Speaker 1: I'm Caroline Hyde of Brumberg's World headquarters in New York,
Speaker 1: and I'm Ed Ludlow in San Francisco. This is Bloomberg
Speaker 1: Technology coming up. The man behind everyone's liquidation and now
Speaker 1: f t X is CEO. He says the prior management
Speaker 1: of the disgraced crypto empire is the worst he's ever seen.
Speaker 1: This is lawyers overseeing the ft X bankruptcy, say Sam
Speaker 1: Mcminfred's tweeting is hurting their case. Then Cisco's CFO joins
Speaker 1: us to talk about their earnings, beak supply chain improvements
Speaker 1: and why they need for job cuts. And we're a
Speaker 1: week away from the official start of holiday shopping season
Speaker 1: and the digital strategy for retailers is more important than ever.
Speaker 1: Mac CEO joins exclusively to talk about expectations. But first,
Speaker 1: let's talk about the ft X empire collapse a little
Speaker 1: bit more if you can bear it, because d x's
Speaker 1: new CEO has been slamming the non existent oversight, the
Speaker 1: misuse of client funds, and saying that they're struggling to
Speaker 1: locate billions of dollars in missing assets. The most Katie
Speaker 1: Greifeld is here with the shock the ore when we read,
Speaker 1: of course that bankruptcy statement coming Finally, Katie, what did
Speaker 1: you make of some of the most sensational parts. Well,
Speaker 1: it's amazing because this is just day one. This is
Speaker 1: the first thing that we've seen from John j Ray
Speaker 1: the third and I like you highlighted at the top
Speaker 1: again this was the man who helped liquidate and Ron
Speaker 1: who drove that saying that this is a complete failure
Speaker 1: of corporate controls and such a complete acts absence of
Speaker 1: trustworthy financial information. So really slamming the record keeping that
Speaker 1: was going on and what it caught my eye, and
Speaker 1: I mean it was just a treasure trove, this war declaration.
Speaker 1: But he also took task to test the concentration of
Speaker 1: control as well. It sounds like a lot of it
Speaker 1: rested with SPF, which just a small handful of people.
Speaker 1: You combine that with sort of shoddy record keep and
Speaker 1: here you are a big part of this story. Katie
Speaker 1: is looking for things and not knowing where they are.
Speaker 1: The administrators are looking at ft x is Empire, the
Speaker 1: digital assets that they held on behalf of clients and
Speaker 1: themselves and saying where are they It's a very pressing question.
Speaker 1: So far, we know they were able to locate about
Speaker 1: seven hundred forty million worth of cryptocurrency in cold wallets.
Speaker 1: They also found about five hundred sixty million dollars in cash.
Speaker 1: You add that together. I'm not too good at math,
Speaker 1: but we're still missing billions of dollars there. And again,
Speaker 1: like we were saying, the record keeping, it was very halfhearted.
Speaker 1: It was very messy again according to the sore and declaration.
Speaker 1: So that's a puzzle that needs to be solved. And
Speaker 1: then you think about how this is actually going to
Speaker 1: be distributed to the different creditors, of which there are
Speaker 1: more than a million dollars, and it's quite a process.
Speaker 1: More questions and answers. We tried to get some answers
Speaker 1: from our view as you out there you responded to
Speaker 1: us on Twitter. We love it because we put the
Speaker 1: polls out to you earlier in the morning, and we
Speaker 1: wanted to get a gauge of really, what is the
Speaker 1: most extraordinary part of all of this thus far? Is
Speaker 1: it the CEO's new CEO's reaction that you just spelt
Speaker 1: out for us, Katie, Is it Sam Matman freed himself.
Speaker 1: The ongoing Twitter narrative, the cryptic tweets is it the
Speaker 1: fact that, of course he's now facing questioning in the
Speaker 1: US from a legal perspective. In fact, most people thought
Speaker 1: it's all crazy. It's then he feels all crazy. Whether
Speaker 1: the titbits can you bring us that have just been
Speaker 1: totally sensational. I mean it's got to be the tweets, right,
Speaker 1: the fact that it's just tweeting through it, it's really amazing.
Speaker 1: You combine that with the d m s to that
Speaker 1: incredible report from Vox. But just focusing on the tweeting again,
Speaker 1: FTXS lawyers citing his quote incessant and disruptive tweeting while
Speaker 1: accusing SPF of undermining the bankruptcy case. I mean, it
Speaker 1: escapes me. Another example of something like this, it's one
Speaker 1: I think there was potential photographic evidence and him just
Speaker 1: in a supermarket street. I saw section in the same
Speaker 1: Twitter circle late at night, too late at night. Katie Greifeld,
Speaker 1: we think of her being so on top of this story.
Speaker 1: I want to get you more really perspective here on
Speaker 1: the ramifications in the entire ecosystem. I'm really police and
Speaker 1: welcome back to the show, Jill Gunter. She is, of
Speaker 1: course chief strategy Officer and Espresso Systems, a company providing
Speaker 1: scaling privacy systems for Web three applications. Jill, great to
Speaker 1: have your voice on this because you've been someone who helped, well,
Speaker 1: really put money to work in this space. When you're
Speaker 1: slow ventures now really building out this ecosystem. How much
Speaker 1: of a knock has it had across the entirety of
Speaker 1: not just exchanges, but more broadly. Yeah, I've been fortunate
Speaker 1: to be in this space in some capacity for the
Speaker 1: last decade. Now, as you mentioned, whether that's on the
Speaker 1: investing side, were now on the building side with Espresso Systems,
Speaker 1: and I have to say, I have never seen a
Speaker 1: tragedy of this skill. I think it's a tragedy for
Speaker 1: the retail investors who came into this space and put
Speaker 1: money to work with SPF and with f TX, and
Speaker 1: who didn't fully understand what the mission of crypto was about.
