Speaker 1: Imed Ludlow in San Francisco. Caroline Hyde off today this
Speaker 1: is Bloomberg Technology and coming up. Tech stocks drop as
Speaker 1: a hot jobs report, adds pressure on the FED to
Speaker 1: keep raising rates. Plus warnings from Amazon and Alphabet way
Speaker 1: on shares as big tech gets hit by the slowdown.
Speaker 1: Even so, then has that one rises for a fifth
Speaker 1: straight week as Apple gains and the cyber tag which
Speaker 1: sent derivative trading back to the nies. We've got the
Speaker 1: Bloomberg scoop on how vulnerability at a little known software
Speaker 1: firm lead to Sunbroker's going manual. But first we've got
Speaker 1: to talk about these markets are really hot jobs print
Speaker 1: for the month of January, putting pressure on the FED
Speaker 1: to look at raising rates. That's the market take on
Speaker 1: all of this, and then we digest starnings and that's
Speaker 1: that one hundred down one point eight percent, although as
Speaker 1: we said, it ended the week up on the week,
Speaker 1: meaning five straight consecutive weeks of games. The Philadelphia Sundy
Speaker 1: Conductor Index also kind of in line with that, down
Speaker 1: one point nine percent. Is yields continue to push higher.
Speaker 1: Bitcoin essentially did nothing in reaction to what we saw
Speaker 1: from the data. It kind of traded sideways around twenty
Speaker 1: three thousand, five hundred dollars per token. There's still momentum
Speaker 1: in the earning story in both directions. Switched up the
Speaker 1: board to look at the names that we're thinking about,
Speaker 1: particularly Apple. It was so interesting because the post market
Speaker 1: reaction Thursday to Apple's miss was negative, and yet we're
Speaker 1: up two point five percent. There was some optimism around
Speaker 1: what Tim Cook had to say on reopening in China.
Speaker 1: Not so for Alphabet, the parent of Google or Amazon.
Speaker 1: Those shares really dropping and then accelerating their declines following
Speaker 1: that hot job sprints. Of course, their earnings were not
Speaker 1: impressive to investors, worrying sounds about the trajectory three, which
Speaker 1: will get into. And then Meta actually had been high,
Speaker 1: continuing its momentum from its earnings that beat earlier in
Speaker 1: the week. But then we had that jobs print as well,
Speaker 1: and that's where we got to go because the focus
Speaker 1: on data is back, the focus is on the FED
Speaker 1: is back. To Boomberg's repick, it joins me from Mount
Speaker 1: in d C. Read hit me with the numbers that
Speaker 1: we got from the eco sphere on Friday. Well, first
Speaker 1: of all, I'm always here to report good economic news.
Speaker 1: So that's that's a great way to end of Friday. UM.
Speaker 1: But what we saw was we saw that employers added
Speaker 1: about a half a million jobs in January, which blew
Speaker 1: past estimates. And it was this really broad based game
Speaker 1: that really kind of showed this this restrengthening in the
Speaker 1: labor market when we didn't really know it could get
Speaker 1: any stronger. So you saw the unemployment rate fall to
Speaker 1: three point four percent, which is a fifty three year low. UM.
Speaker 1: We saw this broad based hiring. We saw the average
Speaker 1: work week tick up, showing that there's still kind of
Speaker 1: that robust labor demand. And we saw wages, while decelerating
Speaker 1: from the prior month, we saw them still continue to
Speaker 1: climb at a robust rate. Read. You're the only person
Speaker 1: that I know that can go through all of that
Speaker 1: was such beaming joy on a Friday after what has
Speaker 1: been a busy day in markets, volatility driven by the numbers. Here,
Speaker 1: I am broken and exhausted. You just keep going, fine,
Speaker 1: let's go with it. I think that the narrative is
Speaker 1: I framed it. We go back towards the FED right.
Speaker 1: Good economic data, bad news for markets, and that's because
Speaker 1: of what we think the FED will now have to
Speaker 1: reconsider what is the market saying about the Federal Reserve
Speaker 1: in response to the numbers that we have on the screen.
Speaker 1: So especially whenever you get a number like today in
Speaker 1: the week of other strong data that we've seen, Um,
Speaker 1: you saw job openings rally back above eleven million. You've
Speaker 1: seen jobless claims, so applications for unemployment you've seen them fall.
Speaker 1: And the last four out of the last five weeks,
Speaker 1: UM you've seen kind of susteemed strength and the consumer UM,
Speaker 1: it really makes the a the Fed's job more difficult.
Speaker 1: And you know, some of my colleagues had a great
Speaker 1: story out today about how when you see jobs numbers
Speaker 1: like today's, it you know, really strengthens the Fed's resolve
Speaker 1: to you know, push rates above five percent. Alright, bloom
Speaker 1: Bloomgog's re pick. It just fantastic rapporting on that ECO data.
Speaker 1: That's Friday. I want to hone in on the tech
Speaker 1: sector and put it in the context of job cuts,
Speaker 1: all of those that we've seen, particularly in two Boomberg's
Speaker 1: m Live team has been asking if these cuts have
Speaker 1: been too large, too small, or even too premature. Here's
Speaker 1: what some of Bloomberg Television's guests have had to say
Speaker 1: about that question. Even after all of the recent layoffs
Speaker 1: that you've seen for many of the large tech companies,
Speaker 1: we still see tech, as you know, relatively bloated in
Speaker 1: terms of if you look at how much it's you know,
Speaker 1: employment counts have grown relative to its real sales growth
Speaker 1: over the past several years. Even after you adjust for
Speaker 1: the recent layoffs. For every big tech company that's having layoffs,
Speaker 1: there are many small organizations who are eager to gobble
Speaker 1: those employees up. So I wouldn't say that there's a
Speaker 1: dearth right now. What we're seeing, however, is CEO is
Speaker 1: taking advantage of fear in the headlines. So I think
Speaker 1: that these layoffs put these companies in a position where
Speaker 1: it's more difficult for them to show better than expected
Speaker 1: sales and profits, because if they had better than expected
Speaker 1: sales and profits, why are they cutting head council significantly.
