Tesla Investor Day | Bloomberg Technology 02/28/2023
CAROLINE: I AM CAROLINE HYDE. ED: THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: COMING UP, EAT DEEP DIVE INTO EV'S, RIVIAN AND TESLA. ED:
BOTH WE SPEAK TO THE CFO AND ZOOM. CAROLYN: RAISING TWO MILLION DOLLARS IN TWO ADVENTURE FUNDS. WE SIT DOWN WITH MATT HARRIS FOR MORE. BEFORE WE GO INTO THE PRIVATE SIDE OF THE MARKET, THE PUBLIC SITE. LACKLUSTER DAY TO END THE MONTH. IT WAS A LACKLUSTER MONTH, NOW STOP -- NASDAQ OFF FIGHT TEMPERS ON THE S&P WAS DOWN MORE THAN 2%. INFLATION RUNNING HOT IN EUROPE. WHAT DOES THAT MEAN ABOUT THEIR
CURTAILING AND WHAT THAT MEANS FOR CENTRAL-BANK POLICY OVER THERE? PUSHING BACK ON RISK TOLERANCE. TWO YEAR YEAR HIGHER. YOU RISK REWARD. IT AIN'T PRETTY. WE WILL LOOK AT THAT.
A LOT OF ANALYSTS LOOKING AT THAT, SIGNALING THAT THEY DO NOT THINK THE RISK REWARD AND EQUITIES VERSUS BONDS IS BAD. THE YIELD AT THE MOMENT, EARNINGS YIELD, SAX IS A BE THE 10 YEAR YIELD IS UP. ED: IS WHY THAT FORWARD-LOOKING COMMENTARY IS SO IMPORTANT.
A LOT OF VOLATILITY AT THIS SESSION, ZOOM CLOSING AT 1.2%, BUT IT HAD BEEN HIGHER AFTER A STRONG FOURTH ORDER. TESLA VOLATILE. IT HAD BEEN HIGHER, CLOSING
DOWN ALMOST A PERCENTAGE POINT AS WE WAIT. ONE BIG MOVE IS APPLIED MATERIALS UP TO .7%. NEW CHIP MAKING MACHINES WILL LOWER THE COST OF ADVANCED SEMICONDUCTOR PRODUCTION. EARNINGS SEASON CONTINUES IN
EARNEST. RIVIAN THE BIG MOVER IN AFTER HOURS. THEY'RE FORECASTING PRODUCTION IS UP 50,000 UNITS FOR 2023. THESE REACTING NEGATIVELY, DOWN 7%. HOPES IT WOULD BE ABOUT 60,000. THIS IS A COMPANY TIGHTENING
ITS BELT, CHASING TESLA. CAROLINE: PARTICULARLY INTERESTING ON THE SUPPLY CHAIN. NICE RUN THERE. WE SAW HIM PACE OVER, BUT AS YOU TAKE TO YOUR SEAT, THE HISTORY OF TELEVISION UNVEILED, I AM INTERESTED TO GET YOUR TAKE ON WHAT IS HAPPENING IN TERMS OF SUPPLY CHAIN HEADWINDS AND HOW THAT HAS BEEN HITTING PRODUCTION. PRODUCTION NOT LIVING UP TO EXPECTATIONS, EVEN THOUGH THERE IS SIGNIFICANT GROWTH THERE./ ED: THE POINT IS WITH RIVIAN,
EXPECTATIONS WERE SO HIGH GOING BACK TO NOVEMBER 21. SIX FIGURE LISTING. THEY HAD AMAZON BEHIND THEM, HUGE NAMES ON THE STREET, BUT THEY HIT REALITY. THERE WERE SHORTAGES, ISSUES WITH PRODUCTION AND TEETHING PROBLEMS. THOSE WILL CONTINUE INTO 2023. CAROLINE: ALTHOUGH I THOUGHT READING THAT INVESTOR LETTER, THEY ARE TRYING TO SOUND OPTIMISTIC. THE WAY THEY RAMPED, THE DELIVERIES. -- THEY DELIVERIES.
OVERALL, IS THIS TRYING TO COVER UP ISSUES. THE FOCUS ON PROFITABILITY WAS SOMETHING. ED: TWO WAYS OF LOOKING AT IT. THEY ARE BURNING THROUGH CASH.
LAST YEAR'S LOSS WAS A LOT. THIS YEAR, GUIDANCE IS FOR AN ADJUSTED LOSS EXCLUDING ITEMS OF $4.3 BILLION. THAT IS A LOT OF MONEY. IF YOU COMPARE AND CONTRAST TO TESLA WHICH IS AT A LATER STAGE OF ITS LIFECYCLE, THEY SPENT NOWHERE NEAR THAT TO RAMP THEIR PRODUCTION.
RIVIAN HAS AN ENVIABLE CASH BALANCE, BUT IT IS BURNING THROUGH IT. THERE IS STILL PUBLIC DOES LEFT FOR THEM TO PLAY WITH. HOW MUCH IS GROWTH WORTH? INVESTORS WANT MORE DISCIPLINE. CAROLINE:
AND THAT IS THE ENVIRONMENT WE ARE IN AND HOW WE SUDDENLY CHANGE. WE DO NOT WANT GROWTH AT ALL COSTS. HOW HAS THESE YOU CHANGED HIS TUNE? ED: THEY DID BELT-TIGHTENING, TWO ROUNDS OF LAST LAST YEAR, BOTH AROUND 6% OF STAFF AND TO THE TUNE 800 JOB CUTS. THAT WAS PAINFUL. HE IS A FOUNDER AND CEO. THE NARRATIVE IN THE SHAREHOLDER DECK IS THAT HE IS A ROUGH OUT COST IS UP IN THIS YEAR. NEW PRODUCTS TO COME. CAROLINE:
WE HAVE ALSO GOT ANALYSIS AND INSIGHTS COMING TOMORROW. ED: THAT IS THE COMPARE AND CONTRAST. RIVIAN IN THE EARLY STAGE OF ITS LIFE. TESLA, MASTERPLAN PART 3 TO COME. STEVE WESLEY OF THE WESLEY GROUP TOMORROW.
HE WAS ON THE BOARD. HE JOINED JUST AFTER MASTERPLAN PART ONE WAS ANNOUNCED. NERI ARE AT PART THREE. WE HOPE TO GET HIS INSIGHTS. CAROLINE: MORE ABOUT EARNINGS. WE HAVE DONE RIVIAN.