Speaker 1: And I think it's also a tragedy for the crypto
Speaker 1: industry as a whole, that it's being dragged down by
Speaker 1: the acts that it seemed to be, at least at
Speaker 1: this point, fraudulent and criminal on on the part of
Speaker 1: just a few actors in the space. F t X
Speaker 1: is not crypto it's not representative of the industry, and
Speaker 1: it's not what the industry was founded to solve. Jill,
Speaker 1: I've been excited to talk to you because you cover
Speaker 1: basically the entire ecosystem of what's falling apart here right. Yes,
Speaker 1: your cso it Espresso, but you also are essentially a
Speaker 1: venture capitalists. You've invested in other crypto startups. Could you
Speaker 1: tell Caroline and I what conversations you're having with all
Speaker 1: your friends behind the scene, everyone that you know in
Speaker 1: this history industry. What are people talking to each other about.
Speaker 1: I think that the biggest takeaway amongst builders in this space,
Speaker 1: of which I'm lucky to be one, is that it end.
Speaker 1: This is not what crypto is about. Crypto is a
Speaker 1: technology that was founded to bring accountability, openness, transparency to
Speaker 1: financial systems. It was founded if you look back at
Speaker 1: the Bitcoin White Paper, which was sort of the advent
Speaker 1: of the space as a whole, created in two thousand
Speaker 1: eight in the wake of the financial crisis that was
Speaker 1: playing out then. It was created to reduce the necessity
Speaker 1: to trust middlemen with your finances and um and with
Speaker 1: your assets. And unfortunately, I will say that I think
Speaker 1: crypto is an industry has fallen short and a few capacities,
Speaker 1: one of which is that we have yet to build
Speaker 1: good enough user experience around the products that we've built
Speaker 1: that truly do take advantage of the openness, transparency, and
Speaker 1: accountability that it can offer. And because of that, people
Speaker 1: have trusted their assets to centralized exchanges like f t X,
Speaker 1: and they have gotten lost on what the actual core
Speaker 1: value proper position of the technology is. They've also gotten
Speaker 1: caught up in the speculative hype around crypto as an
Speaker 1: asset class while losing track of its value proposition again
Speaker 1: as a technology. And I think amongst builders in the space,
Speaker 1: amongst the entrepreneurs out there who have been building, whether
Speaker 1: it's for six months or six years, in this space,
Speaker 1: there is simultaneously a feeling of despondency that this is
Speaker 1: this is the mainstream view of crypto right now, is
Speaker 1: that SPF and f t X are somehow representative of it.
Speaker 1: But there is also a real feeling of galvanization that
Speaker 1: this is our opportunity and that if anything, this should
Speaker 1: drive home to people why the core value prop of
Speaker 1: crypto is actually necessary, why we do want technologies that
Speaker 1: reduce trust in middleman and trusted intermediaries that SPF purported
Speaker 1: to be among passionately, said Joe. And there is a
Speaker 1: lot of passion, and there is a lot of anger rising,
Speaker 1: but there's also a lot of committed capital that still there. Adventure.
Speaker 1: I'm interested as to whether we've heard of perhaps the
Speaker 1: institutional players who are looking at investing in the actual
Speaker 1: asset class perhaps pulling back. But what about those that
Speaker 1: are building like yourself at the moment. Are you worried
Speaker 1: about those checks that having been built up and I'm
Speaker 1: ready to be deployed, are still being cut for companies
Speaker 1: such as yours. My senses, yes, my senses that you
Speaker 1: know there will be, I think rightly an increase in
Speaker 1: scrutiny and diligence being done around companies. I think that
Speaker 1: the standards will also be raised to ensure that companies
Speaker 1: are not just building another casino, but instead are building
Speaker 1: for real utility, real value, and real sustainable revenue and
Speaker 1: business models that aren't just founded on a pyramid of
Speaker 1: tokens um and I, I, for one, welcome that. I
Speaker 1: think many builders in the space welcome that as well.
Speaker 1: I think that that level of diligence has been missing
Speaker 1: for a while. I think that there are many reasons
Speaker 1: for that. I think that people had the sense over
Speaker 1: the last decade really that there was easy money to
Speaker 1: be made. That was a combination of everything from interest
Speaker 1: rates to again a speculative bubble really around a nascent
Speaker 1: and poorly understood technology. And I think that that's all
Speaker 1: been washed out from the investors side, and I think
Speaker 1: that that's a good thing. I think we're just getting
Speaker 1: this conversation started. More to come. Do you're gun to
Speaker 1: Chief strategy officer at Espresso Systems thank you. Hardest part
Speaker 1: for me, as somebody being on the organization side of
Speaker 1: layoffs is that you know that people's lives are at stake,
Speaker 1: and if you are an empathetic person, which I for
Speaker 1: better or worse, m you can't help but think about
Speaker 1: the impact that this is going to have on the
Speaker 1: people who have a job one day and not the
Speaker 1: next day. This is Camilla Boya. She had the misfortune
Speaker 1: of working at three companies in the space of nine
Speaker 1: months that did layoffs. While there is definitely not a
Speaker 1: good way of firing people, there is absolutely a bad way.