Speaker 1: You're at the place where layoffs are the most likely
Speaker 1: catalyst to give FED confidence inflation. We'll get back to
Speaker 1: two percent, so I expect sort of towards q t
Speaker 1: Q three you'll see the margin improvements and bottom line
Speaker 1: improvements on earnings that resolve from the layoffs and then
Speaker 1: the cost cutting. But we're not going to see it
Speaker 1: just yet, so I think it'll trickle in and then
Speaker 1: in the coming months. So you've had the ECO data,
Speaker 1: you've had the earnings. Let's get to the macro and
Speaker 1: the earning season at large with Alex tap Scott, Managing
Speaker 1: director over at nine point Partners, the Digital Asset Group
Speaker 1: over six billion dollars US and assets under management or
Speaker 1: eight billion Canadian dollars and Alex, it's quite the week
Speaker 1: to digest. I'm grateful to have you with me. I
Speaker 1: guess let's start on the jobs data, really hot print
Speaker 1: here in the US for January. You know the logic here,
Speaker 1: I guess from the market's reaction is the FED will
Speaker 1: have to rethink about the timing of a policy pivot
Speaker 1: and then in the context of higher rates, discounting present value,
Speaker 1: future profits, tech, etcetera. Is this a think again moment
Speaker 1: or is this just a blip? Well, I guess we're
Speaker 1: back in the zone where good news is bad news. UM.
Speaker 1: I think that the market reaction was pretty predictable given
Speaker 1: the much harder than expected non farm perils. But as
Speaker 1: you pointed out in your opening segment. You know, the
Speaker 1: market has been up five weeks in a row, and
Speaker 1: the NASDACK, which is obviously highly sensitive to interest rates,
Speaker 1: UM is set to close up or I said, I
Speaker 1: should say recently just closed up over three percent for
Speaker 1: the week. So I think we probably do for a
Speaker 1: pullback after a pretty blistering hot period. And as I
Speaker 1: see it, I don't think the number today UM, as
Speaker 1: one isolated data point is enough to derail this risk
Speaker 1: on trade that we've seen to pick up the last
Speaker 1: a while. So you yourself personally do hold Apple, Amazon, Alphabet,
Speaker 1: the parent company of Google. I think you also hold
Speaker 1: Microsoft as well. Is we reflect on the week of earnings,
Speaker 1: you know, one of the takeaways that that other guests
Speaker 1: have said is that essentially this is definitive proof megacat
Speaker 1: tech is not immune to what we see in the
Speaker 1: global economy. Was that your takeaway as well? Well? I don't.
Speaker 1: I think that's been obvious for the past few months.
Speaker 1: You know, I think going into two thousand and twenty three,
Speaker 1: investors had really been pricing in the worst case scenario.
Speaker 1: For the start of this year. I think expectations were
Speaker 1: that inflation was going to keep running hot, and that
Speaker 1: was going to force the FED and other central banks
Speaker 1: to continue to jack up braids, and that we were
Speaker 1: going to be doing at some point for you know,
Speaker 1: some kind of economic um slow down, maybe even a
Speaker 1: major recession. So far, the data has not borne that out. Now.
Speaker 1: I wouldn't say that we're out of the woods yet,
Speaker 1: but I think that the worst case scenario is really
Speaker 1: no longer the base case. And I think a soft
Speaker 1: landing went from something that was kind of a pipe
Speaker 1: dream for a lot of balls to something that's increasingly
Speaker 1: being priced into the market, and when that happens, I
Speaker 1: think that that's obviously going to cycle capital back into stocks.
Speaker 1: I think a lot of managers started the year very
Speaker 1: underweight um, looking to wait and see how the FED reacted,
Speaker 1: and you get this foe mode getting the year as
Speaker 1: simple as it might sound, where they have to play
Speaker 1: catch up to make sure they don't miss their benchmarks.
Speaker 1: And I think we're starting to see that trade playing
Speaker 1: it too right. There's this idea of tough comps right
Speaker 1: or unfair comparisons between Q four two and Q four
Speaker 1: twenty one. Apple was a good example of that in
Speaker 1: their commentary around the difficulties they had in the last
Speaker 1: three months two, but also the idea that it wasn't
Speaker 1: fair to compare with the year the period a year
Speaker 1: ago because of the different product release timings. You know,
Speaker 1: how good was Q four twenty one compared to what
Speaker 1: we saw in the most recent earnings period. Well, as
Speaker 1: you pointed out, every company is different, and an Apple's case,
Speaker 1: you know, the product cycle can weigh on earnings and
Speaker 1: on revenue. But I think in general Q four two
Speaker 1: thousand twenty one, so a little over a year ago
Speaker 1: was kind of like the Goldilocks zone. You know, we
Speaker 1: had all this deferred consumer spending because people have been
Speaker 1: walked up during covid um. You had an economy that
Speaker 1: was still growing in a very fast flip, and the
Speaker 1: inflation concerns weren't quite as you know acute, I guess
Speaker 1: as they are today. And so you saw that transferred
Speaker 1: into consumer spending, you know, business spending on advertising, spending
Speaker 1: on cloud and so forth. That translates into the earnings
Speaker 1: for these companies. So I would say that looking at
Speaker 1: you know, most investors were looking at this earnings prints
Speaker 1: from these different companies hoping to avoid the worst and
Speaker 1: to be clear, like tech earnings were mediocre, and I
Speaker 1: would say kind of a mixed bag. You know, Facebook
Speaker 1: beat on earnings and revenue but had exceptionally low expectations.
