OF APPLE’S MOST CRITICAL SUPPLIERS. DETAILS AHEAD. PLUS WE GO BACK TO THE PICKET LINE AS HOLLYWOOD STUDIOS RETURN TO NEGOTIATIONS WITH ACTORS THIS WEEK TO END THE MONTHS-LONG STRIKE. BUT FIRST, I CHECK IN ON THOSE MARKETS, AND BOY, HAS THERE BEEN SOME VOLATILITY, PARTICULARLY IN TREASURIES. WHAT’S THE READ ACROSS HERE?
>> THERE’S BEEN TREMENDOUS VOLATILITY AT THE SURFACE LEVEL, SO MUCH SO, LET’S START BENEATH THE SURFACE. IF WE HAD BEEN LOOKING AT THIS BOARD AN HOUR AND A HALF AGO, THERE WOULD HAVE BEEN AT LEAST SOME RED ON IT. BUT IT FLIPPED TO THE UPSIDE. MICROSOFT AND META, TWO OF THE MEGA CAP COMPANIES. THAT ARE REPORTING THIS WEEK. MICROSOFT TOMORROW, AND META ON WEDNESDAY.
A BIG PIECE OF THIS TURNAROUND FOR SURE FROM A MICRO STANDPOINT. FOR MICROSOFT, ONE OF THE KEYS COULD BE THEIR OUTLOOK FOR AZURE, THE CLOUD BUSINESS THAT WAS DISAPPOINTING. PLUS COLOR ON A.I., FOR META, IT’S ALL ABOUT WHETHER OR NOT THEY CAN MAINTAIN MID TEENS GROWTH. THAT COULD HAVE A LOT TO DO WITH PRICE. WE ALSO HAVE BITCOIN IN RALLY MODE, UP SEVEN OVER THE LAST NINE DAYS. THAT IS HELPING OUT RIOT PLATFORMS, UP 10.2%.
NVIDIA RECEIVING SOME FAVORABLE COMMENTARY FROM A WALL STREET INVESTMENT BANK. LET’S PUT THIS TOGETHER WITH THE NASDAQ 100 AND SEE WHAT IT MEANS. HERE’S THIS ROLLER COASTER RIDE. TO YOUR POINT AT THE LOWS, IT WAS MORE OF A MACRO STORY, CAROLINE, THE FACT YOU HAD THE 10-YEAR YIELD BACK ABOVE 5% FOLLOWING THE TWO-YEAR YIELD. THE YIELD CURVE REALLY FLATTENING OUT.
THAT MAKES STOCKS LOOK MORE EXPENSIVE, BUT BIG CAP TECH IN PARTICULAR, THE GROWTH, THE LIQUIDITY, IT TIGHTENS THE SITUATION OVERALL. BUT AS THE 10-YEAR YIELD SLIPPED BACK TO 490, LOOK AT THE RALLY WE HAVE, PLUS SOME OF THE INDIVIDUAL MOVERS WE WERE JUST LOOKING AT. ON THE YEAR, IT’S VERY INTERESTING. BECAUSE OVER THE LAST THREE MONTHS, WE’VE HAD STOCKS DOWN. THE S&P 500 DOWN ABOUT 8%, SO ON THE YEAR, UP ABOUT 10%.
THE NASDAQ 100 AT ONE POINT UP MORE THAN 40% ABOUT, 10% VERY ROUGHLY COMING OFF BOTH INDEXES. YOU CAN SEE, THOUGH, THE MEGA CAP TECH INDEXES THAT HAVE SOME OF THESE STOCKS THAT ARE REPORTING THIS WEEK UP MUCH MORE. WHAT MAKES THIS INTERESTING, CAROLINE, IF WITH GO INTO THE BLOOMBERG TERMINAL, IT MEANS THE S&P 500 IS DOING SOMETHING THE NASDAQ 1100 IS NOT DOING, THE S&P 500 ON THE DAY WAS FIRMLY BELOW THE 200-DAY MOVING AVERAGE, BACK ABOVE, IT LOOKS LIKE WE’RE PROBABLY SEE MORE WEAKNESS TO THE DOWNSIDE. THE QUESTION IS, WILL THE NASDAQ 100 FOLLOW AT SOME POINT? IT COULD HAVE JUST AS MUCH TO DO WITH YIELDS AS IT COULD WITH EARNINGS THIS WEEK AND NEXT. CAROLINE:
MACRO CHARTS, TECH, DO YOU IT ALL. MEANWHILE, A KEY CORPORATE STORY OF THE DAY HAS BEEN CHINESE AUTHORITIES, SHAKING THE CONFIDENCE OF FOREIGN COMPANIES IN PARTICULAR. THAT’S WITH A SERIES OF ARRESTS ACROSS INDUSTRIES, AND AN INVESTIGATION INTO THE ALL-IMPORTANT TECH NAME THAT IS FOXCONN, A KEY SUPPLIER TO APPLE. FOR MORE, WE WANT TO DIG INTO IN THIS NARRATIVE. THE DIRECTOR OF THE RODE UPGROUP, AND YOUR EXPERTISE IS SO IMPORTANT. YOU ADVISE WITHIN CHINA, AND I’M INTERESTED AS TO WHETHER YOU THINK THIS IS AN ONGOING PUSHBACK BECAUSE OF, WELL, THE TECH ISSUES THAT WE’VE SEEN, THE RIVALRY BETWEEN U.S. AND CHINA, OR IS IT SOMETHING
DIFFERENT ENTIRELY? >> WELL, LOTS OF LAYERS OF INTRIGUE HERE, OF COURSE. ANY MULTINATIONAL CORPORATION OPERATING IN CHINA KNOWS THAT THERE’S ALWAYS THE RISK OF TAX AND COMPLIANCE AUDITS. THIS RUNS FROM TECHNOLOGY TO RETAIL REALLY ACROSS THE GAMUT. BUT IN THIS GEOPOLITICAL CLIMATE, WHENEVER THESE MOVES ARE TAKEN, THERE’S ALWAYS THE QUESTION OF WHETHER THERE’S MORE OF A PRELIMINARY TINGE HERE OF ECONOMIC COERCION. OF COURSE, FOXCONN BEING SO CLOSELY TIED TO APPLE, IT’S MORE OF A QUESTION MARK HERE IN TERMS OF TARGETING. THERE HAVE BEEN RUMORS OF INFORMAL BANS AGAINST APPLE PRODUCTS. THIS COMES IN THE WAKE OF
REVELATIONS AROUND THE BREAKTHROUGH, MAKING IT A MORE FORMIDABLE COMPETITOR TO APPLE AS WELL. SO LOTS OF DIFFERENT THINGS TO UNTANGLE HERE. OTHER COMPANIES ALSO FACING CRACKDOWNS FROM SECURITY LAWS, BUT THERE’S A BIT MORE TO UNPACK HERE AND WHETHER THIS IS TRULY A CASE FOR COERCION AND HOW IT COULD TIE INTO THE TAIWANESE ELECTION AS WELL. >> YEAH, LET’S DIG INTO THAT IN A MOMENT.