Speaker 1: There's three really important things to bear in mind. First
Speaker 1: of all, don't fire a mass number of people over
Speaker 1: zoom or over email. Don't diminish their contributions to the company.
Speaker 1: Make sure you're showing gratitude for the time and effort
Speaker 1: and love in lots of cases that people have put
Speaker 1: into their jobs at that company. It's much harder to
Speaker 1: trust a leader who isn't capable of owning their own
Speaker 1: fallibility than it is to trust one who will own
Speaker 1: up to their mistakes and be willing to kind of
Speaker 1: take that on board and move forward. Accountability, empathy, closure.
Speaker 1: It's really important to treat the people who are being
Speaker 1: laid off with that respect. Giving the people impacted a
Speaker 1: chance to say goodbye. Treating them in that human way
Speaker 1: and not just cutting them off from every system right away,
Speaker 1: goes a long way towards the experience of both the
Speaker 1: people who are leaving and the people who were remaining
Speaker 1: in terms of that ability to move on. That was
Speaker 1: quick takes Alex Webb and checkout dot COM's Kamilla Boya
Speaker 1: and tech layoffs are in the air. Bloomberg TV also
Speaker 1: spoke to Airbnb s Brian Chesky earlier. Here's what he
Speaker 1: had to say about job cuts. Two and a half
Speaker 1: years ago. We lost eighty percent of our business. We
Speaker 1: laid off of our employees, and I said at that
Speaker 1: time that we are going to be now prepared for
Speaker 1: anything to come, any storm. And so we stayed really
Speaker 1: disciplined for the last two and a half years, anticipating
Speaker 1: difficult times ahead, and we said, no matter what happens
Speaker 1: the economy, we do not want to have to change
Speaker 1: how we run the company. And that's only possible if
Speaker 1: we stay lean. And we stayed disciplined, and we only
Speaker 1: have about six thousand employees, so we're really lean. Begin
Speaker 1: the year, we were only planning to hire seven percent
Speaker 1: more people than the year before, when many other tech
Speaker 1: companies that weren't growing even as fast as us, we're
Speaker 1: gonna hire more people. So because of that and because
Speaker 1: the strength of our business, we are not stepping on
Speaker 1: the brakes. In fact, we're stepping on the gas. We
Speaker 1: are still hiring. We're not freezing, we're not cutting, We're growing.
Speaker 1: M That was Airbnb CEO Brian Chesky, and speaking of
Speaker 1: tech layoffs, Cisco closed four point seven sent higher on
Speaker 1: Thursday after giving an upbeat quarterly revenue forecast, and like
Speaker 1: many other tech companies right now, unveiling a plan to
Speaker 1: cut jobs. CFO Scott Heron joins us. Now for more, Scott,
Speaker 1: let's push this forward right, bullish outlook for the last
Speaker 1: three months of this year. But at the same time,
Speaker 1: you're acknowledging a changing macro picture, you're preparing for the worst.
Speaker 1: How do you balance that? Yeah, and in our case,
Speaker 1: I think it's a little bit different. And first of all,
Speaker 1: thanks for having me on the card. It's great to
Speaker 1: see you both again. I'm a big fan. I should
Speaker 1: start there. We had a great first quarter. It was
Speaker 1: record high red quarterly revenues for US earnings per share
Speaker 1: and revenues above the high end of our guidance range.
Speaker 1: And it's really on the back of a lot of
Speaker 1: hard work we've been doing over the last eighteen months
Speaker 1: to build a recurring revenue model and to manage the
Speaker 1: supply chain issues. So the performance is actually quite good
Speaker 1: at the company. We did announce a small restructuring today
Speaker 1: and it's really about two things, and I think it's
Speaker 1: a bit different than the way perhaps you've heard from
Speaker 1: other companies. Ours is really about rebalancing the number of
Speaker 1: headcount we had at the beginning of the year. We
Speaker 1: have today, we're gonna have the same number of heads
Speaker 1: at the end of the year. What we're doing is
Speaker 1: trying to marshal more resources and focus more into a
Speaker 1: couple of key areas, which of course means we have
Speaker 1: to come down in some other areas. So we're focusing
Speaker 1: more on platforms and cloud delivered capabilities within our networking
Speaker 1: business and insecurity. Our goal through internal placement, by the way,
Speaker 1: is to place as many of those who are displaced
Speaker 1: on the low end of that into some of the
Speaker 1: open jobs on the on the other end. So this
Speaker 1: is not a cost motivated, cost savings motivated restructuring for us.