LET'S PUSH AHEAD TO WHAT IS ON THE MOVE TODAY IN TRAINING -- ZOOM. IT RELEASED ITS FOURTH-QUARTER EARNINGS AND THEY BEAT, REPORTED BETTER-THAN-EXPECTED RESULTS, IN PARTICULAR A STRONGER OUTLOOK FOR ADJUSTED EARNINGS. LET'S BRING IN THE CFO. ALWAYS GREAT TO HAVE YOU. TELL US ABOUT THE FOCUS ON PROFITABILITY, THIS NEW ENVIRONMENT. HOW WILL YOU ABLE TO BOOST?
KELLY: THANKS FOR HAVING ME. WE ARE ALWAYS FOCUSING ON OPPORTUNITIES TO DRIVE TOPLINE GROWTH, BUT WE WANT TO BE THOUGHTFUL ABOUT OUR INVESTMENTS. IN Q4, WE TOOK A CONCERTED EFFORT TO LOOK AT EXPENSES IN THAT PERIOD AND BE THOUGHTFUL ABOUT PRIORITIZING HOW WE ARE SPENDING THOSE DOLLARS. UNFORTUNATELY, WE ANNOUNCED A FEW WEEKS AGO THAT WE WERE DOING A REDUCTION AND THAT WOULD COMPRISE ABOUT 50% OF OUR WORKFORCE, WHICH SOME OF THAT HAS BEEN IMPACTED HERE IN THE U.S. ALREADY. THE REST WILL HAPPEN OVER TIME. THAT SETS US UP NICELY FOR PROFITABILITY FOR FY2024. WE GUIDED TO PROFITABILITY FOR
THE FULL YEAR OF AROUND 6%, WHICH WAS ABOUT 20% AHEAD OF WHERE CONSENSUS WAS. WE WILL KEEP OUR EYE ON MAKING THAT PROFITABILITY BUT ALSO LOOKING FOR OPPORTUNITIES TO REINVEST IF THERE ARE AREAS TO INNOVATE OR ADD CAPACITY IN OUR SALES ORGANIZATIONS. CAROLINE: WHERE DOES THAT COME FROM? SOME ANALYSTS SAY YOU NEED TO THE BEYOND MEETINGS AND INVEST FASTER. WHERE ELSE KELLY: ARE YOU LOOKING? KELLY:KELLY: WE ARE EXCITED ABOUT THE CONTINUED GROWTH OF OUR PLATFORM. WE HAVE MOVED BEYOND MEETINGS. WE HAVE ASSUMED PHONE, WHICH IS
OUR FUN SOLUTION. WE ANNOUNCED YESTERDAY WE HAVE SOLD OVER I .5 MILLION SEATS. REALLY EXCITED THERE. WE ALSO HAVE ZOOM CONTACT CENTER, WHICH IS OUR NATIVELY ON-BASE CONTACT CENTER. WE ANNOUNCED OUR LARGEST CALL TO DATE ON THAT POT FROM YESTERDAY. THEN WE HAVE ZOOM IQ FOR SALES. BOTH ZOOM CONTACT CENTER AND ZOOM IQ FOR SALES ARE HIGHLY JAI IN SOLUTIONS TO BRING INTELLIGENT ANSWERS TO CUSTOMERS AND PROSPECTS. ED:
JP MORGAN TALKING ABOUT NEW PRODUCTS, WHEN THOSE GAIN TRACTION, BALANCING AGAINST EXECUTION RISK, BUT THEY WANT TO KNOW ABOUT WITH THE MACRO PICTURE IMPROVES AND HELPS YOUR TOPLINE. WHAT ARE YOU SEEING IN YOUR MARKETS AND HEARING ABOUT THE HEALTH OF YOUR CUSTOMERS AND THE GLOBAL ECONOMY RIGHT NOW? KELLY: CERTAINLY, THE ECONOMY HAS BEEN A HEADWIND ON A GLOBAL BASIS. WE ARE FACING CURRENCY PRESSURES COMING JUST LIKE EVERYONE ELSE, AS WELL AS CUSTOMERS BEING THOUGHTFUL ABOUT EVERY DOLLAR THAT THEY ARE INVESTING. THAT IS ELONGATED AND SALES CYCLES AND MORE DEALS. HOWEVER, WITH ZOOM, IT IS WELL POSITIONED IN THIS MARKET, BECAUSE WE ARE HIGHLY PRICE COMPETITIVE.
WHAT WE OFFER IS THE OPPORTUNITY FOR CUSTOMERS TO CONSOLIDATE ON THIS PLATFORM THAT THEY ALREADY KNOW AND LOVE. THE CHANGED MANAGEMENT IS EASY. THEY ALREADY DEPLOYED THE ZOOMLION. WHAT WE SEE IS WE HAVE AN OPPORTUNITY TO BRING MORE VALUE TO OUR CUSTOMERS AND POTENTIALLY UPSELL THEM, EVEN IN NG AND WHERE THEY MIGHT BE LOOKING FOR COST SAVINGS. ED: ZOOM WENT THERE JUST LIKE EVERY OTHER TECHNOLOGY COMPANY THIS WEEK -- ARTIFICIAL INTELLIGENCE. TALK US THROUGH THE STRATEGY.
ARE YOU OPPORTUNISTIC IN TALKING ABOUT IT THIS WEEK? KELLY: AI IS NOT NEW TO ZOOM. WE HAVE HAD ASPECTS OF AI EMBEDDED IN OUR SOLUTION FOR A LONG TIME. HE HAVE THINGS LIKE TRANSCRIPTION. IF YOU WOULD MORE EASY EATING, YOU CAN GET AN AUTOMATED -- IF YOU RECORD A ZOOM MEETING, YOU WILL GET AN AUTOMATED TRANSCRIPTION.