BASICALLY SAYING THEY WILL COLLABORATE WITH AUTHORITIES, AND INDEED, YOU MENTIONED THIS IS IN SOME WAYS TO DO WITH REVIEWING OF LAND USE, IN PARTICULAR TAX AUDITS. TELL US A LITTLE BIT MORE ABOUT THE ADDED COMPLEXITY, THE FOUNDER OF FOXCONN HAS STEPPED DOWN BECAUSE HE’S RUNNING FOR THE TAIWANESE ELECTION. REVA: HE IS, AND, OF COURSE, THAT CHANGES UP THE RACE A BIT. HE’S RUNNING AS AN INDEPENDENT. THIS IS A VERY COMPLEX ELECTORAL DYNAMIC FOR BEIJING, AND TRYING TO FAVOR AN OUTCOME FOR THE ONE THAT IS MORE FRIENDLY TO MINELAND POLICIES -- TO MAINLAND POLICIES. IT’S HARD TO CONCLUDE, THOUGH, THAT A MOVE AGAINST FOXCONN WOULD TRANSLATE INTO A POLITICAL FAVORABILITY TOWARD BEIJING WHEN IT COMES TO THE UPCOMING TAIWANELECTION IN JANUARY. THERE’S A QUESTION OF WHETHER
THE PARTICIPATION IN THE RACE WOULD DIVIDE THE OPPOSITION VOTE IN A WAY THAT UNDERMINES THE K.M.T., WHICH BEIJING WOULD NOT LIKE TO LEND. BUT STILL, THAT’S A VERY COMPLEX LOGIC CHAIN, AND I DOUBT THAT THESE MOVES AGAINST FOXCONN WOULD TRANSLATE INTO THEM PULLING BACK FROM THE RACE. SO AGAIN, I THINK THERE’S A TEMPTATION TO SEE EVERYTHING AS A HIGHLY POLITICIZED MOVE, BUT HERE, I THINK WE NEED TO TAKE A CLOSER LOOK AT APPLE’S DIVERSIFICATION MOVES, OTHER ELECTRONICS COMPANIES AND THEIR DIVERSIFICATION MOVES. CHINA, OF COURSE, HAS A VERY BIG IMPULSE NOW TO STRIKE BACK AT U.S.-LED TECHNOLOGY AND INVESTMENT CONTROLS. WE JUST HAD ANOTHER ROUND OF U.S.-LED CHIP CONTROLS, WHICH
IS PUTTING A LOT OF PRESSURE ON MAJOR U.S. TECH PARTNERS TO INCLUDE TAIWAN. SO THAT IS REALLY, I THINK, THE HYPOTHESIS TO TEST HERE. CAROLINE: WHEN YOU PUT, OF COURSE, YOU SAY IT’S EASY TO GO FOR THE HIGHLY POLITICAL LENS, GO FOR THE HIGHLY ECONOMIC LENS, BECAUSE ALL OF THIS COMES IN A MUCH TOUGHER CONTEXT FOR CHINA MORE BROADLY. REVA: ABSOLUTELY. SO ANYTHING PERCEIVED AS RETRIBUTION ARE FALLING INTO THE SCOPE OF TIGHTENING LAWS AROUND COUNTER ESPIONAGE AND COUNTERING ANY TYPE OF PERCEIVED ESPIONAGE ACTIVITY.
CRACKDOWNS AROUND DATA SECURITY IN GENERAL, MULTINATIONAL CORPORATIONS ARE ALREADY ON HIGH ALERT. AND THIS CERTAINLY DOESN’T HELP THE SOURING INVESTMENT CLIMATE. AS WE’VE ALREADY SEEN, F.D.I. INFLOWS INTO CHINA HAVE BEEN LEVELING OFF, PARTICULARLY SINCE 2019. THAT’S BEEN VERY WORRYING TO THE POINT WHERE YOU SEE THE STATE COUNCIL OF CHINA PUTTING OUT ALL KINDS OF PLEDGES TO SAY IT’S OK, WE’RE DOING THINGS TO INCLUDE VERY NOTABLE THINGS LIKE EASING CROSS BORDER FLOWS AND DATA REGULATIONS, A BIG ASK FOR MANY OF THESE COMPANIES. AT THE SAME TIME, EVERY TIME
THAT THE U.S. ENGAGES IN ANOTHER ROUND OF TECHNOLOGY AND INVESTMENT CONTROLS, THERE IS THIS IMPULSE TO STRIKE BACK, AND YOU’RE SEEING THIS THROUGH LANDMARK LEGISLATION COMING OUT OF CHINA, EVERYTHING FROM COUNTER ESPIONAGE LAWS, THE FOREIGN RELATIONS LAW, IT’S A FORM OF CODIFYING RETRIBUTION. FOR EXAMPLE, CONTROLS ON ARTIFICIAL AND NATURAL GRAPHITE, ARTIFICIAL GRAPHITE IS VERY CRITICAL FOR E.D.
BAT RIIS. WE’VE SOON RESTRICTIONS ON OTHER EXPORTS. THOSE ARE IMPORTANT FOR SEMICONDUCTOR MANUFACTURING. ALL OF THIS ONLY UNDERSCORES THE UNRELIABILITY OF CHINA IN THESE CRITICAL VALUE CHAINS. THAT CAN ENERGIZE DIVERSIFICATION MOVES, BUT OF COURSE CHINA IS LOOKING TO SHOW WHERE IT CAN CREATE CHANGE IN THE HERE AND NOW. CAROLINE: IT INFLICTS PAIN ON IT’LL OWN
PUBLICLY TRADED COMPANIES. I’M LOOKING AT THE INDEX, WHICH HAS ONLY RECEIVED OF ABOUT THREE YEARS AGO, TO TRY TO BE THE CHINESE VERSION OF THE NASDAQ 100, AND IT HIT A RECORD LOW SINCE IT’LL INCEPTION. WE ARE WORRIED ABOUT GROWTH AND A WEAK EXPORT OUTLOOK, NOT TO MENTION SOME OF THE POLITICAL ELEMENTS. SO GO BACK TO WHAT YOU ADVISE CLIENTS IN THE HERE AND NOW, REVA. YOU ARE SOMEONE WHO LOOKS AT THE ADVISORY. IF I’M ABOUT TO THINK ABOUT ENTERING THE COUNTRY, DO YOU SAY I WOULDN’T? REVA: WELL, IT DEPENDS ON WHERE YOU ARE, WHICH VALUE CHAIN WE’RE SPEAKING OF.
EVEN AS DIVERSIFICATION IS HAPPENING, YOU CAN LOOK AT APPLE, YOU CAN EVEN LOOK AT FOXCONN’S FOOTPRINT AND HOW IT HAS A NOTABLE PRESENCE IN CHINA, BUT EMERGING PRESENCE IN PLACES LIKE INDIA, MEXICO, VIETNAM. THAT TREND IS HAPPENING, OF COURSE, BUT THESE COMPANIES ARE ALSO GREATLY EXPOSED, APPLE IN PARTICULAR. AS THESE COMPANIES ARE ENGAGED IN THE BALANCING ACT, IT IS VERY IMPORTANT TO UNDERSTAND THE INTENT BEHIND CHINA’S POLICY MOVES. IT’S CAUGHT BETWEEN TRYING TO
PROMOTE A HEALTHIER FOREIGN INVESTMENT CLIMATE TO COUNTERACT THE FORCES OF ITS STRUCTURAL ECONOMIC DOWN TURN, AND THAT IS SOMETHING THAT IS GOING TO LAST FOR A WHILE. AT THE SAME TIME, TO STAY ALERT TO U.S.-LED AND PARTNER MOVES ON TECHNOLOGY AND INVESTMENT CONTROLS, THIS IS A FAST-EVOLVING SPACE. THERE IS A LOT PACKED INTO, FOR EXAMPLE, THE 400-SOME PAGES OF CONTROLS THAT CAME OUT JUST LAST WEEK FROM THE U.S. THAT IS MAKING IT VERY HARD FOR TECHNOLOGY COMPANIES IN PARTICULAR AT THE LEADING EDGE TO CONTINUE OPERATING IN CHINA. YOU ONLY HAVE TO LOOK AT SAMSUNG, FOR EXAMPLE, TO SEE HOW ACTIVELY THEY ARE DIVERSIFYING OUTSIDE OF CHINA ALREADY.
SO LOTS OF MOVES IN PLAY. BALANCING ACTS ARE HARD TO PULL OFF IN THIS GEOPOLITICAL CLIMATE, BUT REALLY DEPENDS ON WHERE YOU HAVE A CREDIBLE COMPETITOR IN THE SPACE, WHERE YOU’RE AT THE LEADING EDGE AND WHERE OTHER OPPORTUNITIES LIE OUTSIDE OF CHINA. CAROLINE: SUCH COMPLEXITY, AND YOU HELP BREAK IT DOWN. THANK YOU, REVA. MEANWHILE, COMING UP, WE’LL GO BEHIND THE SCENES WITH ONE OF THE FASTEST GROWING FIN TECHS HERE IN EUROPE. THE C.E.O. OF TSZYU LCH IS GOING TO JOIN
US. MEANWHILE, LET’S GET YOU UP TO SPEED WITH OTHER COMPANIES ON THE MOVE, IN PARTICULAR THOSE THAT ARE EXPOSED TO CHINA, BUT RALLYING. NVIDIA, THE A.I. DARLING THAT ACTUALLY FELL ALMOST 9% LAST WEEK. SO I’LL BE BOUNCING BACK AS THE MUSIC CHANGES, IS THERE OTHER CONTEXT THAT’S UNDERLYING THE 3.5% RALLY ON THE DAY?