Speaker 1: Talk to us there for about security, about clouds, Scott,
Speaker 1: Are they the two areas that a corporate, a government agency,
Speaker 1: a client of yours cannot do without. Why the bullishness
Speaker 1: into this deteriing outlet. Yeah, I think it's a couple
Speaker 1: of things. It's a great question, and one of them
Speaker 1: I just talked about. We are more than our revenues
Speaker 1: now are are recurring, right, and so we've built up
Speaker 1: more than thirty billion dollars of remaining performance obligations. You
Speaker 1: hear the phrase r p O, right, that's sales we
Speaker 1: that we've transacted that haven't yet shown up in our
Speaker 1: revenue stream, so we we we start each quarter with
Speaker 1: a nice recurring revenue base. We also, through the last
Speaker 1: year because of some of the supply concerns, have built
Speaker 1: up a significant order backlog. When you put those two together,
Speaker 1: and you know, demand is what demand is. We had
Speaker 1: the second highest Q one in terms of product orders
Speaker 1: that we've had in our history, second only to Q
Speaker 1: one a year ago, and so we continue to see
Speaker 1: good demand. We've got a base of recurring revenue, and
Speaker 1: we've got a backlog, so we have great visibility into
Speaker 1: the next several quarters. Traditionally, Cisco is viewed as this
Speaker 1: sort of legacy tech name, not so exciting Scott, if
Speaker 1: you don't mind me saying, you know, that's the Cell
Speaker 1: sides kind of take on Cisco. But you are trying
Speaker 1: to do something new, move into services, recurring revenue, be
Speaker 1: more in everyone's face every day. How's that going. It's
Speaker 1: going great. You know. It's one of the reasons that
Speaker 1: I think you hear the bullish outlook from us at
Speaker 1: a time when there's a fair amount of uncertainty um
Speaker 1: of our revenues. I'll say it again, of our revenues
Speaker 1: are coming from recurring revenue models. Um, that is subscriptions,
Speaker 1: it's sas, it's some of the the recurring revenue models
Speaker 1: attached to some of the hardware that we ship out.
Speaker 1: And frankly, as I said, we've built up a pretty
Speaker 1: large order backlog trapped in there is another two billion
Speaker 1: dollars worth of recurrent with the software revenue trapped in
Speaker 1: that backlog. So, um, I think it's gone. Well, there's
Speaker 1: room for us to get to accelerate that even further.
Speaker 1: Let's talk about what on this are saying. I like
Speaker 1: the way it sort of paraphrases it. But City is
Speaker 1: keeping you want to sell, and City Group is saying
Speaker 1: that weren't about the order growth remaining negative down four?
Speaker 1: What do you say to that? I say what I
Speaker 1: said earlier, Caroline, it's it was down in the first
Speaker 1: quarter on a year on your basis by four compared
Speaker 1: to a Q one last year that was up thirty four, right,
Speaker 1: and so it's hard to the compare. Point is actually
Speaker 1: part of why just the arithmetic gives you that. I
Speaker 1: think the better way to look at it then, is
Speaker 1: what's happening sequentially? Right when you can't when you've got
Speaker 1: an anomaly quarter that we're compared to. And by the way,
Speaker 1: our fourth quarter of last year, our first and second
Speaker 1: quarter both had greater than all three had greater than growth.
Speaker 1: So in each case the arithmetic is gonna look tough.
Speaker 1: I think the better way to gauge what's really happening
Speaker 1: in terms of customer customer demand is okay, how did
Speaker 1: the sequentials compared to what you've seen historically? And from
Speaker 1: that standpoint, it was pretty much in line, slightly below,
Speaker 1: pretty much in line what we've seen as a historical
Speaker 1: range going from it was our fourth quarter, by the way,
Speaker 1: to our first quarter that we just announced, So the
Speaker 1: sequentials look fine. And as I said, it was the
Speaker 1: second highest Q one in terms of product orders we've
Speaker 1: had in the history of the company. And to profess
Speaker 1: City Group doesn't say it's difficult year on year comps.
Speaker 1: We thank you for spelling that out for us to
Speaker 1: go CFO Scott Heron, great to have some time with you.
Speaker 1: Keep on watching, We appreciate it. In while coming up
Speaker 1: what's new in the VC world, we'll get the latest
Speaker 1: global headlines. That's next. And before we had to break
Speaker 1: a softer tone, apparently coming from one Elon Musk. According
Speaker 1: to people familiar with the matter, Musk is now attempting
Speaker 1: to retain Twitter staff is by actually softening his remote
Speaker 1: work mandate. This comes as apparently fewer workers are opting
Speaker 1: in to the next chapter of Twitter. It's a Blomberg.
Speaker 1: Let's take a look at the top headlines in the world.
Speaker 1: Adventure have toll VC Giant Tiger Global is raising six
Speaker 1: billion dollars for its next fund and looking to Morgan
Speaker 1: Stanley's wealth management arm for help. According to sources, the
Speaker 1: fun will invest in startups across the enterprise space and
Speaker 1: tech in Indian staying in that side of the world.
Speaker 1: Over in Singapore, I Globe Partners is raising two million
Speaker 1: dollars for a new fund that will back deep tech.
Speaker 1: Is the fifth fund for the VC, which is mostly
Speaker 1: led by women. I Globe was founded in Silicon Valley
Speaker 1: before moving to Singapore in two thousand nine in invest
Speaker 1: in startups with deep scientific backgrounds, and finally, members of
Speaker 1: Dubai and aber Dabby's Royal families adjoining forces with other
Speaker 1: investors to back London based AI startup the Applied AI
Speaker 1: Company that's according to sources. AI Code develops AI products
Speaker 1: for government, healthcare, and insurance sectors. Caroline, Welcome back to
Speaker 1: Bloomberg Technology. I'm Caroline Hide in New York. I'm blogs
Speaker 1: and Ludlow is with me in. Sam Francis go and Ed. Well,
Speaker 1: that's going to China. Take a giant story and as
Speaker 1: giant soaring today. Yeah, I'm looking at Alie Barba, the
Speaker 1: e commerce giant in China. It's interesting the stock up
Speaker 1: almost eight percent, right, but it posted a surprise loss,
Speaker 1: and in fact the loss it posted was the same
Speaker 1: dollar amount that analysts thought it would record in profit.