Speaker 1: Apples you put it up mixed, mixed on both. But ultimately,
Speaker 1: you know, A, we're comparing it to a period that
Speaker 1: was you know, if not an lt lier, very difficult
Speaker 1: ump compared to what we saw last year. Uh and B.
Speaker 1: I think that really people are trying to look forward
Speaker 1: um to see what these companies are going to do,
Speaker 1: to try and write the ship and uh, yes, know,
Speaker 1: well how zeroed in? Then is this market on the
Speaker 1: bottom line? When we talk about what we learned from
Speaker 1: earnings about three going forward, the answer seems to be
Speaker 1: not that much other than the zeroed in on cost. Yeah, well,
Speaker 1: in a zero interest rate environment, it's a grow at
Speaker 1: all costs kind of market, right, And that's why you
Speaker 1: saw you know, unprofitable tech companies trading at sky high
Speaker 1: valuations and and that was true also for big cap
Speaker 1: tech companies. And I think we're starting to migrate from
Speaker 1: a top line market to a bottom line market. There's
Speaker 1: an increasing focus on costs, all the inputs that go
Speaker 1: into Uh, you know the financials for these companies, and
Speaker 1: as as you've pointed out, there's been some job cuts
Speaker 1: and some other trimming, and I think if you look
Speaker 1: at the earnings calls for these companies the past week
Speaker 1: and a half or so, that's something that they've really
Speaker 1: drilled down on, and I think investors are pricing that
Speaker 1: and they're thinking, Okay, well, if they can keep cutting
Speaker 1: cost even if revenue is flat, then I'm going to
Speaker 1: see bigger earnings and I want to buy into that trip.
Speaker 1: All right, Alex Taps got managing director over at nine
Speaker 1: Point Partners Digital Asset Groups. So good to have you
Speaker 1: here with us. Tech is really doing quite terribly on
Speaker 1: fundamental so well. Tech companies are ripping on their stock prices.
Speaker 1: They're having an awful earning season. It's a pretty direct
Speaker 1: and our assessment from Credit Swiss is Jonathan Golob on
Speaker 1: how text faring. Let's continue the conversation a mega week
Speaker 1: of megacap tech earnings. Just getting e commerce perspective. Rachel Typograph,
Speaker 1: CEO and founder of mick Mac, a global econ commerce
Speaker 1: enablement and analytics platform for multi channel brand. You heard
Speaker 1: what Jonathan Golob had to say, about how tech he's doing.
Speaker 1: In summary, not very well when you looked across Amazon
Speaker 1: on the e commerce side, and also as it extends
Speaker 1: to what Alphabet had to say about core search. What
Speaker 1: was your takeaway from this week, Rachel, Listen, we all
Speaker 1: knew this was going to be a tough week, but
Speaker 1: we're talking about the three biggest players in advertising. We
Speaker 1: have Google, we have Meta, we have Amazon. They each
Speaker 1: play a fundamental role in the ecosystem, but times start changing.
Speaker 1: With Google, they've had the stronghold in search, but they
Speaker 1: also sit on this amazing asset YouTube, which is an
Speaker 1: incredible place for brand awareness and engagement. You have Meta,
Speaker 1: largest player and Social. They've done a phenomenal job of
Speaker 1: building out full funnel ad solutions across Facebook and Meta.
Speaker 1: And now you have Amazon, the largest player in e
Speaker 1: com which is also another way of saying they're sitting
Speaker 1: on a treasure chest of purchase data waiting to be monetized.
Speaker 1: And what's changed in the no I'm starting instruction, Rachel,
Speaker 1: I want to I want to zero in on that
Speaker 1: because this is what surprised me about this earnings report
Speaker 1: from Amazon. Last quarter, the upside surprise was advertising, and
Speaker 1: this quarter the downside surprise was the AWS didn't come
Speaker 1: in to save the day. But we didn't really even
Speaker 1: talk about advertising, and you're basically saying that this is
Speaker 1: some unlocked still locked up potential to the commerce giant. Absolutely,
Speaker 1: AWS was an amazing way to offset margins. Advertising is
Speaker 1: an amazing way to offset margins in the losses of
Speaker 1: their traditional retail business. So Amazon's ad business grew in
Speaker 1: Q four It was now becoming a very very close
Speaker 1: player behind Meta. And the reason for this is because
Speaker 1: of the headwinds that Google and Meta have experienced changes
Speaker 1: in Apple's iOS fourteen cookie list Internet, they started to
Speaker 1: undo the way that direct response advertising fundamentally worked in
Speaker 1: platter platforms like Meta and Google. As a result, advertisers
Speaker 1: want to be able to demonstrate the r o I
Speaker 1: of their marketing investment, and Amazon is sitting on all
Speaker 1: of this purchase data to be able to demonstrate to
Speaker 1: advertisers direct attribution. And so Amazon is really writing the
Speaker 1: tail winds that are in fact Google and Metas headwards.