LAST WEEK WAS THE WORST WEEK SINCE EARLY SEPTEMBER 2022. FROM LONDON, THIS IS BLOOMBERG TECHNOLOGY. ♪ CAROLINE: THE "BLOOMBERG TECHNOLOGY" SUMMIT IS GOING TO KICK OFF TOMORROW RIGHT HERE IN LONDON, SHOWCASING A WHOLE RANGE OF STARTUPS IN THE BIOTECH FIELD, HEALTHCARE STANDOUTS, DURING A SERIES OF DISCUSSIONS ABOUT THE U.K.’S GLOBAL ROLE AND THE MOST PRESSING QUESTIONS IN TECHNOLOGY TODAY, WHETHER IT BE CLIMATE CHANGE, A.I. IN A FEW WEEKS, THE U.K. GOVERNMENT PLANS TO CONVENE HUNDREDS OF EXECUTIVES, GOVERNMENT LEADERS TO PROMOTE SOME INVESTING OPPORTUNITIES IN BRITISH COMPANIES, INCLUDING THOSE WORKING ON NUCLEAR FUSION, DEEP TECH, BUT MOST NOTABLY THINKING ABOUT HOW A.I. SAFETY CAN BE SEEPED INTO THE
GLOBAL NARRATIVE RIGHT NOW. LET’S DIVE DEEPER INTO THE WORLD OF THE TECH SCENE HERE IN THE U.K. THE C.E.O. OF ZILCH, EUROPE’S FASTEST GROWING COMPANY IN JUST 14 MONTHS. SELF-PROFESSED GROWTH, AND I’M INTERESTED IN THIS TIME, WHAT HAS BEEN YOUR BUSINESS MODEL? I KNOW IT’S CONSUMER CREDIT BASICALLY, REDUCING COSTS. HOW HAS THAT MANAGED TO SEE THAT GROWTH IN WHAT HAS BEEN A MUCH TOUGHER TIME FOR TECH? >> I THINK WHAT’S INTERESTING TO NOTE HERE IS THAT THE LANDSCAPE, WHICH IF I PAINT THE PICTURE, IT WILL BE WHY WE’RE SEEING THIS GROWTH TO THE RACE OF THE MARKET, AND THAT IS THAT THE LANDSCAPE TODAY IS THAT WE HAVE HIGH COST OF CAPITAL, WHAT THAT TYPICALLY MEANS IS YOUR LENDERS, BANKS, TEND TO WITHDRAW THEMSELVES FROM LENDING. SO YOU HAVE FINANCIAL EXCLUSION AT ITS HIGHEST, SO THE DEMAND GOES CRAZY FOR CREDIT PRODUCTS. AT THE SAME TIME, YOU HAVE THE
COST OF LIVING HAS GONE UP. AND SO YOU HAVE DEMAND FROM THE MASS MARKET IS REALLY INTENSE FOR PRODUCTS, AND TYPICALLY WHAT HAPPENS IS YOU HAVE LENDERS ACTUALLY THRIVE IN A MARKET LIKE THIS, BUT THEY MAKE A LOT OF MONEY OFF THE CUSTOMER. WHAT’S UNIQUE ABOUT ZILCH IS THAT WE FOUND A WAY TO GENERATE ADD REVENUE FROM BRANDS WHEN OUR CUSTOMERS SHOP, AND WE’RE USING THAT TO OFFSET THE COST OF CREDIT TO CUSTOMERS, WHILE SERVICING THIS MEGA DEMAND. SO FOR US, WE’RE SEEING
ULTRAHIGH GROWTH THROUGH THE NEXT YEAR TO TWO YEARS. BASED ON ALL OF THIS COMING TOGETHER, MOST UNIQUELY PROVIDING LOTS OF SAVES. WE’RE TALKING ABOUT HUNDREDS OF MILLIONS IN SAVES IN FEES FOR CONSUMERS AS THEY USE OUR PRODUCT AND MOVE AWAY FROM TRADITIONAL LENDING PRODUCTS, LIKE REVOLVING CREDIT CARDS. CAROLINE: THEY CAN IMPROVE A CREDIT SCORE, NOT DEPEND ON CREDIT CARDS. I’M INTERESTED, AS A SOUTH AFRICAN ENTREPRENEUR, TO COME AND BUILD IN LONDON, WHY? >> I MEAN, I THINK IT’S PART OF WHY THERE’S THE TECH SUMMIT TOMORROW. THERE’S A LOT GOING ON IN
LONDON. WE LOOK AT THE MARKET HERE AND SAY, YOU KNOW, WE REALLY WANTED ACCESS TO EUROPE, OF COURSE, TO THE UNITED STATES. CAROLINE: YOU STILL GOT ACCESS TO EUROPE? >> WE STILL DO. A LOT OF PEOPLE HAVE SPOKEN ABOUT BREXIT AND WHAT HAS THAT CHANGED? YOU JUST NEED TO MAKE SURE YOUR LICENSING IS CORRECT AND UNDERSTAND HOW TO OPERATE IN THAT ENVIRONMENT. REGULATION, AS LONG AS IT’S CLEAR, IS A FANTASTIC THING.
WE ALSO SAID THIS FOR OUR INDUSTRY, WHICH IS WHY ZILCH IS ONE OF THE ONLY REGULATED PROVIDERS IN THE SPACE. WE’RE CALLING FOR REGULATION. I MAKE THIS COMMENT, AS LONG AS THE RULES ARE CLEAR, YOU CAN ENGAGE WITH THOSE RULES AND TRANSACT. SO WE DO HAVE ACCESS TO EUROPE AND UNDERSTAND VERY WELL FROM THE UNITED KINGDOM, AND EQUALLY, THE UNITED STATES, WHICH IS A MASSIVE OPPORTUNITY FOR US. SO WE REALLY WANTED TO BE IN LONDON. WE THINK WE CAN CONTROL WHAT WE’RE DOING FROM HERE REALLY WELL.
GREAT, UNIQUE POOL OF TALENT, LOTS OF WALKS OF LIFE AND DID YOU WANT TYPES OF BACKGROUNDS IN OUR BUSINESS, AND WE REALLY WANTED THE DIVERSITY IN THE COMPANY AS WE BUILT THIS PRODUCT, SOMETHING WE WANT EVERYONE TO ENJOY. CAROLINE: PHILLIP, WHAT ABOUT THOSE THAT YOU VIEW FOR MONEY IS THAT POOL OF MONEY U.K.-BASED, AND IS IT FIRM AT THIS MOMENT WHEN PEOPLE ARE QUESTIONING THE VALUATIONS? >> I THINK IT JUST DEPENDS ON THE BUSINESS. WE’VE SEEN A LOT OF COMPANIES RAISING UP ROUNDS, YOU’VE ALSO SEEN DOWN ROUNDS. THERE’S BEEN AN ADJUSTMENT, NO
DOUBT ABOUT THAT. THE WAY WE THINK ABOUT IT OURSELVES IS, DO YOU HAVE ENOUGH CAPITAL AND A SUSTAINABLE BUSINESS MODEL TO GET YOURSELF TO BREAK EVEN AND BEYOND RIGHT NOW IN THIS MARKET? I THINK THAT’S HOW WE SEE AT LEAST OUR COMPANY. AND THE STRONG VIEW IS, AS LONG AS YOU CAN DEMONSTRATE THAT AND THAT IS THE CASE, YOU’RE PROBABLY GOING TO STAND OUT IN BUSINESS RIGHT NOW. THAT’S NOT BECAUSE THERE’S A LOT OF TERRIBLE BUSINESSES, JUST BECAUSE A LOT OF MONEY WAS CHASING HIGH YIELD. THEY WANT GROWTH AT ALL COST, AND THE PROBLEM IS THEY SACRIFICE THE MARGIN AND THE REAL BUSINESS MODEL IN SOME CASES FOR THAT. AND THE CHICKENS ARE COMING HOME TO ROOST. IF YOU HAVE A REAL PROFITABLE MARGIN AND
ENOUGH CAPITAL TO GET TO BREAK OR BEYOND, WE STILL THINK THAT YOU CAN DEMONSTRATE THE REAL VALUE IN YOUR COMPANY, AND YOU CAN GROW IN AND BEYOND YOUR VALUATION. AND THAT’S REALLY HOW WE ARE THINKING ABOUT OUR BUSINESS. SO POOLS OF CAPITAL-WISE, I MEAN, I THINK IN THE U.K. WE SOMETIMES UNDERESTIMATE CAPITAL ON THIS PLANET IN THE UNITED KINGDOM. BUT WE CERTAINLY DO SEE IN OUR
BUSINESS A SPREAD FROM THE U.S. AND U.K., AND THAT BEGS THE QUESTION, WHERE DO YOU GO NEXT? WHAT DO YOU DO NEXT AS A COMPANY? WE’RE EVALUATING THAT RIGHT NOW. CAROLINE: OK. LEAVE US ON THE IDEA THAT WE’RE
SEEING SOME RAISING OF FUNDS. ZILCH WILL BE AT THE TECHNOLOGY SUMMIT TOMORROW. WE’LL BE TALKING ABOUT THE WEALTH OF MONEY LATER IN THE SHOW, WHETHER IT’S V.C.’S.