Speaker 1: It's all about COVID zero policy, which is impacting consumer
Speaker 1: demand in China on the e commerce side, also about
Speaker 1: disruptions to supply chain, but they're seeing past that. You know,
Speaker 1: the stock trading at its highest level in six weeks
Speaker 1: or so. I thought that was really interesting, as we're
Speaker 1: kind of zeroing in now on the retail space on
Speaker 1: e commerce, but then looking to other opportunities. Valley Barber
Speaker 1: sticking with retail Macy's really interesting. Biggest jump in the
Speaker 1: stock for Macy's since May, the stock trading its highest
Speaker 1: level since June. Strong performance for me looking across the
Speaker 1: Bloomberg tunel. There's kind of two sides of the story.
Speaker 1: The e commerce side of the business kind of trading
Speaker 1: back towards pre pandemic levels, but we look at the
Speaker 1: role technology played Caro in how they manage inventories. This
Speaker 1: is a smart company and actually so many different names
Speaker 1: faring so differently in this space. I think this is
Speaker 1: one to watch as we head into the holiday season,
Speaker 1: think about the consumer, think about retail, start rising, keeping
Speaker 1: on it's dead as well as it gets an upgrade
Speaker 1: from SMP and in fact I managed to get a
Speaker 1: catch up with Macco chairman Jeff Gannett is an exclusive
Speaker 1: conversation all about digital strategy ahead of the holiday season.
Speaker 1: When you looked at our digital business back in two
Speaker 1: thousand and nineteen, it was about of our overall omni
Speaker 1: channel business during the pandemic. It was for we started
Speaker 1: the year expecting it was going to be like thirty seven.
Speaker 1: It's coming out at about thirty three, so thirty three
Speaker 1: percent versus a pre pandemic year of so it's still
Speaker 1: very robust growth. So even though our business was down
Speaker 1: to twenty one and digital in the third quarter it
Speaker 1: was up thirty percent to two thousand and nine. So
Speaker 1: I think this evolution of the customer omni channel journey
Speaker 1: and more of those transactions being in digital, that's going
Speaker 1: to continue. But there is a new baseline that has
Speaker 1: been established in twenty two versus where we were in
Speaker 1: twenty and twenty one when customers didn't feel as comfortable
Speaker 1: going to brick and mortar locations to buy. So what
Speaker 1: about that for Cyber Monday, for example? The predictions that
Speaker 1: is that something you lean into, Yes, like, as an example,
Speaker 1: we're looking very carefully at how much of our digital
Speaker 1: business was being done in late October and the first
Speaker 1: three weeks of November last year. How much of that
Speaker 1: do we believe is going to shift to Thanksgiving and
Speaker 1: Cyber Monday, Cyber Week. We do expect a deep higher
Speaker 1: spike there. We do expect the usual Christmas lull that
Speaker 1: goes after that. That first week of December, we go
Speaker 1: into a lull of two weeks and then it comes
Speaker 1: raging back more to brick and mortar traffic the last
Speaker 1: ten days before Christmas and therefore your investment and this
Speaker 1: is a time where maybe companies are putting back in
Speaker 1: terms of investing. Are you still looking to be committing
Speaker 1: money to digital. Is it more about smaller form up stores,
Speaker 1: our more opportunities. How do you ascribe the money you
Speaker 1: are going to spend. Yeah, one of the things I
Speaker 1: think is, uh, if I look at a kind of
Speaker 1: the Macy strategy pre and post pandemic, I think one
Speaker 1: of the things I'm proud of is really what we're
Speaker 1: doing with our financial strengths. And you look at our
Speaker 1: balance sheet and really when you think about our capital
Speaker 1: allocation and the first order of business and capital allocation
Speaker 1: is investing in the business. So do your question. We're
Speaker 1: deeply committed to ensuring that we're top notch in digital,
Speaker 1: that we've got a modernized supply chain that can accommodate that,
Speaker 1: that our stores are in great shape, that we're investing
Speaker 1: in our team of people, of colleagues, um and that's
Speaker 1: serving us well. So we have not stepped back from that.
Speaker 1: So we're spending about a billion two in our CAPEX
Speaker 1: budget in and that's been about our average is about
Speaker 1: the one billion range. You can expect us to spend
Speaker 1: that in future years because you know, retail is about
Speaker 1: investment and we've got to make sure that we're ready
Speaker 1: for the customer. However, they're going to change in digital
Speaker 1: technology supply chain. Are are places that have given us
Speaker 1: a good return on that investment, mac CEO Jeffkin at that. Now,
Speaker 1: for more on online retail environment that we are currently within,
Speaker 1: we want to bring in Rachel Tendrink. She's general partner
Speaker 1: and co founder of Red Bike Capital, which invests in
Speaker 1: early stage growth startups in fintech in e commerce marketplaces. Rachel,
Speaker 1: it's great to have you here in the studio with us,
Speaker 1: and a lot of that the focus of Macy's a
Speaker 1: lot of what they're doing well as their inventory, but
Speaker 1: how is the build up in other companies inventory gonna
Speaker 1: affect us from an e commerce perspective as well. Thank
Speaker 1: you for having me. I think what's going on is
Speaker 1: that they retailers had such a bad experience last year
Speaker 1: where they were so under stocked, they were so desperate.