WE ALSO HAVE TRANSLATION. WE HAVE SOME NEW PRODUCTS THAT WERE ANNOUNCED IN Q4. WE HAVE ZOOM VIRTUAL AGENT, PART OF OUR CONTACT CENTER SOLUTION, CONVERSATIONAL AI SOLUTION WHICH WAS ONLY A FEW PARTIES AGO. WE ALSO HAVE ZOOM IQ FOR SALES WITH USES AI TO ANALYZING MEETINGS AND HELP MAKE THEM AS EFFECTIVE AS POSSIBLE. WE HAVE BEEN LEVERAGING AI. WHAT YOU HEARD YESTERDAY'S THAT ERIC IS EXCITED ABOUT CONTINUING TO DO MORE BUT IT IS NOT NEW FOR US. CAROLINE: ANYTHING NEW IN TERMS OF
ACQUISITIONS PLANT? -- PLANNED? KELLY: WE ARE ALWAYS LOOKING FOR OPPORTUNITIES. YESTERDAY, WE HIGHLIGHTED NEW AREAS OF POTENTIAL GROWTH. THAT INCLUDES CONTINUED EXPANSION OF THE PLATFORM. EXPANDING INTO PRODUCTS, EXTENDING OUR PRODUCTS, WE'VE BEEN TO DATE HAS BEEN ACQUISITIONS THAT HAVE EXCELLED IN WIND DEVELOPMENT. WE ALSO TALKED ABOUT
DEPARTMENTAL APPLICATIONS, WHICH LEND THEMSELVES NICELY TO POTENTIAL ACQUISITIONS. WE ARE CONSTANTLY LOOKING FOR THOSE OPPORTUNITIES. IT IS A BIG PART OF HOW WE THINK ABOUT OUR GROWTH STRATEGY AND CAPITAL ALLOCATION STRATEGY AS WELL. ED: THANK YOU SO MUCH FOR YOUR TIME. ZOOM SHARES CLOSING AT LOWER THAN 1%. COMING UP, WHY APPLE SUPPLIES ARE RACING TO THE CHINA. THAT AND MORE IS THAT -- NEXT. CAROLINE:
LET'S GO BACK TO THE A -- THE U.K. OAK HOLLOW PLUNGING AND MARK SPENCER STRIVING TO MAKE PROFIT. STOCKERS PULLING BACK AMID THOSE HIGH PRICES.
NO TRADING AND SLOWS SINCE OCTOBER 2022. THIS IS BLOOMBERG. >> TESLA HAS ANNOUNCED A NEW PLANT IN NORTHERN MEXICO, IT FIFTH FACTORY AND FIRST SOUTH OF THE U.S. BORDER, THIS AS THEY ARE TRYING TO BE ABOUT CAPACITY, WHICH STANDS AT 1.9 MILLION CARS PER YEAR. IT IS ALSO ALLURING IN MORE EV MAKERS, MEXICO IS. IT IS ALREADY A HUB FOR THE MAKING OF COMBUSTION ENGINES.
THIS IS SUCCESS FOR THE PRESIDENT OF MEXICO. HIS WISH WAS FOR THE PLANT TO BE BUILT IN A SOUTHERN STATE OF MEXICO BUT HE DID MANAGE TO BRING OUT SIGNIFICANT ENVIRONMENTAL COMMITMENTS FROM ELON MUSK, IN PARTICULAR THE USE OF REUSABLE WATER. WATER IS SCARCE IN THAT THE COUNTRY AND ONLY NEEDED IN THE MANUFACTURING OF VEHICLES AND THEIR PAINTING. NOW LET'S GET ON WITH TAX.
UBER WRAPPED UP A LEVERAGE OF LOAN SALE ON TUESDAY, BECOMING ONE OF THE LATEST COMPANIES TO TAP INTO DEMAND FOR RISKIER DEBT. IT WILL USE OF PROCEEDS TO REFINANCE LOANS THAT MATURE IN 2025. -- SAYS -- IDSH SYSTEM OF ITS DATA HAS BEEN STOLEN, INCLUDING PERSONAL INFORMATION. THIS SENT SHARES SOMETHING TO THEIR LOWEST LEVEL SINCE 2009. WHILE NETWORKS REMAIN
OPERATIONAL, THE COMPANY SAYS ITS INTERNAL COMMUNICATIONS HAVE BEEN AFFECTED. AND APPLE SUPPLIES RUSHING TO MOVE PRODUCTION OUT OF CHINA, FASTER THAN OBSERVERS ANTICIPATED. THAT IS ACCORDING TO ONE OF APPLE'S MOST IMPORTANT PARTNERS, EXPLORING THE LOCATIONS BEYOND ITS NATIVE CHINA, TRYING TO AVOID FOLLOWING FROM ESCALATING TENSIONS BETWEEN WASHINGTON AND BEIJING. THIS IS INTERESTING. WE KNOW EXPANDING ISSUES READING THE U.S. AND CHINA BEGIN WITH A TRADE WAR, BUT IT HAS RAMPED UP, NOT ONLY AROUND TECHNOLOGY BUT ALSO CHECKS.-- CHIPS. WE WENT TO OUR AUDIENCE AND ASKED A FEW QUESTIONS. ED:
WHETHER OR NOT CHINA NEEDS TO TAKE A BACKSEAT WHEN IT COMES TO SUPPLY CHAINS. SHOULD THERE BE A SHIFT? 82% SAY YES. WHAT IS INTERESTING HOW QUICKLY THIS IS PAINTED TO BE LONG-TERM STORY. SHORT-TERM, THIS WAS ABOUT COVID . NOW IT IS POLITICAL. CAROLINE: INTERESTING WE HAVE COME OFF THAT DISCUSSION ABOUT TESLA TRYING TO FIND ANOTHER MANUFACTURING UNIT IN SUKKOT. SOMEBODY TRYING TO ON SURE THAT
MAKE IT CLOSER TO HOME. WE HAVE SEEN IN MANY WAYS THE COST IDENTIFICATION WITH CHINA USED TO BE ABOUT THE BOTTOM LINE. BUT WHEN WE ARE THINKING ABOUT COMPANIES THINKING ABOUT PROFITABILITY, THEY ALSO HAVE TO PICK ABOUT GEOPOLITICS. ED: NOW THE RISKING AND THERE IS OPPORTUNITY FOR EMERGING MARKETS TO TAKE SOME OF THAT SUPPLY CHAIN. COMING UP, LUMEN TECHNOLOGIES. EXCLUSIVE PARTNERSHIP WITH
SCALE AI FOR ITS ALUMINA -- LUMINAR ENGINE. --. WE DISCUSSED WITH CEO AUSTIN RUSSELL. THIS IS BLOOMBERG. ED: LUMINAR PARTNERING WITH SCALE I I FOR THAT AI FOR ITS ENGINE. THEY ANNOUNCED
ED: TESLA SYSTEMS USES CAMERA ONLY BASED INPUTS. LUMINAR THANKS LIDAR IS THE BEST INPUT WHEN IT COMES TO AUTONOMOUS DRIVING. CAROLINE: IT IS INTERESTING HOW MANY RELATIONSHIPS THERE ARE FOCUSING WITH OTHER AUTOS. YOU SAW THE UPSIDE IT BECAUSE OF AN INTERVIEW WITH A MERCEDES CEO. ED: I WAS AT A MERCEDES R&D CENTER
LAST WEEK. ONE ANNOUNCEMENT WAS THAT LUMINAR WILL BE PROVIDING HARDWARE THAT GOES INTO THEIR DRIVE PILOT SYSTEM, PART OF THEIR LEVEL 3 AUTONOMOUS SYSTEM, NOT YET A FAMILY IN THE U.S. ARE FROM NEVADA BUT THE SHARES REALLY JUMPED. CAROLINE: LET'S TALK ABOUT RELIGION IN THE U.S.