WE GOT THE GENERAL PARTNER FROM CYBERSECURITY V.C. FIRM JOINING US, AS SHE WANTS TO DISCUSS SOME OF THE TRENDS SHE’S SEEING ACROSS THE SECTOR. MEANWHILE, LET’S GET INTO THE PUBLIC MARKETS AS WELL. LET’S TUNE INTO WHAT’S HAPPENING WITH AIRBNB. A RALLY, A BOUNCEBACK FROM SOME
QUESTIONS REGARDING REGULATION. WE WERE JUST TALKING ABOUT FINANCIAL FIN TECH REGULATION THERE, AND CERTAINLY IN NEW YORK, IT’S BEEN A FOCUS IN TERMS OF REGULATORY PUSHBACK. CURRENTLY THEY’RE UP ALMOST 4%. FROM NEW YORK, USUALLY FROM SAN FRANCISCO USUALLY, FROM LONDON TODAY, THIS IS "BLOOMBERG TECHNOLOGY." ♪ CAROLINE: WE’D BE REMISS IF WE WEREN’T THINKING ABOUT SOME OF THE GEOPOLITICAL SITUATION WE CURRENTLY LIVE WITHIN, AND IT’S NOTABLE THAT IN THE CONCERNS AROUND CONFLICT IN THE MIDDLE EAST, GOVERNMENT AND PRIVATE COMPANIES ARE LOOKING TO CONTINUE TO BEEP UP THEIR CYBERSECURITY. AND CYBER START UPS ARE TURNING TO OTHERS. ITS PORTFOLIO IS VALUED AT $30
BILLION. JOINING US NOW FROM LONDON IS EMILY HEATH, GENERAL PARTNER AT CYBERSTARTS. IT IS WONDERFUL TO HAVE SOME TIME WITH YOU. EMILY, THE BRITISH -- >> YES, I AM. CAROLINE: YOU HAVE WORKED FOR A WHOLE HOST OF COMPANIES ACROSS INDUSTRIES, SUCH AS AIRLINES, BUT YOU’VE BEEN, OF COURSE, A KEY COMPANY THAT YOU ARE CHIEF OFFICER.
NOW YOU’RE USING YOUR EXPERTISE TO ALLOCATE CAPITAL. WHY? >> EMILY: THIS IS A VERY, VERY UNIQUE MODEL. WE’RE A VERY SMALL BUT MIGHTY CYBER-ONLY VENTURE CAPITAL FIRM. AND THERE’S A SECRET SAUCE BEHIND THIS FIRM. THEY’RE VERY SMALL. THERE’S THREE PARTNERS, TWO IN TEL AVIV AND ME IN SAN FRANCISCO.
WE EACH BRING SOMETHING VERY DIFFERENT. WE’VE GOT ENTREPRENEURS, TRADITIONAL VENTURE CAPITALS, AND MYSELF BEING THE PRACTITIONER. WHEN YOU THINK THE EXPERIENCE TO YOUNG FOUNDERS THAT ARE IN THE VERY EARLY SEED STAGES, WE FORGET SOMETIMES AS PRACTITIONERS HOW MUCH VALUE WE CAN ACTUALLY ADD TO YOUNG COMPANIES TO MAKE SURE THAT WE STRESS TEST THE PROBLEM STATEMENTS THAT THEY HAVE MAKE SURE THEY’RE BUILDING LONG LASTING, MEANINGFUL COMPANIES. CAROLINE: FOUNDED IN 2018 BY SEQUOIA PARTNER, BUT ALSO THE GODFATHER OF THE ISRAELI CYBERSECURITY SCENE. JUST TALK TO US AT THE MOMENT ABOUT HOW YOU ARE SEEING THE ECOSYSTEM AFFECTED THERE. YOU MUST HAVE, OF COURSE, A LARGE AMOUNT OF COMPANIES BASED THERE. EMILY:
YES, EVERY ONE OF OUR COMPANIES IS BASED IN ISRAEL. THERE’S A SADNESS. I MEAN, THERE’S AN ABSOLUTE, PROFOUND SADNESS AMONGST THE COMMUNITY RIGHT NOW. ON A PERSONAL LEVEL, I DON’T THINK I’VE MET A SINGLE FOUNDER THAT HASN’T BEEN AFFECTED IN SOME WAY, WHETHER THEY KNOW SOMEBODY WHO HAS BEEN MURDERED, SOMEBODY THAT’S MISSING OR SOMEBODY THAT’S BEEN PROFOUNDLY AFFECTED. ON A PERSONAL LEVEL, IT STRUCK REALLY, REALLY CLOSE TO HOME FOR US. ON A PROFESSIONAL LEVEL, HOW
FAR, I AM SO IMPRESSED WITH THE RESILIENCE OF THE ISRAELI PEOPLE AND OF THE ISRAELI STARTUP COMMUNITY. IT IS ABSOLUTELY INCREDIBLE. I THINK THIS CONCEPT OF RESILIENCE IS SOMETHING THAT WE TALK ABOUT ALL THE TIME. ISRAELIS HAVE THIS NATURAL ABILITY TOO THINK ABOUT WHAT THAT ACTUALLY MEANS, BECAUSE THEY’RE USED TO LIVING IN TURMOIL. THIS IS, OF COURSE, UNPRECEDENTED. BUT WHAT IT MEANS IS THEY WERE PREPARED AND ABLE TO BOUNCE BACK. NOW, SOME OF THE PORTFOLIO COMPANIES HAVE HAD SOME OF THEIR STUFF THAT ARE NOW ON RESERVE DUTY.
THERE’S PEOPLE IN THE UNITED STATES THAT ARE STANDING IN FOR THEM. BUT BUSINESSES REMAINED RELATIVELY UNAFFECTED. HE WOULD NOT SAY IT’S BUSINESS AS USUAL BY ANY STRETCH, BUT THESE ARE RESILIENT PEOPLE WHO REALLY, TRULY HAVE PLANS THAT HAVE GONE INTO EFFECT. CAROLINE: GEOPOLITICS IS COMPLEX. SO TOO IS CYBERSECURITY. I’M WONDERING WHAT PROBLEMS
THEY ARE TRYING TO TACKLE, WAYS IN WHICH YOU’RE SEEING YOUR STARTUPS, YOUR PORTFOLIOS MANAGE TO OUTPERFORM IN A MARKET CONTEXT THAT’S BEEN VERY DIFFICULT. EMILY: IT’S ALL ABOUT THE PEOPLE. WE INVEST IN PEOPLE. MOST OF THE COMPANIES THAT WE INVEST IN HAVEN’T WHEREIN A SINGLE LINE OF CODE WHEN WE GIVE THEM SEED FUNDING. THEY STRESS TEST THE PROBLEM. ONE OUR MAIN PROBLEMS, FASTEST GROWING SOFTWARE COMPANY ON THE PLANET EVER, FASTER THAN TWITTER, AIRBNB. CAROLINE: HOW ARE YOU MEASURING THAT? EMILY: BASED ON GROWTH. THEY’VE BEEN AROUND THREE
YEARS, $10 BILLION VALUATION AND OVER $300 MILLION IN REVENUE, IN JUST THREE YEARS. JUST THE TRAJECTORY OF THE GROWTH, BECAUSE THESE FOUNDERS, THEY’RE SOME OF THE -- THEY’RE SECOND-TIME FOUNDERS. THEY’VE BEEN THERE BEFORE, AND THAT DEFINITELY HELPS. THEY LISTEN TO THE MARKET. THEY’VE ADJUSTED TO THE MARKET VERY EASILY DURING TIMES WHICH ARE VERY TUMULTUOUS. AGAIN, WE WANT TO MAKE SURE WE’RE SOLVING VERY REAL PROBLEMS. CAROLINE: WE’RE GOING TO TALK ABOUT THAT MORE, OF COURSE, SHE’S GOING TO ATTEND THE TECHNOLOGY SUMMIT TODAY.