Speaker 1: So on the one hand, it was good because they
Speaker 1: didn't have to discount whatever was there was what the
Speaker 1: consumer was buying, there was nothing left. The flip side
Speaker 1: of that is that this year they've bought sort of
Speaker 1: preemptively and deeper levels of stock, and what you're seeing
Speaker 1: is the consumer is feeling the pinch of inflation, so
Speaker 1: they're out looking for deals, they're out looking for sales,
Speaker 1: and the retailers can't risk being stuck with loads of
Speaker 1: inventory after the holidays. Rachel, good to see you said
Speaker 1: that pre empts. He talks about pre empting inventories. Didn't
Speaker 1: Amazon also kind of pre empt the entire season with
Speaker 1: an additional prime window. Absolutely, you're seeing that overall sales
Speaker 1: are happening earlier and earlier than ever before. As you said,
Speaker 1: Amazon started their Prime Day in October, which had never
Speaker 1: been done before. You're also seeing Walmart doing digital deals.
Speaker 1: They're doing digital deals every Monday of November and offering
Speaker 1: early access to their Walmart Plus um sort of prime
Speaker 1: comparison um connection. So what you're seeing is consumers are
Speaker 1: starting to buy earlier, and you're seeing that e commerce
Speaker 1: brands that started those deals earlier are faring okay. The
Speaker 1: ones that started sort of Veterans Day, you know, a
Speaker 1: couple of weeks ago, whereas the ones that are just
Speaker 1: starting now, they're off to a slow start. Wait sell
Speaker 1: What's interesting is with Macy's where they see the difference
Speaker 1: is perhaps sales falling at the overall Macy's brown sales
Speaker 1: climbing at the more luxurious and the blooming ales of
Speaker 1: blue mercury. How are you going to see the different
Speaker 1: income brackets impact different e commerce players here? So I
Speaker 1: think that the question it applies to all brackets, and
Speaker 1: that everybody's making trade offs in what things they're going
Speaker 1: to spend in and what things are not. I think
Speaker 1: that when you're looking at the lower end, the lower bracket,
Speaker 1: they're going to go for that accessible luxury, but they
Speaker 1: might look for an item that's under a hundred dollars,
Speaker 1: so maybe it's a luxury lipstick, maybe it's a luxury,
Speaker 1: you know, small accessory. So the lower end is going
Speaker 1: to strive to sort of do fewer, nicer but accessible luxury.
Speaker 1: I think at the upper upper end, you always have
Speaker 1: a certain segment of population that isn't affected, right my
Speaker 1: price increases, that isn't truly feeling the pinch of inflation.
Speaker 1: So you see things like LVMH continue to fare very well. Rachel,
Speaker 1: You've had a pretty storied career at some of the
Speaker 1: giants of consumer goods retail, but you're now investing on
Speaker 1: this sort of start up end of the curve when
Speaker 1: it comes to e commerce. Is there an opportunity here?
Speaker 1: Lots of layoffs from the big tech names, people looking
Speaker 1: to invest in technologies that make them more nimble. What
Speaker 1: is the e commerce landscape outside of an Amazon. So
Speaker 1: it's an interesting time inventor, because, um, it's a tough
Speaker 1: time inventor, and particularly for consumer and particularly for consumer tech.
Speaker 1: So what you're seeing is a lot of consumer DTC
Speaker 1: brands are being very judicious with their spend, not only
Speaker 1: because they're concerned about the consumer and worried about that
Speaker 1: this might be a more tapered holiday season, but number two,
Speaker 1: they're trying to extend their runway. They know that they
Speaker 1: need to show strong numbers to their investors, they need
Speaker 1: to show a positive CAC to LTV ratio, and so
Speaker 1: they're being really thoughtful about how much paid spend they're using,
Speaker 1: thinking about how they can acquire customers more cost effectively,
Speaker 1: what channels to use, etcetera. We want to thank Rachel
Speaker 1: so much Fracial tem general partner and co founder of
Speaker 1: Red Bike Capital. Check her out. Meanwhile, coming up, how
Speaker 1: regulatory priorities are changing in the wake of the f
Speaker 1: t X blow up. So much more on this debacle
Speaker 1: a Bloomberg f t X. Let's talk about it again,
Speaker 1: because is creating a headache for most, if not all,
Speaker 1: of crypto right now, let's getting right to Bloemotional Basak
Speaker 1: as well as Either Capital CEO Brian Mussov and Ether Capital,
Speaker 1: of course, holding about three million dollars in Ether tokens,
Speaker 1: half of which a staked and Sanie I want you
Speaker 1: to take the first question. Yeah, thank you so much,
Speaker 1: Caroline and Brian, thank you for joining us. Because obviously
Speaker 1: a lot of questions around what happens to the crypto
Speaker 1: universe from here. There's a lot of logic here about
Speaker 1: DeFi really coming out on top here, but I'm wondering
Speaker 1: where does that logic hold and where does it break down.
Speaker 1: I think there's no question that in the long term
Speaker 1: we need both worlds. We need easy access points for consumers,
Speaker 1: retail investors, institutions who aren't comfortable holding the assets themselves
Speaker 1: or playing around and defy. But I think some people
Speaker 1: have lost the narrative along the years who have decided
Speaker 1: to just trust these centralized entities, whether they were um
Speaker 1: regulated or not regulated here in the US or in
Speaker 1: a foreign jurisdiction. And so people are gonna go out,
Speaker 1: They're going to do more research, they're gonna hold these
Speaker 1: firms more accountable, they're going to demand more transparency, and
Speaker 1: there's going to be access points. But they're certainly pain
Speaker 1: in the short term as the industry, you know, figures
Speaker 1: out how to go through this turmile and and build
Speaker 1: itself back in a much better way. As always, unfortunately,
Speaker 1: retail often get hurt by this. Well, it's been so
Speaker 1: extraordinary about the ft X to Barklear is how many
Speaker 1: very wealthy, very sophisticated investors have also been duped. How
Speaker 1: is institution investing appetite right now in this space. I
Speaker 1: think it's pretty safe to say it's it's either pens
Speaker 1: down or people are going to take a pause on
Speaker 1: writing checks. They're going to decide to vet the teams,
Speaker 1: the whoever they're going to invest in, decide if it's appropriate.