-- REGULATION IN THE U.S. MANY ARE DISCUSSING REGULATION OF BIG TECH IN THE U.S., M&A OVERSIGHT A HOT TOPIC AMONG MANY, INCLUDING FOUNDRIES CONSIDERING WHERE THEY SHOULD GROW STARTERS. IS THIS COUNTRY THE BEST FOR
CULTURING INNOVATION? I'VE -- I SPOKE WITH THIS FOUNDER OF NATIONAL AND IN HIS EXPRESS AS AN IMMIGRANT FROM NIGERIA DOES THE U.S. REMAIN THE BEST PLACE FOR INNOVATION? >> IT IS ABOUT GIVING PEOPLE A FIGHTING CHANCE. NO ONE WANTS A HANDOUT. WE ALL JUST WANT A CHANCE TO
SHOW WHAT WE ARE CAPABLE OF. IN THIS COUNTRY, THAT IS SOMETIMES FAR-FETCHED. I DO NOT GET EXCITED BY THE FACT THAT WE GREW BY 300% LAST YEAR. I GET EXCITED EVERY MONTH. WE TALKED ABOUT THE FACT THAT,
LOOK, SOME ARE JUST SITTING AT HOME BECAUSE WE HELP THEM ESTABLISH CREDIT SCORES. WE JUST KEPT A ROOF OVER TENS OF THOUSANDS OF PEOPLE'S HEADS WHO WERE NOT EVICTED DURING THE PANDEMIC. NEW YORK CITY WAS ON THE BRINK OF EVICTION. A PLUMBER LOST HIS JOB BECAUSE THERE WAS NOTHING TO DO DURING COVID. SHE REACHED OUT TO US HOPELESS BECAUSE HE HEARD US ON THE LOCAL NEWS. WE PAID FOR THREE MONTHS OF HIS RENT.
TWO MONTHS RATER, SCOTT CALLED THIS CRYING, SAYING, I DO NOT KNOW WHAT WOULD'VE HAPPENED TO ME, BUT I HAVE A JOB THAT IS PAYING THE OVER $120,000. THAT IS WHAT WE ARE ALL ABOUT. CAROLINE: AMERICA GIVES YOU THAT CHANCE, BUT MORE AND MORE PEOPLE ARE SAYING THEY WORRY THAT CERTAIN WAYS IN WHICH E-MINIS BEING PUSHED BACK ON, CERTAIN LET'S SAY IN THE WORLD OF CRYPTO IT NEEDS RULES OF THE ROAD, BUT ENFORCEMENT IS THE NEW REGULATION. IS THERE A WORRY THAT PEOPLE ARE NOT GOING TO SEE THE U.S. AS THAT? >> I THINK THERE IS STRENGTH IN NUMBERS AND DIVERSITY. THIS COUNTRY TELLS THE WORLD THIS IDEA OF CREATING A MORE PERFECT UNION, THIS IDEA THAT IF YOU PLAY BY THE RULES YOU CAN GET A BUT THAT IS NOT TRUE FOR A LOT OF PEOPLE, NOT TRUE FOR THE AFRICAN-AMERICAN, BUT STILL TODAY THE AVERAGE WHITE FAMILY HAS 10 TIMES AS MUCH AS THE AVERAGE BLACK FAMILY. IT IS NOT TRUE FOR THE LATINOS WHO HAVE 12 TIMES LESS WORK THAN THE AVERAGE WHITE FAMILY. WHEN WE THINK ABOUT WHAT IS
GOING ON, THIS WHAT WE DO AT ESUSU'S WE GO TO POLICYMAKERS AND SAY THE ONLY THING WE ARE GOING TO KEEP INITIALLY IS THE HIPPOCRATIC RULE, DO NO HARM. AS YOU ARE THINKING ABOUT INNOVATIVE IDEAS, DO NOT WAIT FOR THE FCC TO STRIKE IT DOWN. DO NOT WAIT FOR CONGRESS OR THE FTC TO SAY THIS WILL NOT WORK. BE PROACTIVE AND SAY THESE ARE SOME OF THE IDEAS WE HAVE. THIS IS WHAT WE HAVE IN MIND
AND THIS IS HOW IT HELPS THIS COUNTRY. IF PEOPLE ESTABLISH THEIR CREDIT SKILLS, DURING OUR 45 MILLION PEOPLE WHO DO NOT HAVE CREDIT SCORES. AVERAGE DEBT IN AMERICA IS OVER $92,000. IF YOU ELECT THAT CAPITAL AND PEOPLE CAN GET ACCESS TO THAT, YOU CAN UNLOCK FOR $20 IN CAPITAL.
THAT IS NOT ONLY GOOD FOR USE GDP. -- U.S. GDP. POLICYMAKERS' CONSTITUENTS WOULD BUILD WEALTH AND PROBABLY VOTE FOR THEM AGAIN. YOU HAVE TO GO BACK TO POLICY 11. IF YOU WANT TO MAKE SURE THINGS WERE, YOU HAVE GOT TO GET ON BOARD. IT IS NOT THE WILD WEST. YOU DO
NOT READ THINGS AND COME BACK AND ASK FOR FORGIVENESS PRETTY GOOD TO POLICYMAKERS AND SAY, I AM INTERESTED IN THE HIPPOCRATIC RULE, DO NO HARM TO THE BEST OF MY ABILITIES. AND BEAT JUST AS CAPITALISTS AND STATE WE WILL DO GOOD. CAROLINE: I CANNOT TELL YOU HOW INSPIRING THAT CONVERSATION WAS AT THE CORNELL BLOOMBERG TECHNOLOGY EVENT LAST WEEK. SO MUCH MERGER, ACROSS THE >> WELCOME BACK. ED: BAIN CAPITAL VENTURES TARGETING STARTUPS ACROSS ALL TARGETS.