AND LOOK, WE’RE GOING TO BE DISCUSSING A LITTLE BIT COMING UP ON THE L.P. SIDE OF THEE DIVISION, PENSION FUNDS. HOW ARE FORMS IN THE U.K. CAROLINE: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." I’M CAROLINE HYDE IN LONDON.
TODAY AND FOR THE NEXT NEW DAYS. MEANWHILE, LET’S CHECK THE MARKET THAT ARE TRADING WORLDWIDE FOR YOU. IT HAS BEEN A VOLATILE DAY WITH YIELDS ON THE HIGH SIDE, BUT THEY ACTUALLY HAVE PULLED BACK NOW. WE’RE DOWN SOME SIX BASIS POINTS ON THE 10-YEAR, HAVING ECLIPSED 5%, HIGHS IN MORE THAN A DECADE. WE’RE NOW PULLING BACK TO 4.85
ON THE 10-YEAR. THAT LEAVES SOME GROWTH. IF THEY MANAGE TO RALLY ON THE DAY, AS WE ANTICIPATE SOME KEY EARNINGS FROM MICROSOFT, FROM ALPHABET AFTER THE BELL. LOOKING AT THAT TOMORROW. I’M LOOKING AT NEW YORK CRUDE, STILL UP, BUT ELEVATED, WE’RE AT $86. THIS IS IN A GEOPOLITICAL CONTEXT WHERE WE ARE AWAITING WHETHER OR NOT INDEED THE CONFLICT BETWEEN ISRAEL AND HAMAS HAS ESCALATED. FOR NOW WE DAMP DOWN SOME OF THOSE CONCERNS. MOVE ON TO WHAT IS, OF COURSE,
A KEY ASSET OF CHOICE WHEN IT COMES TO TECHNOLOGY. BITCOIN HAS BEEN ON A RUN. WE’RE UP. 30,000 IN EXCESS OF THAT NOW. KEY TECHNICAL LEVEL, AND, OF
COURSE, AS MANY ANTICIPATE PERHAPS THE S.E.C. PULLED BACK FROM ITS CASES. ARE WE LOOKING TOWARD SOME SORT OF E.T.F. IN THE FUTURE? IT’S SOME SORT OF HAVEN.
THAT’S THE KEY QUESTION. MEANWHILE, WE WANT TO TALK MORE ABOUT SOME PRIVATE MARKETS, AN ALLOCATION OF FUNDS HERE IN THE U.K. SOME OF BRITAIN’S LARGEST PENSION FIRMS HAVE COMMITTED TO ALLOCATING A MINIMUM OF 5% OF CONFINED CONTRIBUTION FUNDS TO UNLISTED EQUITIES BY 2030. THE AIM IS TO UNLOCK OVER PERHAPS 50 BILLION POUNDS OF NEW CAPITAL BY THE END OF THE DECADE. JOINING US NOW IS SOMEONE WHO’S SPEAR HEADING THIS MOVEMENT, YOU OVERSEE BASICALLY THE ECONOMY OF THE SQUARE MILE. YOU TRY TO ANTICIPATE THE WAYS
IN WHICH WE CAN MAKE IT THRIVE, AND ONE WAY IS YOU THINK ALLOCATE PENSION FUNDS OF WHICH YOU COME FROM, WHY STARTUPS? WHY IS THAT A BENEFIT? >> LOOK, THE STARTING POINT ABOUT PENSIONS IS TO GET THE BEST RETURNS FOR PENSION, AND WE MUST NEVER MOVE AWAY FROM THAT AS A FUNDAMENTAL UNDEROPINION HERE. THE MOST SUCCESSFUL PENSION FUNDS IN THE WORLD, USUALLY THE CANADIAN STATE PENSION FUNDS, HAVE 30% AND 50% OF ASSETS LISTED IN INFRASTRUCTURE, PRIVATE CREDIT, AND PRIVATE EQUITY. SO WE NEED TO GET THE PENSION SYSTEM IN THE U.K., OF WHICH IS OVER 4 TRILLION POUNDS, MORE INVESTED IN PRODUCTIVE ASSETS TO GIVE BETTER RETURNS. THE REASON I’M PARTICULARLY FOCUSED ON LATE-STAGE VENTURE CAPITAL IS, AS YOU HEARD EARLIER, THERE IS GOOD INCOULD YOU WATER AND SEED CAPITAL IN THE U.K.
BUT OFTEN OUR HIGH GROWTH COMPANIES, AND WE ARE BRILLIANT AT THESE HIGH GROWTH INDUSTRIES, GREEN AND RENEWABLE TECH, LIFE SCIENCES. FOUR OF THE BEST 10 UNIVERSITIES IN THE WORLD, BUT TOO MANY OF THESE COMPANIES, ONCE THEY SORT OF PROVED THEIR BUSINESS MODEL AND LOOKING FOR ACCELERATOR FINANCING, HAVE TO GO EXTERNALLY FOR CAPITAL. AND I WANT US TO MARRY UP THAT NEED WITH AN OPPORTUNITY TO GET THE BEST RETURNS FOR OUR U.K. PENSION SAVERS. WE LOVE ONTARIO, BUT WHY SHOULD CANADIAN TEACHERS BE BENEFITED FROM THE INCREDIBLE ENTREPRENEURIAL SPIRIT IN THE U.K.? CAROLINE: IT’S ABOUT ALLOCATING BRITISH PENSIONERS’ FUNDS, OR FUTURE PENSIONERS’ FUNDS, TO A U.K.
ECOSYSTEM AS WELL. WILL THEY NOT THEREFORE BE ABLE TO ACCESS PRIVATE MARKETS OUTSIDE OF THE UNITED KINGDOM? >> ABSOLUTELY, AND I THINK THE IDEA IS THAT IT’S NOT JUST THE WHAT ABOUT ALLOCATING 5% OF D.C. PENSION FUNDS, WHICH, YOU KNOW, WE THINK BUY 2030, JUST BECAUSE D.C. PENSIONS ARE GROWING BY 10% PER ANNUM, WE’RE GOING TO HAVE 1.3 TRILLION POUNDS OF D.C. PENSIONS, SO 5% IS ABOUT 50
BILLION POUNDS. I’D LIKE A SIGNIFICANT CHUNK OF THAT TO BE ALLOCATED TO A FUTURE GROWTH FUND, WHICH HAS THE ADVANTAGE AS A COLLECTIVE INVESTMENT FUND OF BEING ABLE TO GET THE ENORMOUS DIVERSIFICATION OF RISK THAT ACTUALLY YOU NEED WHEN YOU’RE TALKING ABOUT COMPANIES AT THAT EARLY STAGE. CAROLINE: GIVE US A CONTEXT AS TO WHY. WHY THE U.K. HAS BEEN RETICENT PSYCHOLOGICALLY, CULTURALLY, TO INVEST IN THEIR WAY FROM PENSION FUNDS. >> I THINK IT’S A COMBINATION OF THINGS.