Speaker 1: Let's zero and a Meta. That was the surprise of
Speaker 1: the week, probably you know, a the response Metas shares
Speaker 1: jumping by the most in a decade, Thursday. But the
Speaker 1: other data point is Facebook at two billion daily users,
Speaker 1: up seventy million from a year ago. What is Meta
Speaker 1: done to make its platforms interesting again, because presumably the
Speaker 1: market reaction is the investors saying this bodes quite well
Speaker 1: for advertising revenue going forward. It Yeah. So the way
Speaker 1: that people measure the efficacy of their advertising dollars is
Speaker 1: through this mythical model called media mixed modeling, and what
Speaker 1: it requires is that brands need full funnel marketing in
Speaker 1: order for the math equation to work. They need to
Speaker 1: have upper funnel media that's letting people know, hey, I
Speaker 1: exist in the world, mid funnel media that's encouraging them
Speaker 1: to buy, and then bottom of the funnel media that's
Speaker 1: pushing them towards the path to purchase. Bottom of the
Speaker 1: funnel media think Amazon, think Walmart, think Instacart, all of
Speaker 1: retail media. It's typically expensive. Upper funnel media is more affordable.
Speaker 1: Meta remains to to be a really strong platform for
Speaker 1: upper funnel media. Mick mac We work across eight hundreds
Speaker 1: of the biggest brands in the world, and we actually
Speaker 1: saw paid traffic within Meta increase by eight. We saw
Speaker 1: the client in Google by seven and what that demonstrates
Speaker 1: is that advertisers still seeing Meta as an upper funnel channel.
Speaker 1: And what's happening is that people are moving dollars out
Speaker 1: of Google because primarily that's search, into Amazon because Amazon
Speaker 1: is the new search. Hey, Rachel inaggregate, what did we
Speaker 1: learn about the health of the advertising market for social
Speaker 1: media companies this week? We're learning that people are continuing
Speaker 1: to spend. Is it the gold rush of no? But
Speaker 1: are billions of dollars still moving into platforms like Meta
Speaker 1: and Pinterest and TikTok. Absolutely, and TikTok continues to be
Speaker 1: a platform that everyone should be watching. We saw massive
Speaker 1: amounts of dollars again shift away from platforms like YouTube
Speaker 1: into TikTok. In two, Rachel, I finally want to go
Speaker 1: to Twitter. Since Twitter has gone private, there's less fund
Speaker 1: to be had. That's not true at all. You can
Speaker 1: just go to Elon Musk Twitter, which we did today,
Speaker 1: and Elon Musk is talking about sharing revenues from ads
Speaker 1: with the creators. And I'm interesting your take on this
Speaker 1: about Twitter's pivot to a created driven platform. Do you
Speaker 1: think he can do that? Listen, Ellen is trying everything
Speaker 1: right now to keep dollars within the platform. At MICMAC,
Speaker 1: we've essentially seen a hundred decline in paid media traffic
Speaker 1: and Twitter since he took ownership. So with creators, it's
Speaker 1: actually an interesting play YouTube did a very similar move
Speaker 1: where they share the ad revenue with creators. As a result,
Speaker 1: many many influencers have built six figure businesses on YouTube
Speaker 1: and it's encourage them to move away from platforms like
Speaker 1: Instagram into YouTube for content creation. So I do think
Speaker 1: there's an opportunity for Twitter to engage with creators in
Speaker 1: this way. But it's not novel. It's a proven playbook
Speaker 1: that works in environments like YouTube. Alright, Rachel Typograph, founder
Speaker 1: and CEO of MCMAC, thank you so much for joining
Speaker 1: us this Friday. Now, Rivian is developing an electric bike
Speaker 1: that's potentially expanding the ev maker's product lineup. This is
Speaker 1: something I was reporting earlier today for Bloomberg. CEO R J.
Speaker 1: Scarings disclosed the e bike effort Friday at a company
Speaker 1: wide meeting all hands. That's according to my sources, a
Speaker 1: small group of engineers is already working on this project.
Speaker 1: Are J. Scarings told his staff the company owns patterns
Speaker 1: for electric bicycle components and designs now coming up. Derivatives
Speaker 1: traders sent back to manual processing thanks to a cyber
Speaker 1: attack earlier this week. We have the details on that
Speaker 1: coming up next. This is Bloomberg. A cyber attack earlier
Speaker 1: this week sent derivatives trading back to the nighties. Bear
Speaker 1: with us joining us for more. Bloomberg's Katherine Doctor who
Speaker 1: had that scoop, explained the basics of this story to
Speaker 1: meet Catherine. So just this week, Ion Trading, it's a
Speaker 1: software firm that is the key to many markets across
Speaker 1: the globe, but this specific software was for derivatives trading,
Speaker 1: and earlier it started in Europe. Some of the systems
Speaker 1: were down and it came out that there was a
Speaker 1: cyber attack, and ultimately that meant that derivatives trading was
Speaker 1: up ended across the world. And it's really been a
Speaker 1: disruption and this target which is ongoing. The systems are
Speaker 1: still down across the globe and only just now either
Speaker 1: coming back online or moving elsewhere are UM. There's been
Speaker 1: a ripple effect and there has also been UM many
Speaker 1: developments even even currently UM we're we're calling sources because
Speaker 1: it has come come out on the UM cyber attack.
Speaker 1: The the actual attacking website. UM that this uh, this
Speaker 1: software is now not on their target lift, so we
Speaker 1: might actually see some developments and some resolutions soon. Um.