THIS IS A LOT OF MONEY, A RECORD FOR THE FIRM. SHOULD WE BE SURPRISED AT THE TIMING OF TWO NEW FUNDS? >> WE ARE GRATIFIED BY IT. IT'S A VOTE OF CONFIDENCE. I THINK IT SHOULD BE A BOOST FOR THE ECOSYSTEM. THERE IS NOT A RETREAT FROM TECHNOLOGY INVESTING, TECHNOLOGY IS MOVING QUICKLY. INVESTORS ARE STILL VERY INTERESTED AND THIS MIGHT BE A BUYING INSTEAD -- A BUYING OPPORTUNITY. GUEST: IT'S ALSO -- ED: IT'S ALL STAGES EARNINGS THROUGH GROWTH.
YOU ARE FOCUSED ON THE END MARKETS. WHAT IS THE THESIS BEHIND THAT? GUEST: THE THESIS IS BE TO BE. --B2B. WE HAVE OWNERSHIP POSITIONS IN HUNDREDS OF COMPANIES. WHAT WE BRING TO THE TABLE IS THOSE FIRST B2B COMPANIES. CAROLINE: WHAT SO FASTENING IS YOUR BACKGROUND, YOU HAVE A BACKGROUND IN FINTECH.
WHAT WAS NOTABLE IN YOUR STATEMENT WAS HOW PEOPLE HAVE RECENTLY BEEN QUESTIONING DO DILIGENCE BEING DONE ON SOME COMPANIES AND OF TO HELP YOUR PORTFOLIO COMPANIES. IS THAT A DIG OF WHAT'S LARGELY HAPPENING IN THE WORLD OF CRYPTO? HOW ARE YOU THINKING ABOUT DOING THE DILIGENCE ON COMPANIES IN THIS NEW ENVIRONMENT? GUEST: I DON'T THINK THIS ANYTHING NEW ABOUT THE WAY WE DO DUE DILIGENCE RIGHT NOW. BAIN CAPITAL HAS A LEGACY OF BEING VERY CAREFUL, VERY ANALYTICAL AND WE DIDN'T CHANGE ANYTHING ABOUT THAT. THIS MARKET ENVIRONMENT IS BETTER FOR US. WE CAN DO MORE DUE DILIGENCE IN
THE WAY WE HAVE ALWAYS BEEN ACCUSTOMED TO BECAUSE WE HAVE MORE TIME TO MAKE DEALS, MORE TIME TO GET TO KNOW FOUNDERS. WHAT WAS INTERESTING ABOUT 2021 WAS HOW QUICKLY EVERYONE HAD TO MOVE AND THAT DID NOT PLAY TO OUR STRENGTHS. WE ARE KNOWN FOR TAKING OUR TIME AND DOING OUR WORK. THIS MARKET ENVIRONMENT IS MORE COMFORTABLE FOR US AND OUR STYLE OF INVESTING. CAROLINE: WHERE WILL YOU BE DOING THE
INVESTING? ARE YOU LOOKING AT ALL GEOGRAPHIES AS WELL AS ALL SIZES OF COMPANIES? GUEST: OUR TEAM IS SPLIT BETWEEN NEW YORK AND SAN FRANCISCO. 70% OF OUR WORK IN TERMS OF INVESTING IS DONE IN THE U.S. AND THE BALANCE IS DONE IN EUROPE AND THAT PERCENTAGE HAS BEEN INCREASING. I'VE BEEN DOING THIS 27 YEARS,
AND A FEW DECADES AGO VENTURE CAPITAL WAS NOT THAT ROBUST THAN INCREASINGLY IN THE U.K. AND AROUND CONTINENTAL EUROPE, WE ARE SEEING REALLY INTERESTING OPPORTUNITIES WITH FANTASTIC FOUNDERS. ED: I'M LOOKING FOR YOUR REACTION AS TO WHETHER YOU REALLY RISE TO THIS QUESTION. ARTIFICIAL INTELLIGENCE. GUEST:
I'VE HEARD ABOUT THAT. ED: WHAT IS YOUR VIEW OF ARTIFICIAL INTELLIGENCE AND WHERE DO YOU SEE THE OPPORTUNITIES? GUEST: IT HAS BEEN A BIG PART OF OUR INVESTING FOR THE LAST 10 YEARS. GENERATIVE AI IS BRAND-NEW, BUT THAT IS RELEVANT BECAUSE WE HAVE DEEP EXPERTISE IN THAT. SEMANTIC MACHINES WAS WE THINK
THE LEADING LINGUISTIC AI COMPANY THAT WE WERE THE LARGEST INVESTOR IN, WE SOLD TO MICROSOFT. WE HAVE GONE ON TO INVEST IN THE MODERN DATA STACK TO THIS DAY MOST RECENTLY A COMPANY CALLED UNSTRUCTURED. TO US GENERATIVE AI IS THE LATEST IN A SERIES OF ADVANCEMENTS IN MODERN DATA ANALYTICS. AND IT IS STRIKING USEFUL. WE SEE IT IN FINANCIAL
SERVICES, COMMERCE, THE MARKETING AND SALES TECHNOLOGY. WE ARE EXCITED. ED: THE FIRM LAST APRIL LAUNCHED A CRYPTO ONLY FUND AND I WONDERED WHAT YOUR ASSESSMENT IS AROUND THE HEIGHT WITH GENERATIVE AI VERSUS WHAT WE SAW IN CRYPTO RELATED COMPANIES. ARE THEY ANALOGOUS OR ARE THEY TWO SEPARATE THINGS ENTIRELY? GUEST: HUMAN BEING'S ARE PRONE TO BOOM AND BUST CYCLES AND WE SAW THAT IN CRYPTO. WE SEEN IT THREE OR FOUR TIMES IN THE LAST DECADE IN CRYPTO. THINGS GET OVERHEATED, THINGS