Speaker 1: I think maybe institutions are going to start to look
Speaker 1: towards holding tokens instead of investing in the picks and troubles.
Speaker 1: I've been saying for years that there isn't likely a
Speaker 1: universe where the centralized entity does really well but bitcoin
Speaker 1: and ether fail. But there is a world where the
Speaker 1: centralized entity who's you know, trying to insert agency or
Speaker 1: rent extraction in between this technology that's all about peer
Speaker 1: to peer transactions. That's what it's all about, is not
Speaker 1: trusting some central authority um. But some institutions aren't able
Speaker 1: to hold it because maybe there's a mandate internally where
Speaker 1: they they're not allowed to hold the assets direct and
Speaker 1: so the way to play the space has been to
Speaker 1: invest in companies, and maybe they're going to shift their
Speaker 1: attention back towards the blue chips bitcoin ether take a
Speaker 1: long view, Uh, the opportunity around staking is very appealing
Speaker 1: because you can generate yield off holding that asset. So
Speaker 1: I think that there's gonna be a recalibration that happens
Speaker 1: here to us about the steaking in the yield farming
Speaker 1: and in that respect, the tainted element of that because
Speaker 1: many would just say, look, it was too good to
Speaker 1: be true, and thus it was well. We also have
Speaker 1: to separate that the failure here is not crypto itself.
Speaker 1: Bitcoin is fine, Ethereum is fine. The price may be blemished,
Speaker 1: but this is just bad actors, poor governance, central authority.
Speaker 1: This happens in traditional finance all the time and there's
Speaker 1: by the way, there's there's no regulation that can prevent
Speaker 1: what happened. You can put up maybe better bumpers, better guardrails,
Speaker 1: but if you had bad actors internally at the C suite,
Speaker 1: you know, level and bad management and lack of oversight,
Speaker 1: someone who's nefariously intentionally trying to do something, it's going
Speaker 1: to happen regardless of what paper they signed and what
Speaker 1: they followed in a certain jurisdiction. Do I think we
Speaker 1: can get better in terms of staking? You know, people again,
Speaker 1: if they go and they hold the token direct they
Speaker 1: go and they buy some ether. You know, that's what
Speaker 1: we've done. An ether capital, the opportunity to generate four
Speaker 1: to six percent while holding your asset and securing the network,
Speaker 1: validating transaction you can get on a treasury now like
Speaker 1: But but they're different things because people aren't buying ether
Speaker 1: and staking it because they're trying to capture just this
Speaker 1: four to six percent yield. These are people who are
Speaker 1: along the technology. They believe in a credibly neutral protocol
Speaker 1: that's going to confirm a number of activities, whether it's DeFi,
Speaker 1: n f t S, metaverse, stable coin movement, and they're
Speaker 1: saying while I have this low time preference on the asset,
Speaker 1: why wouldn't I want four to six percent? You know, yes,
Speaker 1: it is denominated in that token, but it's a it's
Speaker 1: an attractive opportunity for you've actually seen yields jump meaningfully higher,
Speaker 1: and as a banking reporter here for a long time,
Speaker 1: there's no free lunch. Ten percent is very hard to sustain.
Speaker 1: Higher than that can be very hard to sustain. How
Speaker 1: sustainable are these surges and yields? And do you get
Speaker 1: concerned when you look at a curve pool, for example,
Speaker 1: and see I balance is starting to form. So, first
Speaker 1: of all, the yield has never gone to tend to
Speaker 1: The yield is a couc reulation based on how many
Speaker 1: other participants on the network are staking their asset, how
Speaker 1: many transactions are taking place on the network at any
Speaker 1: given time, and they're they're paying a small transaction fee
Speaker 1: to have whatever their activity is validated inside of a block.
Speaker 1: So the yield's going to bounce around. Whether they stay
Speaker 1: up at six percent or drop to two percent, I
Speaker 1: don't know. I would say though that staking different than
Speaker 1: going into defy, different into lending platforms, whether they're centralized
Speaker 1: or on chain offer the lowest risk rate you can get.
Speaker 1: It's not completely risk free, but it's effectively a bond
Speaker 1: with the protocol, and that's as as safe as you
Speaker 1: can basically get other than just holding the ethan looking away.
Speaker 1: How do you feel? For example, let's talk about actors
Speaker 1: in the space for a minute. You have the f
Speaker 1: t X hacker who emerged with a large stack of ether.