Speaker 1: This is a story, Catherine, of technology gone wrong, just
Speaker 1: terrific repulsing from you and the team. My understanding is
Speaker 1: that we've had responses from the US Treasury Department and
Speaker 1: also some banks. What are they saying, Yes, so today, UM,
Speaker 1: we put out some reporting on the banks that are
Speaker 1: either directly impacted, and what they are saying is that
Speaker 1: they are managing their trade, some of them manually, so
Speaker 1: they're going back to UH. We do refer to the
Speaker 1: nineteen eighties when this world of derivatives trading was more
Speaker 1: manual and less automated, less dependent on computers and electronic
Speaker 1: trading um than it is today. So they are trying
Speaker 1: to resolve this issue. They are manually reporting so that
Speaker 1: they can abide by their regulatory guidance, and the regulators
Speaker 1: are are giving some flexibility as well. They've extended some
Speaker 1: deadlines and some of their reporting requirements that are due
Speaker 1: at the end of this week have been extended. It
Speaker 1: feels like this is just the start of this one.
Speaker 1: Bloomberg's Katherine Dougherty, Thank you very much. Welcome back to
Speaker 1: Bloomberg Technology. I'm Ed Ludlow in San Francisco. Now, Google
Speaker 1: has invested almost four million in the AI startup and Thropic,
Speaker 1: which is testing a rival to open a eyes chat
Speaker 1: GPS that according to a Bloomberg source, the deal gives
Speaker 1: Google a stake in Anthropic, but it doesn't require Anthropic
Speaker 1: to spend any of the funds buying cloud services from Google.
Speaker 1: It's been a long week of AI headlines and I
Speaker 1: want to break them all down now with Saga Shah,
Speaker 1: head of Responsible AI at fract Or, a global AI
Speaker 1: provider to fortune companies across finance, healthcare, and retail. Let's
Speaker 1: start with that and Google, Sago, you you operate in
Speaker 1: the world of AI. I know that you're following the
Speaker 1: headlines and technological developments closely. You know the executives over
Speaker 1: Alphabet and Google were ready for the questions when you're
Speaker 1: going to pull back the curtain. But what did you,
Speaker 1: as an industry participant, actually learned this week about Google's
Speaker 1: latest in artificial intelligence? Shan, I think this is about
Speaker 1: anything big phonol of us don't affect as we can understand.
Speaker 1: Definitely you know doc after Google's learnings report, for sure,
Speaker 1: but that also indicates a lot about the macro about environment,
Speaker 1: not just about chagpt right, the digital business going down,
Speaker 1: not not growing as fast as it was last two
Speaker 1: years like that sort of sort of a micro trend.
Speaker 1: But the most interesting part has been UH agupty and
Speaker 1: this investment and Tropic as well as the internal arms
Speaker 1: of Google all coming together, which was a great thing
Speaker 1: to see. Uh. For example, the internal Lambda which is
Speaker 1: the language models UM. Right. Uh. They are now using
Speaker 1: that UM for the apprentice pat internally to test. They've
Speaker 1: asked all their employees to start using it and sending feedback. Right,
Speaker 1: that's an interesting move. The other deep mind UM which
Speaker 1: also has you know the almost the best day algorithm
Speaker 1: at two thousands ten right, That is a London based
Speaker 1: company that they acquired, and it's sort of become the
Speaker 1: you know, part of Google. They have also in UM.
Speaker 1: I asked keep my indortional get involved in this. Uh.
Speaker 1: In this charge is UH And of course the Tropic,
Speaker 1: as everybody's noticing, it's just another one of those investments,
Speaker 1: which is a significant investment, still less than Microsoft some
Speaker 1: more d billion darted investment and open Aye. So I
Speaker 1: feel Google is of course trying to match up the
Speaker 1: speed as well as using all H A I methods
Speaker 1: to catch up. And it's possible it may you wouldn't go,
Speaker 1: you know, better than anything else out there, considering the
Speaker 1: advances it has already made. Um in the world of
Speaker 1: the other conversation has kind of emerged over the course
Speaker 1: of the week is who's ahead and whose best position
Speaker 1: to commercialize artificial intelligence? The stock market is also paying attention,
Speaker 1: right we we We look at some interesting names, C
Speaker 1: three AI, big Bear AI, even buzz feed whose stock
Speaker 1: has been a w over the place because of their
Speaker 1: relay s and ship with open ai for the use
Speaker 1: of chat GPT. We're sharing just some of the jumps
Speaker 1: on Friday, big Bear up for what was your conclusion
Speaker 1: this week about who is leading in the field of
Speaker 1: our official intelligence? Is it Microsoft? Is it Google? That's
Speaker 1: a tough question, frankly, and I would I would reflect
Speaker 1: upon it in a different way. I think the race
Speaker 1: is much longer than this year, uh, Frankly. Chart deputy
Speaker 1: generative AI, which is a larger umbrella in with synthetic data,
Speaker 1: language models, all of these other types of algorithms are
Speaker 1: also being used. Right. Uh, it is still a little
Speaker 1: far away from being where let's say Google searches for today.
Speaker 1: So it's I think it's out in the open where
Speaker 1: the competition will land. And let's say Google use it's
Speaker 1: all its data, all its algorithms, all its investments towards that.
Speaker 1: And then Microsoft is doing the same. If it integrates
Speaker 1: open air with let's say Microsoft teams and all of
Speaker 1: it's A locations, will the search consumer search move from
Speaker 1: Google to Amazon product searches or within the Microsoft perhaps,
Speaker 1: or maybe Google will develop something much better. That's a
Speaker 1: sort of a debate we keep having every day. Um,
Speaker 1: but I think it's a little away from the stock market.
Speaker 1: Like the stock market reactions are, I feel quite stark.
Speaker 1: So this, uh, I would expect less stark behavior going forward,
Speaker 1: because you will start seeing the improvements in the right
Speaker 1: the way I currently it's only Uh, it's very infinite.