BREAK AND SO FAR THEY HAVE ALWAYS COME BACK. AI ITSELF HAS SEEN ITS OWN BOOM AND BUST CYCLES ALONG THE WAY. I HAVE NO DOUBT THINGS WILL GET OVERHEATED IN AI AND THERE WILL BE ARTICLES AND NINE MONTHS ABOUT THE LETDOWN AND UNFILLED PROMISED BUT WE THINK THE PROMISE IS QUITE DURABLE AS IT RELATES TO AI AND WE THINK THE SAME WAY ABOUT DECENTRALIZATION. CAROLINE: LOOKING FOR NEW OPPORTUNITIES IN BOTH THE SPACES? GUEST: FOR SURE. WE TEND TO GO OVER THE MOST PASSIONATE AND TALENTED FOUNDERS ARE. THAT'S WHERE WE DEVOTE OUR
ENERGIES. THERE HAVE BEEN A LOT OF FLY-BY-NIGHT CRYPTO FOUNDERS WHO HAVE LEFT THE FIELD AND THAT'S PERFECTLY FINE. THE FOUNDERS THAT ARE DEDICATED TO THE IDEAS OF DECENTRALIZATION, LEVERAGING BLOCKCHAIN TECHNOLOGY TO DISRUPT INDUSTRIES, THEY HAVEN'T LEFT. THERE WILL BE SOME FLY-BY-NIGHT FOUNDERS IN AI AS WELL AND WE WILL IGNORE THOSE TO FOCUS ON THE COMMITTED FOLKS. WE ARE VERY ACTIVE IN BOTH
SECTORS. CAROLINE: WE WERE JUST HEARING FROM ONE FINTECH FOUNDER TALKING ABOUT THE OVERSIGHT REGULATION HERE IN THE UNITED STATES. WHAT ARE THE TALENTED FOUNDERS THAT YOU ARE SPEAKING TO MAKING OF THE ENFORCEMENT IN CRYPTO, THE FOCUS ON FINTECH, THE EVOLUTION REGULATION HERE IN THE UNITED STATES? GUEST: ONE WAY TO LOOK AT IT, IT WAS QUITE STRIKING THE ABSENCE OF REGULATION FOR A LONG TIME. ALMOST ALWAYS IN MY EXPERIENCE, THAT LEADS TO A BACKLASH, THE PENDULUM SWINGS AND OFTEN VIOLENTLY. THESE THINGS TENDED TO SYNTHESIZE OVER TIME. WE WILL END UP INEVITABLY WITH
SENSIBLE REGULATION THAT HAS BEEN THE PATTERN. THIS IS THE AWKWARD ADOLESCENCE. WE WILL SEE A NUMBER OF FINTECH COMPANIES OUTSIDE OF CRYPTO WHO ALSO FEEL UNDER REGULATED. -- OVERREGULATED. I MAINTAIN THE FAITH AGAIN HAVING SEEN MANY OF THE CYCLES THAT WHERE WE END UP WILL BE A FRIENDLY PLACE FOR COMMERCE, FOR CAPITALISM, AND FOUNDERS CAN GET OVER THESE OBSTACLES AND PREVAIL. ED:
WE EXPECT TO BE TALKING ABOUT VENTURE CAPITAL MORE THAN EVER ON THIS PROGRAM. AS AN ASSET CLASS. I WANT TO GET INTO YOUR LPS. WE TALKED ABOUT PUBLIC MARKET VOLATILITY, ABOUT THE FED, BUT I WONDER WHO IS COMING TO YOU SAYING I WANT TO BE INVOLVED IN THIS PROJECT? GUEST: AS AN ASSET CLASS, THERE WERE A LOT OF TOURISTS WHO CAME TO THE ASSET CLASS IN 2020 AND 2021 WITH A GREAT AMOUNT OF ENTHUSIASM TO INVEST IN EXCITING TECHNOLOGY.
WHAT WE SAW LAST YEAR AS THE VOLUMES DROPPED DRAMATICALLY, IT WAS MOSTLY THE TOURISTS LEAVING. OUR LPS ARE NOT THE TOURISTS, THEY ARE ENDOWMENTS AND FOUNDATIONS WHO HAVE BEEN WITH US FOR A LONG TIME AND THEY KNOW US DEEPLY. THEY KNOW US TO BE COMMITTED PLAYERS. I THINK THAT'S WHAT YOU'RE GOING TO SEE IN 2023 IS A RETURN TO FOLKS WHO ARE THE STALWARTS OF THIS INDUSTRY BOTH ON THE LP SIDE AND GP SIDE. ED: THAT IS TERRIFIC. A GREAT CONVERSATION. CAROLINE: COMING UP, ANOTHER GREAT CONVERSATION.
MASIMO FOUNDER AND CEO. THIS IS BLOOMBERG. ♪ CAROLINE: WE'RE GOING TO DIVE FURTHER INTO EARNINGS. MEDICAL TECH IN PARTICULAR AND A COMPANY THAT'S LOOKING FROM HOSPITAL TO THE CONSUMER. THE CEO OF MASIMO IS WITH US. WE'RE LOOKING AT FOURTH-QUARTER
REVENUE COMING IN AHEAD OF $2 BILLION. YOUR OUTLOOK IS WELL AHEAD OF THE STREETS ESTIMATES. WHAT IS DRIVING IT? HOSPITALS? NEW CLIENTS? OR YOU WHAT YOU WANT TO BE TARGETING WITH NEW PRODUCTS? GUEST: THE GROWTH CURRENTLY PROJECTED IS ALL ABOUT GROWTH IN THE HOSPITAL FROM THE VERY SUCCESSFUL YEAR WE HAD IN OBTAINING NEW CUSTOMERS AND KEEPING EXISTING CUSTOMERS. THEN WITH THE CONSUMER
BUSINESS, WE ARE PROJECTING SLIGHTLY LOWER GROWTH BUT THAT IS BECAUSE IT'S NOT INCLUDING THE CONSUMER HEALTH PART OF THE BUSINESS. IF THAT STARTS TAKING OFF, HOPEFULLY WE WILL DO A LOT BETTER THAN PROJECTED. CAROLINE: LET'S TALK ABOUT THE TECHNOLOGY UNDERLYING ALL OF THIS.