PART OF IT IS CULTURAL. I THINK SINCE 2008 WE’VE BEEN PRETTY RISK-AVERSE AS A FINANCIAL ECOSYSTEM. THE REGULATORS HAVE BEEN GIVEN A PRIMARY OBJECTIVE OF MAKING SURE WE DIDN’T HAVE A REPEAT OF THAT. WE LOOKED AFTER CUSTOMERS’ INTERESTS, QUITE RIGHT. BUT WE NEED TO GIVE THEM, AND
WE HAVE NOW GIVEN THEM A SECONDARY OBJECTIVE OF COMPETITIVENESS AND GROWTH, SO THEY HAVE ANOTHER LENS THROUGH WHICH TO LOOK AT THESE THINGS. BUT I THINK ONE OF THE BIGGEST ISSUES IS THAT WE’VE NOT HAD THAT SORT OF CULTURE PARTICULARLY OF INVESTING IN LATE-STAGE VENTURE CAPITAL, AND NORTH AMERICA HAS REALLY MARCHED ON US IN THAT REGARD. IT’S LIKE GETTING ON A PLANE, GOING TO THE WEST COAST, AND LOOKING TO RAISE MONEY OVER THERE. THEY CAN CONTINUE TO DO THAT. THEY SHOULD CONTINUE TO DO THAT. WE SHOULD STILL GET LOTS OF INTERNATIONAL CAPITAL COMING IN TO THE U.K. BUT I WANT US TO GET SOME U.K. MONEY WORKING TOO. 50 BILLION IS A GOOD START.
CAROLINE: IT’S INTERESTING THAT THIS COMES HOT ON THE HEELS A U.K.-BASED COMPANY LISTING IN THE U.S. FOR DEEP CAPITAL REASONS. ALSO IN A GLOBAL CONTEXT, HAVING BEEN PRETTY HARD HIT IN THE RISE OF YIELDS, BORROWING COSTS GOING HIGHER, NAMES HAVE BEEN HURT UNLESS YOU’RE A.E.-FOCUSED. WHAT HAS BEEN THE CONVERSATION LIKE WITH THE PENSION INDUSTRY, OF WHICH YOU’RE SOMEWHAT A PART, WE’RE NOT ON SORT OF LOAN TO THE CITY OF LONDON, WHAT HAVE THEY BEEN LIKE? WHERE’S THE RETICENCE BEEN? >> THERE’S NOT BEEN MUCH RETICENCE.
NINE OF THE LARGEST PLAYERS REPRESENTING 65% OF THE D.C. MARKET HAVE BEEN SUPPORTIVE OF THIS AND SIGNED A COMPACT IN EARLY JULY WHEN THE CHANCELLOR WAS ABLE TO ANNOUNCE THIS. SO I THINK THERE ARE VERY BIG PLAYERS, WHO HAVE BIG ASSET MANAGEMENT INCLUDING IN THE PRIVATE EQUITY SECTOR, WHO WOULD LIKE TO SAY, WELL, YEAH, WE’RE HAPPY TO SIGN, BUT WE THINK WE CAN DO THAT OURSELVES. THERE ARE LOTS OF OTHERS, BECAUSE WE HAVE A VERY, VERY BROADLY DIVERSIFIED PENSION SYSTEM WITH LOTS OF SMALL PLAYERS. THEY NEED A COLLECTIVE
INVESTMENT FUND THAT THEY CAN USE AS THE VEHICLE THROUGH WHICH TO INVEST IN THIS ASSET CLASS. BUT I THINK BY CREATING A 50 BILLION POUND WAR CHEST, IF YOU LIKE, AND WITH MUCH OF THIS GOING INTO A FUTURE GROWTH FUND, WE’LL BE ABLE TO CHANGE THE CULTURE. WE’LL BE ABLE TO DEVELOP A REAL ECOSYSTEM, NOT JUST ABOUT CAPITAL, BUT MAKING SURE WE’VE GOT REALLY STRONG, NONEXECUTIVE DIRECTORS AND MENTORS WHO CAN HELP THESE COMPANIES, AND ALSO IMPROVE THE EQUITY RESEARCH WE WRITE ON TECH COMPANIES.
I’D SAY THAT’S ACTUALLY A SIGNIFICANT DIFFERENTIAL AT THE POINT AND THE QUALITY OF TECH RESEARCH THAT HAPPENS IN THE U.S. AND IN THE U.K. SO THIS IS NOT JUST A SILVER BULLET. WE HAVE GOT TO CHANGE THE CULTURE, AND THERE’S A LOT OF WORK INVOLVED. CAROLINE: I’M INTERESTED JUST TO END IT, THE IDEA OF WHETHER THIS MONEY AUTOMATICALLY GOES TO BRITISH-BASED VENTURE CAPITAL COMPANIES, OR ARE WE GOING TO SUDDENLY SEE A FLOCK OF S.F.-BASED FUNDS COME IN AND WANT TO MAKE THE MOST OF THIS CAPITAL? >> I THINK WE, AGAIN, IF YOU COME BACK TO THIS FIRST MOVER, WHICH IS THAT WE HAVE THE DESIRE TO DELIVER THE VERY BEST POSSIBLE RETURNS FOR PENSION SAVERS, THEREFORE, WE NEED TO MAKE SURE THAT THEY HAVE A DIVERSE AND NOT JUST U.K., BUT
ALSO INTERNATIONAL EXPOSURE TOO. BUT WE HAVE GOT SUCH GOOD COMPANIES. THE FACT OF IT IS, THE MOST SOPHISTICATED INVESTORS IN THE WORLD COME HERE TO INVEST IN THE BEST OF BRITISH. SO LET’S INVEST ALONGSIDE THOSE
SOPHISTICATED INVESTORS AND DELIVER GREAT RETURNS TO PENSION SAVERS AND GET SOME OF THESE COMPANIES LISTING IN THE U.K. IN FIVE YEARS’ TIME, IF WE’RE SUCCESSFUL WITH THE COMPACT WITH WHAT WE’RE DOING WITH D.C. PENSIONS, WE’LL HAVE FIVE BILLION POUND, 20 BILLION POUND TECH COMPANIES IN THE FTSE 100. CAROLINE: NOT JUST A DELIVERY. WE THANK YOU SO MUCH, JOINING US, THE LORD MAYOR OF THE CITY OF LONDON, AHEAD OF A BIG EVENT THAT THEY’LL BE THROWING ON WEDNESDAY. COMING UP, IN FACT, WE’RE GOING TO BE TALKING WITH A KEY VENTURE CAPITALIST. OUR SPOTLIGHT TIME IS UPON US, AND WE’RE GOING TO TALK ABOUT THE TECH SCENE IN LONDON WITH HARRY NELIS.
FROM LONDON, WE’RE GOING TO BE WATCHING THE SHARES OF CERTAIN COMPANIES RELATE TO CRYPTO. WE’RE JUST SHOWING HOW BITCOIN WAS OUTPERFORMING FOR A VARIETY OF REASONS. A LOT OF THE KEY NAMES THAT ARE INVESTED IN THE SPACE, WHETHER IT BE RIOT PLATFORMS, CURRENTLY UP 11% ON THE DAY. FROM LONDON, THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: TIME FOR TALKING TECH. APPLE IS HOPING TO INCORPORATE
ARTIFICIAL INTELLIGENCE INTO SOME OF THE KEY SERVICES, THINK SIRI. IN FACT, BLOOMBERG SAYS APPLE IS EXPLORING NEW FEATURES SUCH A AUTOMATED PLAY LISTS, INCLUDING THOSE FOUND IN SPOTIFY AND APPLE OFFICE. MEANWHILE, PREVIOUSLY SQUARE CAPITAL IN INDIA, SAYS A.I. STARTUPS ARE DOMINATING ITS ACCELERATED PROGRAM.
INDEED, IT WAS PRESENT IN SOUTHEAST ASIA AS WELL. SAYS THAT 10 OF THE 13 STARTUPS IN ITS COHORT AND ARE IN THE A.I. AND DEEP TECH FIRM. THEY’VE INVESTED $3 MILLION IN STARTUPS THUS FAR. PLUS, MICROSOFT WILL INVEST ROUGHLY $3.2 BILLION TO GROW ITS DATA CENTERS. THE U.S. TECH COMPANY PLANS TO EXPAND AND A.I.
INFRASTRUCTURE OVER THE NEXT COUPLE OF YEARS, LARGEST INVESTMENT IN 40 YEARS. THE AUSTRALIAN PRIME MINISTER IS CURRENTLY ON A FOUR-DAY VISIT TO THE UNITED STATES. THERE’S LOTS OF BILLIONS BEING THROWN AROUND. LET’S DO A LITTLE BIT MORE HERE IN LONDON.