Speaker 1: It still cannot be trusted to do many things. It
Speaker 1: can do basic stuff like a replication of natural language
Speaker 1: and you know copies media um from you know, NBAS contracts, etcetera.
Speaker 1: And so that those jobs may get you know, repurposed
Speaker 1: to something more meaningful. Um. For some people, you know,
Speaker 1: the upscaling, maybe requirement so and so, some of those
Speaker 1: things will happen, but it is still not going to
Speaker 1: be completely disrupt TiO as we are seeing, at least
Speaker 1: for the next few months. We're still is far away.
Speaker 1: So side it will give me then a taste of
Speaker 1: the here and now, the reality, right and what fractals doing.
Speaker 1: You know, we started this segment by saying, you are
Speaker 1: providing AI right now to fourtune companies. What does that
Speaker 1: look like? What does that even mean? Yeah? So practical
Speaker 1: is uh, we are a set off you know, five
Speaker 1: thousand people to believe we're providing text services in AI
Speaker 1: to almost one fifty plus Fortune Friday companies across all
Speaker 1: healthcare you know, financial services, insurance, consumer goods, retail, and
Speaker 1: so on. And we for us, every strategic decision, tactical decision,
Speaker 1: operational decision that corporate person or consumer is making right,
Speaker 1: how can we make that better using AI? And when?
Speaker 1: When when I say AI, it's so much broader term
Speaker 1: to us. It is AI plus cloud engineering, which enables
Speaker 1: a just human centered design, behavioral sciences which enable user adoption.
Speaker 1: So all of those things come together to help companies
Speaker 1: make better decisions. We also have products which help behavioral
Speaker 1: sciences to solve complex problems, like one of our company's
Speaker 1: final my works very closely to reduce human trafficking, to
Speaker 1: reduce HIV in Africa in Initia, you know, and so on,
Speaker 1: and other such products which help in let's say, training
Speaker 1: analytics with There is one of those companies which we
Speaker 1: invested in which helps create the data science professional pool
Speaker 1: in the world. It's the largest training platform and so on.
Speaker 1: So that is what we're trying to do with cultivating
Speaker 1: a community of data scientists who can work, you know,
Speaker 1: in this new environment because a lot of our skilling
Speaker 1: is required in this environment and a lot of business
Speaker 1: problems can be solved using AI, but there is always
Speaker 1: a human also required. So how we believe is people
Speaker 1: without AI will offer comparental people with the it is
Speaker 1: was this human Sagasha just a really deep read on
Speaker 1: what's happening in this space right now, a head of
Speaker 1: responsible AI of fractal Thank you. Now coming up, Calls
Speaker 1: are growing for banning TikTok in the US. Could it
Speaker 1: actually happen though we'll discuss this is Bloomberg. Could TikTok
Speaker 1: be banned in the US, just over two years after
Speaker 1: the Donald Trump administration tried to force the Chinese parent
Speaker 1: company Bike Dance to sell it's US business. There are
Speaker 1: new legislative efforts to ban the social media app out right.
Speaker 1: Two bills have been proposed, one in the House, one
Speaker 1: in the Senate. But it's a tricky issue. Policymakers are
Speaker 1: walking a really interesting line. Of course, they want to
Speaker 1: keep American either status safe and make sure that there's
Speaker 1: no influence from foreign governments on users in the US,
Speaker 1: but they also don't want to upset a really important
Speaker 1: and increasingly powerful voter base, being young Americans who are
Speaker 1: loving and finding a lot of delight from the TikTok app.
Speaker 1: That's reflected in the mood in d C. Daniel Flatley,
Speaker 1: a reporter for Bloomberg News, was sitting in his car
Speaker 1: a block away from the Capitol when we spoke. You
Speaker 1: won't find very many lawmakers on Capitol Hill who are
Speaker 1: unabashed supporters of TikTok. They say that they have some concerns.
Speaker 1: My patients just run thin. If they've got a solution set,
Speaker 1: they ought to lay it out. And if they don't,
Speaker 1: I think you're going to see if they ever get
Speaker 1: to a solution. That may be moot because individual states
Speaker 1: or Congress may act. It's not totally clear or whether
Speaker 1: they have the appetite to ban it completely, because that
Speaker 1: would be taking things up pretty far and could potentially
Speaker 1: be challenged in court. So we'll see how all that
Speaker 1: works out. The app is already banned on all devices
Speaker 1: issued by the federal government. A number of states have
Speaker 1: followed suit, as have publicly funded universities in those states.
Speaker 1: Some have advocated using the prospect of an outright ban
Speaker 1: as a bargaining chip for negotiations with China over tech. Ultimately,
Speaker 1: if Congress fails to make any progress, it will fall
Speaker 1: to President Joe Biden to find a way to rein
Speaker 1: in the Chinese tech giant that was Bloomberg's Alex Webb,
Speaker 1: Alex Brinka, and Daniel Flatley. Now, let's talk a little
Speaker 1: bit more about this, bringing gen c VCS found and
Speaker 1: CEO Megan Loist for her take. Megan, you know VC founders,
Speaker 1: You know gen Z tech TikTok is an app you
Speaker 1: used by okay, broad demographic, but gen Z as well.