MANY KNOW YOU FOR OXYGEN MANAGEMENT. I'M INTERESTED AS TO WHAT THE CONSUMER IS GOING TO KNOW YOU FOR IN PARTICULAR NEW PRODUCTS, CONNECTED DEVICE, A WATCH THAT HELPS YOU ASSESS YOUR HEALTH AT HOME. GUEST: THANK YOU. AS YOU KNOW, WE ARE THE LEADING PULSE OXIMETER COMPANY IN THE WORLD IN THE HOSPITALS. OVER 200 MILLION PEOPLE ARE
MONITORED WITH OUR TECHNOLOGY AND OUR PULSE OX TECHNOLOGY HAS BEEN USED TO IMPROVE OUTCOMES. NONE OTHER HAS HAD THAT PEDIGREE. OUR CONSUMERS WILL SEE A SERIOUS PRODUCT, A PRODUCT THAT IS TRUTHFUL WITH VERACITY THEY CAN MAKE A DIFFERENCE IN OUR LIVES. ABOUT ONE THIRD OF THE POPULATION HAS CHRONIC ILLNESSES.
THEY HAVE SERIOUS PROBLEMS AND THEY NEED SERIOUS PRODUCTS AND THAT'S WHAT WE HOPE TO GIVE THEM SO THEY CAN TAKE BETTER CONTROL OF THEIR LIVES. ED: HOW MUCH OF THAT REVENUE GUIDANCE FOR THIS YEAR IS CARRIED OVER MOMENTUM FROM THE PANDEMIC? I WAS JUST AT CES IN VEGAS AND EVERYONE IS STILL TALKING ABOUT HOW FOCUSED THE CONSUMER IS ON HEALTH DATA COMING OUT OF THE PANDEMIC. GUEST: THE PANDEMIC IS WHAT GAVE US THE URGENCY. WE ALL THOUGHT ABOUT CONSUMER HEALTH TRACKING AS EITHER BLOOD PRESSURE OR ECG. THE PANDEMIC MADE PULSE
PROXIMITY THE START BECAUSE PEOPLE HAD SILENT ISSUES AND IF YOU WEREN'T DETECTING IT, YOU COULD END UP DYING FROM NOT BREATHING PROPERLY. AT THE TIME, WITHIN A MONTH WE CREATED A PRODUCT THAT ALLOWED HOSPITALS OVERWHELMED WITH COVID PATIENTS SEND THOSE WHO DIDN'T NEED IMMEDIATE ICU CARE HOME AND WITH OUR RELIABILITY REMOTELY MONITOR THEM. THAT ENDED UP SAVING MORTALITY BY 70% AND ABOUT $11,000 PER PATIENT AND THAT IS WHAT'S DRIVING THE HOSPITALS SAYING IT REALLY WORKED, NOW WE WANT TO SEND OUR PATIENTS HOME SOONER AND MONITOR THEM REMOTELY WITH THE SAME OR SIMILAR TECHNOLOGY. ED: I WANT TO ZERO IN QUICKLY ON THE EPS FIGURE FOR 2023.
WHAT IS ALLOWING YOU TO BOOST THE PROFIT AGAINST EXPECTATIONS? GUEST: CERTAINLY ONE OF THE NEGATIVES OF THE PANDEMIC WAS THE SUPPLY CHAIN PROBLEMS. COSTS WENT UP DRAMATICALLY EVERYWHERE NOT JUST IN LABOR BUT IN MATERIALS AND SUPPLY COSTS AND DISTRIBUTION COSTS. AS WE ARE COMING OUT OF THE PANDEMIC, THOSE COSTS MOST OF THEM ARE GOING TO NORMAL AND WE SHOULD SEE THAT IMPROVED OUR MARGINS INTO THE YEAR. CAROLINE: I WANT TO DWELL ON THE WATCH BECAUSE MANY THINK CONNECTED DEVICES AND WATCHES THEY THINK APPLE. THERE WAS REPORTING COMING FROM BLOOMBERG ABOUT HOW APPLE CONTINUES TO FOCUS ON THEIR SMART WATCHES. WHERE ARE YOU CONCERNED ABOUT YOUR INTELLECTUAL PROPERTY? GUEST: APPLE CONTACTED US AND SAID YOU ARE -- WE WANT TO INTEGRATE YOUR STUFF. INSTEAD, THEY STARTED HIRING
OUR PEOPLE, TAKING OUR IP AND WE NOTICED THE LAUNCH OF PATENTS WITH OUR EMPLOYEES NAMES ON IT THEN THERE WATCH. SO WE SUED THEM FOR TRADE SECRET THEFT WHICH IS GOING TO TRIAL THIS MONTH OR APRIL. SECONDLY, WE SUED THEM IN THE INTERNATIONAL TRADE COMMISSION FOR PATENT INFRINGEMENT WHICH WE JUST ONE.
WE ARE WAITING FOR THE COMMISSION'S RULING AND HOPEFULLY SOMETIME IN JUNE OR JULY WE SHOULD GET THE EXCLUSION ORDER SO THEY CAN NO LONGER SELL THEIR WATCHES WITH OUR TECHNOLOGY. CAROLINE: COME BACK TO DISCUSS THAT WITH US WHEN YOU CAN. WE WILL GO TO APPLE TO GET THERE, AND ALL OF THIS.
A LOT FOR INVESTORS TO DWELL ON WITH THAT PARTICULAR COMPANY. I KNOW WE WILL HAVE PLENTY OF INVESTORS ACUTELY AWARE OF INVESTOR DATE TOMORROW OF TESLA. ED: TESLA AND WHAT WE ARE EXPECTING IS MASTERPLAN PART THREE. IT'S BEEN SIX YEARS SINCE PART TWO. THAT MAN JOINED TESLA'S BOARD JUST AFTER ELON MUSK ANNOUNCED MASTERPLAN PART ONE. I'M EXCITED TO GET HIS TAKE BECAUSE THIS IS ABOUT THE EVOLUTION OF A COMPANY THAT IS NO GOING TO OUTLINE ITS NEXT 10 YEARS FOR US. CAROLINE:
MANY REMAIN DEEPLY COMMITTED AND BULLISH ON THIS COMPANY. WE JUST HEARD FROM CATHIE WOOD LAST WEEK ON THAT. ED: SHE IS STILL SUPER BULLISH ON TESLA THAT IT'S ALSO ABOUT ENERGY. I'M EXCITED AND IT'S HAPPENING DURING THE SHOW WHICH FOR US IS TRICKY, BUT FOR THE AUDIENCE FANTASTIC.