OPENING ITS LONDON OFFICE BACK IN THE YEAR 2000, AND THEY’VE MADE INVESTMENTS IN SOME OF THE KEY NAMES THAT HAVE OUTPERFORMED, SPOTIFY. X.L. PARTNER JOINING US TO DISCUSS AN EVOLUTION IN ECOSYSTEM THAT HAS EXITED FOUNDERS, HAS MONEY THAT GETS REINVESTED INTO THE TECH SCENE. DOES IT GET REINVESTED HERE IN EUROPE? DO FOUNDERS LEAVE THOSE? >> ABSOLUTELY. WE RECENTLY DID A STUDY, AND IT SHOWED THAT 200 UNICORNS IN EUROPE HAVE, IN FACT, GENERATED 1,200 STARTUP COMPANIES, AND THAT IS CRITICAL FOR THE ECOSYSTEM, BECAUSE FOR YOU TO NEED CAPITAL, BUT ALSO REPEAT MANAGEMENT TEAMS. AND THAT IS FINALLY NOW STARTING TO HAPPEN,
WHICH WAS VERY DIFFERENT FROM 23 YEARS AGO WHEN THE MARKET WAS VERY EARLY. CAROLINE: AND IT TOOK A WHILE TO BUILD SUCH UNCORNS. WHEN YOU SAY THERE’S BEEN MORE THAN 221 UNION CORNS IN THE REGION, PEOPLE MIGHT BE SURPRISED BY THAT. WHAT KEY AREAS HAVE WE SEEN BILLION DOLLAR COMPANIES FOUNDED HERE IN EUROPE? >> WELL, IT WAS OUR CONVICTION 23 YEARS AGO THAT IT WAS INDEED POSSIBLE FOR EUROPE TO GENERATE THESE BILLION DOLLAR OUTCOMES, OR INVESTORS DOUBTED IT AT THE TIME.
IN FACT, WE HAD TO WAIT FIVE YEARS FOR THAT FIRST UNION I CORN TO SHOW UP, AND THEN THREE MORE YEARS FOR A SECOND ONE TO SHOW UP. CAROLINE: WHAT WAS THE FIRST ONE, DO YOU REMEMBER? >> THE FIRST ONE WAS SKYPE. AND THEN MY SQ.L. IN 2008. SO THE BIG SECTORS THAT HAVE GENERATED IS ONLINE GAMES, SUPERCELL, ENTERPRISE SOFTWARE, CLICK TECH, CONSUMER TECHNOLOGY, INCLUDING SKYPE, SO A VARIETY OF THINGS, IN FACT, WHICH IS ONE OF THE THINGS THAT CHARACTERIZED THE VERY EARLY MARKET. YOU CAN REALLY SPECIALIZE IN ANYTHING. YOU HAVE TO BE VERY BROAD, BECAUSE INNOVATION HAPPENED ACROSS THE BOARD, BUT AT VERY SHALLOW LAYERS. THERE WERE MANY COMPANIES OF THE SAME TYPE. CAROLINE: IT’S INTERESTING, THE FOUNDER
OF SKYPE HAS GONE ON TO FORM HIS OWN V.C. THAT WAS DAYS OF ARTIFICIAL INTELLIGENCE WHERE A.I. WAS CALLED IN EVERY SINGLE ELECTRONICS HE CON. BUT WHAT ARE YOU SEEING IN TERMS OF PROFICIENCY HERE? WE’RE ABOUT TO HAVE AN A.I. SUMMIT ABOUT THE REGULATION, THE SAFETY. IS THERE EXPERTISE IN BUSINESSES BEING BUILT? >> ABSOLUTELY. THERE’S MANY UNIVERSITIES
ACROSS THE EUROPE THAT HAVE GENERATED VERY INTERESTING FOUNDERS, AND DEEP TECHNOLOGY INSIGHTS INTO ARTIFICIAL INTELLIGENCE. WE’VE BEEN FUNDING A NUMBER OF THOSE. AND ARTIFICIAL INTELLIGENCE IS REALLY INTACTING A NUMBER OF THINGS WE’RE INVESTING IN ALREADY. ENTERPRISE AUTOMATION, WITH
ARTIFICIAL INTELLIGENCE YOU CAN ACTUALLY IMPROVE THAT. CYBERSECURITY, POWERED BY ARTIFICIAL INTELLIGENCE, YOU CAN ACTUALLY MAKE THAT BETTER. SO WE SEE ARTIFICIAL INTELLIGENCE AS A MAJOR PARADIGM SHIFT, THE NEW PLATFORM, IF YOU WILL. SO WE HAVE THE INTERNET, WE HAD
MOBILE, WE HAVE CLOUD COMPUTING, AND NOW WE HAVE A.I. CAROLINE: WHY THEN -- LET’S PLAY THE CYNIC AND THE COUNTER, WHICH IS THIS NARRATIVE THAT IS OPTIMISTIC, WHY THEN DO YOU THINK THERE IS THIS WORRY ABOUT POST-BREXIT, LONDON NOT BEING THE ECOSYSTEM FOR EUROPE? WHY THEN DO YOU THINK PERHAPS IN A CURRENT MARKET CYCLE IT’S BEEN VERY DIFFICULT? WE’RE NOT GETTING COMPANIES RAISING THEIR FUNDS IN EUROPE, INSTEAD ARMS GOING TO THE U.S. FOR THE DEEP POCKET. >> YEAH, WE’VE GONE THROUGH A VERY STRANGE PERIOD DURING COVID WHERE THERE WAS ENORMOUS AMOUNTS OF CARE AVAILABLE, AND ENTERPRISES ACTUALLY OVERBOUGHT SOFTWARE.
THAT IS NOW OVER, SO WE’RE GOING THROUGH THIS TRANSITION PERIOD WHERE PEOPLE ARE TRYING TO FIND A NEW PRICE AT WHICH DEALS WILL BE DONE. THE REALITY IS MANY SOFTWARE COMPANIES AND OTHER TECH BUSINESSES JUST HAD SO MUCH MONEY THAT THEY DIDN’T HAVE TO RAISE MORE MONEY. WE’RE NOW ENTERING A STAGE WHERE THEY ARE RUNNING OUT OF MONEY IN THE YEAR TO COME. THEY STILL HAVE TO RAISE MORE MONEY, AND THEY WILL SCORE WHERE THE PRICE IS. CAROLINE:
DOES THAT MEAN, AND WE ACTUALLY HAD A PERSON FROM THE FOUNDERS FUND IN NEW YORK THANKSGIVING THERE’S GOING TO BE 1,000 UNION I CORNS -- UNICORNS RUNNING OUT OF MONEY AND LIKELY WON’T FIND NEW MONEY. DO YOU THINK WE WILL SEE A LOT OF UNICORNS EXPLODING? >> NO, I DON’T THINK SO. THERE’S $200 BILLION OF DRY CAPITAL ON THE SIGHT LINES, WAITING FOR MARKET DISCOVERY OF NEW PRICES. SO I THINK THERE’S PLENTY OF MONEY AVAILABLE FOR UNICORNS. I THINK IT WILL BE AN
ENVIRONMENT IN WHICH FLAT IS THE NEW UP. SO IF YOU CAN RAISE MONEY NOW AT THE PRICE WHERE YOU RAISE MONEY THREE YEARS AGO, THEN IT WILL BE VICTORY. IN FACT, IN THE SUB SECTOR OF SOFTWARE, WE GO A STUDY, AND OF THE 200 UNICORNS IN SOFTWARE, ONLY 10% OF THEM ACTUALLY HAD TO DO FINANCING, AND HALF OF THOSE ACTUALLY FINANCED AT FLAT OR UP PRICES, AND ONLY A FRACTION OF THEM DOWN. SO I DON’T THINK IT’S GOING TO BE THAT BAD. CAROLINE:
WHAT ABOUT MORE INTERNATIONAL FUNDS, SUCH AS YOURSELF? YOU ALLOCATE MONEY AROUND THE WORLD. ACCEL IS A WORLDWIDE KNOWN NAME. ARE MORE INTERNATIONAL V.C.’S, WEST COAST-BASED V.C.’S, THOSE IN EMERGING MARKETS, ARE THEY COMING HERE TO EUROPE? >> YEAH, ABSOLUTELY, BECAUSE EUROPE HAS BECOME A REALLY INTERESTING MARKET. WHAT WE SAW 20 YEARS AGO, MOST
PEOPLE ARE SEEING IT NOW. NAMELY UNOVATION, IT HAPPENS EVERYWHERE, INCLUDING EUROPE. IT’S A GREAT MARKET TO BE AT. IT’S GREAT ADVANTAGE FOR US TO HAVE BEEN HERE FOR SO LONG, BUT MANY OF OUR COMPETITORS ARE HERE, WHICH IS GOOD, BECAUSE YOU CANNOT HAVE AN ECOSYSTEM WITH ONLY A FEW INVESTORS.