Speaker 1: The other side of this debate is the use of
Speaker 1: base and then saying we don't get it, we don't
Speaker 1: get the risks, we don't get why you're taking this
Speaker 1: away from us. Where do you sell on that? I
Speaker 1: think it's interesting, right. I think of there's two two
Speaker 1: sort of users you have to think about. There's the
Speaker 1: people who consume TikTok content like me, and there's also
Speaker 1: the creators who their livelihoods are dependent on TikTok and
Speaker 1: their followings. So for users who are spending fifteen and
Speaker 1: twenty hours a week on TikTok and it's their number
Speaker 1: one sport of entertainment, uh, they're obviously concerned that's going
Speaker 1: to be taken away. But for creators where they're actually
Speaker 1: monetizing on TikTok, and seventy plus percent of creators their
Speaker 1: number one sorts of income is actually through brand deals.
Speaker 1: You take away their main platform, you take away a
Speaker 1: lot of people's livelihoods. And so I think people are
Speaker 1: up in arms, especially gen Zers who make up sixty
Speaker 1: plus percent of TikTok's users, um, simply because you're taking
Speaker 1: away either our main source of entertain men or our
Speaker 1: actual source of income. And so and again, the number
Speaker 1: one career path for gen z eears today, we want
Speaker 1: to be YouTubers, bloggers, content readers, and so this is
Speaker 1: going to continue to be a theme for a lot
Speaker 1: of people. And TikTok is our platform of choice. So
Speaker 1: and on the founder side as well, you'd see a
Speaker 1: lot of consumer founders scaling their businesses on TikTok. It's
Speaker 1: a great path for distribution and building an authentic organic
Speaker 1: presence versually doing a lot of paid marketing. And so
Speaker 1: you're actually taking away a lot of opportunity from founders
Speaker 1: as well. Right colloquially, gen Z is anyone born in
Speaker 1: the late nineties through I think until that's pretty wide
Speaker 1: group of people that we're talking about. I'm interested in
Speaker 1: gen Z fee cs the kind of community that you
Speaker 1: founded and started because it is an ecosystem of both
Speaker 1: founders and vcs. And the other debate that we that
Speaker 1: we want to have you on to talk about is
Speaker 1: how those people will fare in three. Are colleagues at
Speaker 1: Bloomberg Opinion Allison shre you Go write this column this
Speaker 1: week titled gen Z startups will face a tough sell
Speaker 1: in three. In other words, they're entering an environment where
Speaker 1: they're trying to raise money, get businesses off the ground.
Speaker 1: But the world's changed. What are the conversations you're having
Speaker 1: right now with the community that you founded. Yeah, I
Speaker 1: think the funding environment is difficult for younger founders and
Speaker 1: older founders. The average age of a founder is about
Speaker 1: thirty five years old. But and I understand the conversation
Speaker 1: with investors where it's like, Okay, maybe there's less risk
Speaker 1: in backing experience founders who have done at once before.
Speaker 1: But on the flip side of that coin, uh, there's
Speaker 1: a generational opportunity in backing gen Z founders who are
Speaker 1: building problems from themselves. And you see this with every generation.
Speaker 1: It's not something that's necessarily unique with gen zum but
Speaker 1: it's really important because when you look at the world
Speaker 1: today and make the problems that we're facing and experiencing, uh,
Speaker 1: gen Z founders have naturally they experienced the pain point
Speaker 1: firsthand and they can build around that problem. Even for
Speaker 1: me as a gen Z investor and formally as investor
Speaker 1: at the Heppo General Atlantic Large funds, I tended to
Speaker 1: back first time founders gen Z founders because I infinitely
Speaker 1: understood their take as an investor, and so what I'm
Speaker 1: seeing broadly is it really encouraging founders to go back
Speaker 1: to the fundamentals and so thinking about their unique value
Speaker 1: prop and why they're building the problem, what makes them
Speaker 1: the best person to build that business. Really just thinking
Speaker 1: about founder market fit, which is true for gen Z founders,
Speaker 1: millennial founders, gen X founders, any founders, and so I think,
Speaker 1: you know, broadly, I think there's still a massive opportunity
Speaker 1: to be backing gen Z founders, young people who see
Speaker 1: problems authentically from the gen Z perspective. Megan, when you
Speaker 1: look at opportunities yourself as an investor, I know you
Speaker 1: back a lot of gen Z founders. What are thematically
Speaker 1: the areas you're most excited about? Twenty three? We just
Speaker 1: had thirty seconds. Yeah, So we actually do a poll
Speaker 1: every year. This year, the top three trends that gen
Speaker 1: Z investors are tracting our climate, tech, AI and m
Speaker 1: L which is a very through part hapic right now,
Speaker 1: and then fintech as well, though those are three areas
Speaker 1: that we're tracking, And even just this week, I've been
Speaker 1: pitched on a bunch of generative AI companies and so
Speaker 1: a lot of younger founders are building an AI. Probably
Speaker 1: gen Z VCS founder and CEO Megan Lays. So great
Speaker 1: to have you on the show. Thank you so much
Speaker 1: for joining us. When you think of indoor cycling at home,
Speaker 1: you probably think of Peloton. But there's a new kid
Speaker 1: on the block, Swift, which some cyclists use when they
Speaker 1: can't ride outside, and which takes you. Okay, bear with
Speaker 1: me inside the metaverse Quick Takes. Tim Stenovic took a
Speaker 1: ride with the company's co CEO, Eric Men. There you are. Now,
Speaker 1: I gotta catch you and I'm cheasing you. Now, where's
Speaker 1: the sprit? That's what I'm waiting for. Yeah, you left
Speaker 1: me in the dust there. When it comes to indoor cycling,
Speaker 1: pretty much everybody has heard of Peloton, but Swift is
Speaker 1: what a lot of the serious cyclists use when they're
Speaker 1: just not able to ride outside. Here's how it works.
Speaker 1: A smart trainer connects to apps and it can adjust
Speaker 1: to make it harder, like if you're going up a hill.