COMING UP AN EXCLUSIVE PARTNERSHIP. WE WILL GET BACK TO THAT CONVERSATION WITH THE CEO AUSTIN RUSSELL. ED: LIDAR LUMINAR IS HAVING ITS INVESTOR DATE.
A BIG PART OF THE ROADMAP FOR GROWTH, ARTIFICIAL INTELLIGENCE. WHAT ARE YOU DOING IN AI? GUEST: WE BEEN INVESTING IN SOFTWARE AND AI SYSTEMS FOR YEARS EVER SINCE THE COMPANY CAME OUT OF STEALTH MODE IN 2017. PART OF THIS IS DEVELOPING A HOLISTIC SOLUTION FOR AUTOMAKERS. IN CONJUNCTION WITH AUTOMAKERS AS PART OF FULL STACK PRODUCTS AND RECEPTION PRODUCTS AND OTHER CAPABILITIES THAT WE HAVE AND ARE ABLE TO DEVELOP IN CONJUNCTION. PART OF THE HOLISTIC DATA SHOWING IT'S MORE THAN JUST LIDAR. EVERYWHERE FROM THE SEMI CONDUCTOR LEVEL TO THE LIDAR SYSTEM SOFTWARE, OEM, CONSUMER AND INSURANCE AS OPPORTUNITIES FOR WHAT WE HAVE AHEAD.
ED: IT IS ALSO AN INVESTOR DATE. YOU TALKED ABOUT ADDING OVER $1 BILLION IN YOUR FORWARD BOOKINGS. WHO ARE YOU DOING DEALS WITH? GUEST: IT IS LARGELY AUTOMAKERS. FROM AN AUTONOMOUS VEHICLE STANDPOINT, PEOPLE THINK ABOUT ROBO TAXIS WITH ROOF RACKS OR SUPERCOMPUTER IN THE TRUNK. OUR WHOLE THING IS ABOUT ENHANCING THE DRIVER NOT REPLACING THE DRIVER AND HAVING PRACTICAL APPLICATIONS OF THESE SYSTEMS OVER THE COURSE OF THE RELATIVE NEAR TERM FOR PRODUCTION AUTOMAKERS. THAT'S WHERE WE'RE ARE LANDING
THESE MAJOR DEALS. FOR EXAMPLE, MERCEDES LAST WEEK ANNOUNCED THEIR COLLABORATING WITH US TO BE ABLE TO EXPAND LUMINAR POWERED VEHICLES ACROSS THEIR WHOLE LINEUP. IT WILL BE TRANSITIONING FOR A NUMBER OF THOSE DIFFERENT VEHICLES. THAT'S WHAT'S HAPPENING. CAROLINE: A LOT OF REVENUE GROWTH IS BEING TALKED ABOUT. AT LEAST 100% FOR 2023. GROSS MARGIN IS ALSO SOMETHING YOU'RE TALKING ABOUT. HOW HAVE YOU HAD TO DOUBLE DOWN ON PROFITABILITY AS INVESTORS JUST DON'T WANT GROWTH AT ANY COST ANYMORE? GUEST: IT'S A GOOD QUESTION, PROBABLY MORE THE FLAVOR OF THE MONTH WHEN IT COMES TO HOW MUCH YOU ARE INVESTING IN GROWTH VERSUS PROFITABILITY. THE REALITY IS IF YOU WANT TO
FLIP A SWITCH AND COME PROFITABLE THIS YEAR, YOU COULD. BUT THE SMART THING TO DO IS SET OURSELVES UP ON A TRAJECTORY OR WE CAN BE PROFITABLE HOLISTICALLY FOR OUR CORE BUSINESS STARTING NEXT YEAR. I THINK FROM A HOLISTIC PERSPECTIVE, WE DO HAVE AN OPPORTUNITY TO BE WHAT WOULD EASILY BE THE FIRST PROFITABLE AUTONOMOUS VEHICLE COMPANY OR EQUIVALENT.
WE REALLY HAVE A PRODUCT THAT IS OUT THERE GOING INTO CARS LIKE THE ONES YOU ARE SHOWING. IN THE CONSUMER'S HANDS AND FOR MANY OF THEM THERE MAINSTREAM PRODUCTION VEHICLES. WE ALSO SEE THAT WE ARE EMBEDDED ACROSS 20 DIFFERENT VEHICLE MODELS FROM A NUMBER OF DIFFERENT AUTOMAKERS GLOBALLY. ED: WHAT'S THE BIGGEST RISK YOU FACE THIS YEAR? WHAT WILL STOP YOU IN YOUR TRACKS IF ANYTHING? SUPPLY CHAIN, FOR EXAMPLE. GUEST: I THINK THE KEY IS BEING ABLE TO MAKE SURE WE CAN GET OUR HIGH-VOLUME PRODUCTION FACILITY IN MEXICO RUNNING.
THE MEXICO FACILITY IS AHEAD OF GUIDANCE FOR WHAT WE HAD SO WE SHOULD EXPECT THAT TO COME IN LINE Q2. THAT'S GOING TO BE A HUGE DRIVER OF SCALE AND WHAT ENABLES US TO WORK WITH AUTOMAKERS. THEN STARTING WITH GLOBAL PRODUCTION VEHICLE LUNCHES. STARTING WITH VOLVO, FOR EXAMPLE LATER THIS YEAR. CAROLINE: THE LUMINAR CEO.
COMING TO US FROM FLORIDA. THAT DOES IT FOR BLOOMBERG TECHNOLOGY. TOMORROW, STEVE WESLEY WILL BE WITH US. ED: I'M EXCITED FOR THAT CONVERSATION BECAUSE HE HAS WORKED WITH ELON MUSK, HE HAS HEARD ABOUT HOW YOU PLAN FOR THE LONG-TERM. TUNE IN FOR THAT. AND DON'T FORGET TO CHECK OUT OUR PODCAST WHEREVER YOU CARE PODCASTS ON APPLE, SPOTIFY, OR I HEART. SO MUCH TO DISCUSS IN THE WORLD
OF GLOBAL TECHNOLOGY. THIS IS BLOOMBERG. ♪
2023-03-03 01:28