CAROLINE: WHAT DOES THIS ECOSYSTEM SEEM LIKE, LOOK LIKE, SOUND LIKE FROM A DIVERSITY PERSPECTIVE? HOW DOES EUROPE, FOR EXAMPLE, COMPARE WITH SILICON VALLEY, WHERE PEOPLE ARE ALWAYS WRINGING THEIR HANDS, AND SIGHTLY SO, THERE’S A LACK OF DIVERSITY IN FOUNDERS, AND INDEED THE V. C.’S THAT ALLOCATE THEM. >> I THINK EUROPE IS NO DIFFERENT FROM THE U.S. CAROLINE: SO UNDERREPRESENTED, CAN DO BETTER? HOW ARE YOU SEEING IT TRYING TO DO BETTER? >> I THINK EVERYBODY IS MAKING A CONCERTED EFFORT TO GET TO THE RIGHT DIRECTION, BUT IT ALSO HAS A LOT TO DO WITH WHAT HAPPENS BEFORE WE MEET ENTREPRENEURS, LIKE EDUCATION, PRIMARY EDUCATION, COLLEGE EDUCATION. IT ALL ADDS UP TO THE PEOPLE WHO WE INCIDENT UP SEEING AS ENTREPRENEURS. CAROLINE: SO FIX IT IN SEVERAL STEPS
BEFORE. HARRY, GREAT TO HAVE TEAM WITH YOU. THANK YOU FOR JOINING US HERE IN LONDON. HE’S FROM ACCEL AND A KEY V.C. HERE IN THE U.K. SPACE. COMING UP, WE’RE GOING TO
RETURN TO THE PICKET LINE IN HOLLYWOOD. ACTORS, STUDIOS, THEY’RE PREPARING TO RETURN TO TALKS, MONTHS-LONG ACTORS STRIKE IS STILL HAPPENING. MEANWHILE, LET’S TALK A LITTLE BIT ABOUT SOME OF THE COMPANIES WE’RE AWAITING TO HAVE EARNINGS. ALPHABET BEING A KEY ONE OF THEM. THEY’RE COMING OUT TOMORROW
WITH THEIR NUMBERS. BUT ALSO, NOTABLE TO KEEP AN EYE ON WHAT’S HAPPENING IN TERMS OF THEIR OWN DIVERSITY ISSUES IT WOULD SEEM. INTERESTING THAT WE DID SEE, IN FACT, GOOGLE HAVING TO PAY FEMALE EXECUTIVES, A JURY SAYING THEY TREATED AN EXECUTIVE BECAUSE OF GENDER. IT’S THE FIRST TIME THEY HAD TO PAY AN DISCRIMINATION CASE SINCE THE WALKOUTS IN 2018. UP NOW, YIELDS COME BACK DOWN. FROM NEW YORK, FROM SAN
FRANCISCO AND TODAY FROM LONDON, THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: THE FILM VERSION OF TAYLOR SWIFT’S STADIUM TOUR HELD ON TO THE BOX OFFICE LEAD FOR A SECOND STRAIGHT WEEKEND, OUTDRAWING A NEW MARTIN SCORSESE DRAMA. TAYLOR SWIFT BROUGHT IN $31 MILLION IN NORTH AMERICAN TICKET SALES, WHILE "KILLERS OF THE FLOWER MOON," IT OPENS TO SALES OF $23 MILLION. MEANWHILE, STICKING WITH THE FILM INDUSTRY, WE GOT TO BE TALKING ABOUT THE HOLLYWOOD STUDIOS AND THE SAG-AFRA APPARENTLY RESUMING NEGOTIATIONS TOMORROW, MORN A WEEK AFTER SUSPENDING TALKS AIMED AT RESOLVING A MONTHS-LONG LABOR DISPUTE. JOINING US IS PHILLIP GILLETTE, WHO MUST WE THINK THROUGH SOME OF THE STICKING POINTS. WHAT ARE THE STUMBLING BLOCKS STILL REMAINING FOR THE ACTORS WHEN THE WRITERS HAVE MOVED ON? >> MAINLY TWO THINGS THAT ARE REMAINING.
ONE IS THE COMPENSATION FROM STREAMING SERVICES AND HOW THAT WILL GO TO ACTORS, AND TWO IS PROTECTIONS FROM ARTIFICIAL INTELLIGENCE. CAROLINE: OK, A LOT OF THE A.I. CONCERNS, FOR EXAMPLE, HAVE BEEN HELD BY SMALLER ACTING POSITIONS, BIT PARTS AND THE LIKE. BUT NOW WE SEE BIG ACTORS COMING AND WEIGHING IN TO TRY TO PUSH ON THOSE STUDIOS. HOW ARE YOU SEEING GEORGE CLOONEY’S VOICE AND OTHERS ADDED TO THE ARENA? >> YEAH, I THINK THAT’S JUST EVIDENCE OF THE MOUNTING FRUSTRATION IN HOLLYWOOD. I THINK THERE WAS A LOT OF HOPE THAT WHEN THE WRITERS REACHED AN AGREEMENT A MONTH AGO WITH THE STUDIOS, THAT THE ACTORS WOULD BE ABLE TO TAKE THAT TEMPLATE AND FOLLOW QUICKLY. BUT THAT’S BEEN A MONTH NOW.
IT HASN’T HAPPENED. SO, YOU KNOW, LAST WEEK YOU SAW GEORGE CLOONEY AND A BUNCH OF OTHER A-LIST HOLLYWOOD ACTORS JUMP IN, SET UP THIS ZOOM CALL WITH THE UNION LEADERSHIP, YOU KNOW, TOSS AROUND A BUNCH OF IDEAS, HOPING THAT WOULD RESOLVE THINGS. IT SEEMED TO HAVE DONE NOTHING. I THINK THE CONSENSUS WAS THAT THEIR IDEAS WEREN’T GOING TO MOVE THE NEEDLE ENOUGH. CAROLINE:
IT WAS INTERESTING THAT SOME OF THE BIGWIGS ON THE OTHER SIDE OF THE EQUATION, SO NBC OR WHETHER IT BE DISNEY, THEY GOT ROUND THE TABLE WITH THE WRITERS. DO YOU THINK THE SAME THING IS HAPPENING HERE WITH ACTORS? >> YEAH, I THINK THEY’RE INVOLVED. I THINK, AGAIN, THE MAIN PROBLEM IS THAT THE UNION HAS THIS IDEA OF, YOU KNOW, INITIALLY THEY PROPOSE TAKING THE PERCENTAGE OF ALL STREAMING REVENUES, LIKE IF IT WAS 2%, THEN 1 IS%, THEN THEY CAME BACK WE’RE NOT GOING TO TAKE A PERCENTAGE, PER AN ASSESSMENT, PER SUBSCRIBER, AND I THINK THE TOP STUDIO BOSSES, INCLUDING PEOPLE LIKE NETFLIX HAVE SAID THAT’S A BRIDGE TOO FAR, IT FEELS LIKE A TAX, WE’RE NOT GOING TO DO THAT. AND THAT WAS REALLY THE LAST THING THAT BROKE OFF NEGOTIATIONS. CAROLINE: WELL, WE’LL SEE HOW THEY REFORM TOMORROW. FELIX, GREAT TO HAVE YOUR PERSPECTIVE ON IT. WE THANK YOU.
MEANWHILE, THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." DO NOT FORGET TO CHECK OUT OUR PODCAST AND TUNE IN TOMORROW,
2023-10-25 12:24