Speaker 1: When somebody is amassing either at that kind of a
Speaker 1: rate and you don't know who it is, what are
Speaker 1: the concerns behind that? I mean the concerns are you
Speaker 1: have a company that filed for Chapter eleven just hours
Speaker 1: before that, and how is that authorized? Who had access
Speaker 1: to the internal controls to allow a wallet to move
Speaker 1: hundreds of millions of dollars out of the exchange? I
Speaker 1: think Defied did its thing. If you stayed up on
Speaker 1: Friday night, uh, I think it was Friday night like
Speaker 1: like me, because it was wild to watch in real
Speaker 1: time on Twitter, the entire community following those assets as
Speaker 1: they were trying to be moved through various protocols and
Speaker 1: swapped into different assets, different funds. People still don't know
Speaker 1: necessarily who it is, but Defy had that transparency in
Speaker 1: time will hopefully find out who that was. Um, it's
Speaker 1: very difficult to hide in this space. And again, when
Speaker 1: they try and touch some centralized exchange to cash out,
Speaker 1: whether it's now or in the future between on chain
Speaker 1: analytics and k y C that's been put in place,
Speaker 1: they will be brought to justice. Understanding that the space
Speaker 1: is going to be volatile for a while longer. What
Speaker 1: is the risk to the downside here? The risk to
Speaker 1: the downside is that retail investors and institutions that were
Speaker 1: just warming up to the asset class have been spooked.
Speaker 1: They're not sure what a credible access point is going
Speaker 1: to be. Uh. Certainly, f t X was one of
Speaker 1: the most trusted brands in the space. SPF was a
Speaker 1: face who was often seen in the media talking about crypto,
Speaker 1: talking about regulation, and so people are going to go
Speaker 1: back to the drawing board, do their homework and decide again,
Speaker 1: do they want exposure, do they believe in the technology
Speaker 1: long term? What's an appropriate access point? Do they have
Speaker 1: some transparency on how they do custody, that the customer
Speaker 1: funds are segregated, and so again, the industry will emerge
Speaker 1: better because of this, But there is potentially a lot
Speaker 1: of downside still to come, as whoever does, whoever does
Speaker 1: need liquidity in the short term, tries to sell their assets.
Speaker 1: Bumping right ahead, But I'm liking going along. Homework E
Speaker 1: Capital CEO Brian most Off, we thank him, We always
Speaker 1: thank her. I paid Dallas for them, blue checkmark in
Speaker 1: the staff that would leave this earth. My job is done,
Speaker 1: and to that, my job is to entertain you. That,
Speaker 1: of course, is the opening of the Tonight Show with
Speaker 1: Jimmy Fallon. After the hashtag r I P Jimmy Fallon
Speaker 1: was trending on Twitter, Fanon asked Elon Musk to address
Speaker 1: the false tweets. Of course, Musk replied, wait a second,
Speaker 1: how do we know you're not an alien body statue
Speaker 1: pretending to be Jimmy say something that only really Jimmy
Speaker 1: would say. Ha ha. Now, Twitter is of course putting
Speaker 1: up safeguards to flag tweets with misinformation, but we laugh
Speaker 1: at we find it perhaps amusing. But this is something bigger.
Speaker 1: This is something that isn't amusing. This is On not
Speaker 1: being able to control the narrative about themselves. This is
Speaker 1: about corporate s now. We don't understand whether they're really
Speaker 1: blue check or not some sort of impostor. This is
Speaker 1: about looking towards November the twenty nine, when that new
Speaker 1: payable subscription service does get unfolded at Twitter and whether
Speaker 1: it really works. None of it works, and the chat
Speaker 1: show host had to come out and prove his own
Speaker 1: mortality as a consequence, I'm looking at Taylor Swift. Taylor
Speaker 1: Swift is taking down ticket Master, so to speak, and
Speaker 1: she's not alone. Representative Alexandro Cassio Cortez and Senator Amy
Speaker 1: Klobshar are calling for ticket Master and parent Live Nations
Speaker 1: be broken up after Taylor Swift fans face technical difficulties
Speaker 1: right trying to obtain tickets for Swift's latest tour. Breaking
Speaker 1: news by the way, ticket Master has now canceled plans
Speaker 1: to sell those tickets to the general public this Friday.
Speaker 1: I'm afraid the Swift is just going to have to
Speaker 1: shake it off. What I don't understand is, like, whose
Speaker 1: fault is this? Right? You have the lawmakers on Capitol
Speaker 1: Hill saying this is about the platform, We're gonna have
Speaker 1: to break it up. You have the fans saying we
Speaker 1: just want to buy tickets insatiable appetite. You have Swift
Speaker 1: saying I'm the problem. It's me. This is chaos and
Speaker 1: it's got everyone talking the big picture carriers. I don't
Speaker 1: have a ticket and I'm not going. You're not going?
Speaker 1: Do you want to go? Ed? That is a key question.
Speaker 1: Were you one of the ones who were amid the
Speaker 1: flood of billions of people trying to be accessing it
Speaker 1: all at exactly the same time the fact that Live
Speaker 1: Nation is trying to blame just the ultimate popularity of
Speaker 1: Taylor Swift rather than their own systems. Yeah, look, I
Speaker 1: like the new album Snow on the Beach. Not sure
Speaker 1: that's about but it's chaos. And what I read one
Speaker 1: stat real quick, almost three point five billion, not million,
Speaker 1: billion people trying to access the hot site or hits
Speaker 1: to get tickets. It's chaos. It's chaos. Do you like
Speaker 1: the new album d No comment? No comment. He's got
Speaker 1: some he's got big thoughts. Take them to Twitter, to
Speaker 1: take them to Twitter, because we're on Twitter. And that
Speaker 1: does it for this additional bloom Beg Technology Friday. Right
Speaker 1: on the studio, of course, we have Grinder CEO to
Speaker 1: talk about his first months on the job, how the
Speaker 1: online dating industry is emerging, post pandemic, but go check
Speaker 1: us on social media. This is Bloomberg