Speaker 1: One of those apps is Swift. It helps you exercise,
Speaker 1: but it's also a game. You're peddling your bike in
Speaker 1: the real world, but you have this avatar. I wanted
Speaker 1: to learn more about Swift, and I thought there was
Speaker 1: no better way to do that than to go for
Speaker 1: a ride with the company's CEO. I'm in New York City,
Speaker 1: you're in Long Beach right now. We're three thousand miles away,
Speaker 1: but we're we're actually riding together on screen. Is this
Speaker 1: the metaverse to you? Absolutely, it's a net averse. It's
Speaker 1: a virtual space where people come together. There, they engage,
Speaker 1: they build communities. If you look at the clubs that
Speaker 1: we have, we have well over twenty clubs. It's really interesting.
Speaker 1: The power of the community is I think unique to
Speaker 1: with how do you develop courses? What's the process there?
Speaker 1: We have a fantastic creative team and what we've learned
Speaker 1: that over the years, These magical places like Latopia and
Speaker 1: now mccourie Islands are the kind of maps that our
Speaker 1: community would like to spend more of their time on.
Speaker 1: And that's partly because we can do crazy things right.
Speaker 1: We can create tunnels under the water in the seabed,
Speaker 1: we can create roads above Manhattan. There are other people
Speaker 1: who can try to replicate and be a more of
Speaker 1: a simulator. We want to be our own thing, and
Speaker 1: I think we can enhance what the real world is
Speaker 1: and and just making much more interesting to do things
Speaker 1: that you otherwise can't do. We see a lot of
Speaker 1: companies raising prices right now because of inflation. Am I
Speaker 1: correct in thinking that you guys have not raised prices.
Speaker 1: We did raise prices five years ago, but we have
Speaker 1: not done so since then. But let's be honest, the
Speaker 1: cost of running our business has gotten more expensive. It's
Speaker 1: been really tough to supply. Chain issues are real. We
Speaker 1: are trying to run a business that is profitable at
Speaker 1: some point. It's not. At the moment. We're really focused
Speaker 1: on trying to onboard as many customers as possible and
Speaker 1: trying to make the pricing accessible. You've raised over half
Speaker 1: a billion dollars. Your investors want to see a return.
Speaker 1: What's the exit for them? I think we all have
Speaker 1: aspirations of taking this company public. There's no doubt about it.
Speaker 1: Our investors have invested in this business because they think
Speaker 1: we will be the category leader. You know, we believe
Speaker 1: we can do that through through product. Take us into
Speaker 1: the decision to launch hand cycles and tell me about
Speaker 1: the reception and what you've heard. Back in September, we
Speaker 1: finally launched the hand cycle. It develops everyone, but those
Speaker 1: who are using are really those who are disabled. This
Speaker 1: is really about, you know, leaving up to our values,
Speaker 1: which is about diversity and inclusivilty. We have some responsibility
Speaker 1: and making sure we make those investments. What's the breakdown
Speaker 1: those with mail versus female men women? So there's a
Speaker 1: lot of work to be done there. And then this
Speaker 1: is why the sponsorship of the Woman's sort of Fronts
Speaker 1: is so important for us. Take me through the r
Speaker 1: all I on that. How does that translate into more people,
Speaker 1: you know, paying fifteen bucks a months with if you're
Speaker 1: going to sponsor a bike race, the sponsor the Towtter Fronts.
Speaker 1: So when the opportunity came up for us to really
Speaker 1: help support and relaunch the Woman's sort of Fronts, we
Speaker 1: jumped at it. We'll have to find a sprint to do.
Speaker 1: That was last I feel so bad, I'm throwing my
Speaker 1: colleague much so, why towel You used to work at
Speaker 1: a bank? Yes, now you ride likes all day. I
Speaker 1: started my career on Wall Street many years ago. One
Speaker 1: of the inspirations for startings with was to recreate my community,
Speaker 1: my experience, the competition to training that I had in
Speaker 1: Central Park. What does with look like three or five
Speaker 1: years from now? I think there will be a convergence.
Speaker 1: It's our job to make the interplay between indoor and
Speaker 1: outdoor as seamless as possible, so that what's not lost
Speaker 1: in that interplay is a social connection and the ability
Speaker 1: to share experiences. I think that is a big unlock
Speaker 1: for how we can really contribute to the cycling industry.
Speaker 1: I've never done anything like this before in terms of interviews.
Speaker 1: You know, I've not done this before either, But I'm
Speaker 1: told that there are some tech leaders who on a
Speaker 1: monthly basis get on Swift and have their catch up.
Speaker 1: I think they find it amusing to be able to
Speaker 1: do some exercise at the same time. All right, Eric,
Speaker 1: I'm gonna catch you. Oh who you are? Okay, that's
Speaker 1: enough for me. That's not work out rutual high five.
Speaker 1: That was great, Thanks very thanks him. See it again. Yeah,
Speaker 1: let's do it again. I would love to quick takes,
Speaker 1: Tim Semic There some breaking news on the Bloomberg terminal.
Speaker 1: Elon Musk has defeated the Tesla shareholder suit on the
Speaker 1: sweets about taking Tesla private. The juries found that Musk
Speaker 1: did not mislead the public about the Tesla take private deal.
Speaker 1: We'll have more in that in the coming days. That
Speaker 1: does it for this edition of Bloomberg Technology. Don't forget
Speaker 1: check out our podcast I Heeart, Apple, Spotify, wherever you
Speaker 1: get your podcasts. What a week. This is Bloomberg Pick
Speaker 1: who give a big too big