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Speaker 1: From Mark hard of We're Innovation, Money and Power Collie

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Speaker 1: in Silicon Valley, NBR. This is Bloomberg Technology with Caroline

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Speaker 1: Hide and Ed Ludlow. I'm Caroline Hide of Bloomberg's World

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Speaker 1: read Quarters in New York, and I'med Ludlow in San Francisco.

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Speaker 1: This is Bloomberg Technology coming up. The banking chaos continues

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Speaker 1: SVB Financial files for Chapter eleven bankruptcy as First Republic

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Speaker 1: sees its worst we ever on record. Will bring you

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Speaker 1: the updates as they cross, and we'll look at how

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Speaker 1: this is playing out in the market. Silvia Jablonsky of

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Speaker 1: Defiance CTS joins us with her take on bitcoin, which

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Speaker 1: is flirting with its biggest weekly gain in almost two years,

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Speaker 1: plus how the crisis is playing out in the c suite.

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Speaker 1: We speak with the CEOs of Mercury of Rippling for

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Speaker 1: their take, and we get the venture capital outlook for

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Speaker 1: the co founder of Cozon Adventures. All that so much

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Speaker 1: more coming up. Let's get first to an extraordinary week

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Speaker 1: on the markets that finishes with an extraordinary day. We're

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Speaker 1: off by one percent on the NASTAC, but remember this

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Speaker 1: index is actually higher to the tune of four percent

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Speaker 1: on the week as actually the big tech still outperforms

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Speaker 1: when we're worried about small tech. And of course for

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Speaker 1: the banks, the KBW bank condects another sink by fifteen

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Speaker 1: percent on the week. We're down by five percent on

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Speaker 1: the day. We are down by the most on the month.

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Speaker 1: Since March of twenty twenty twenty eight percent of value

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Speaker 1: of the KBW bank connects has been extinguished two year yields.

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Speaker 1: We fly to safety once again. We're off by twenty

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Speaker 1: four basis points. This as we see inflation expectations from

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Speaker 1: the consumer from the humish data coming down. Let's move

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Speaker 1: it on. Let's look at what's happening. What was once

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Speaker 1: inflation hedge at the moment, is it some sort of

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Speaker 1: well safety portrayed at the moment as well? Up twenty

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Speaker 1: three percent in the last five days for bitcoin age extraordinary.

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Speaker 1: Dig into some of the micro moves, well, the mentality

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Speaker 1: the market's really interesting. You can name like Microsoft up

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Speaker 1: half a percentage point, where most names on the NASDAC

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Speaker 1: one hundred of down. There's a debate whether that's a

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Speaker 1: move to safety or if it's a feel good from

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Speaker 1: all their AI announcements this week and video pushing higher

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Speaker 1: one percent, Morgan Stanley calling this a mega trend in

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Speaker 1: AI and video, of course, has been talked about for

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Speaker 1: a few days now as one of the main beneficiaries.

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Speaker 1: Interesting to look at the streamers. Disney down nine tenths

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Speaker 1: one percent, Netflix down pretty significantly. Third party data out

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Speaker 1: Friday showed that actually Disney's ad supported tier of Disney

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Speaker 1: Plus is outperforming the ad supported tiers of some of

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Speaker 1: its piers, not translating through to the stock. First Republic,

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Speaker 1: We've had holts, we've had volatility. All told, this stock

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Speaker 1: is down seventy percent over a five day basis. It's

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Speaker 1: worst week on record, the stock trading at its lowest

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Speaker 1: level since twenty eleven. We are still waiting for definitive

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Speaker 1: answers in this banking sector. What we know is that

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Speaker 1: Biden's paying very close attention to this carrot, as we

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Speaker 1: all are. And let's just talk a little bit about

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Speaker 1: the step by step take with SVB, the company filing

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Speaker 1: for Chapter eleven bankruptcy earlier today, with us now to

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Speaker 1: break it all down as she has done every single

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Speaker 1: day of the week and the weekend before. Bloomberg's Chenali

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Speaker 1: bask And Sali. What does it mean for the parent

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Speaker 1: company to follow a bankruptcy and who's involved? There are

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Speaker 1: a lot of questions to be considered here. I've been

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Speaker 1: following this closely. I've been asking all week why has

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Speaker 1: there not been a bankruptcy filing? Now? What you'll have

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Speaker 1: as creditors who will want a certain amount of money

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Speaker 1: back number one. Number two, there are certain assets that

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Speaker 1: will not be included a here, certain banking assets and

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Speaker 1: including some of the assets tied to his venture portfolio

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Speaker 1: year and its securities business as well. What I've been

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Speaker 1: hearing throughout the entire week was the difficulty guys, it

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Speaker 1: has been to sell assets to recoup value here. Now

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Speaker 1: this is under the overseeing of a bankruptcy judge as well.

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Speaker 1: The hohope here is that there is enough money that

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Speaker 1: can be redeemed here by strategic options for some of

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Speaker 1: these assets. I mean ed what's interesting, of course, Silicon

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Speaker 1: Valley Bank, which is previously under SVB Financial, Well, it's

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Speaker 1: still got a bridge bank, right, and it's got new executives. Yes,

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Speaker 1: We've got to be really clear, it's financial that did

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Speaker 1: the Chapter thirty SVB the Bridge Bank right, it continues

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Speaker 1: to be a California chartered bank under the receiver ship

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Speaker 1: of the FDIC, so it cannot fall into bankruptcy. That

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Speaker 1: said Sinali. Astonishing reporting on the Bloomberg terminal that one

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Speaker 1: year ago the San Francisco FED brought in a new

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Speaker 1: assessment team quickly flagged issues at that bank and asked

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Speaker 1: management to act on it. What have we reported? This

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Speaker 1: is a very complicated thing, and there's a lot of

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Speaker 1: questions being asked, not just about how they lobbied for

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Speaker 1: easiness when it came to how they operated. There's a

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Speaker 1: lot of questions here about whether the system across the

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Speaker 1: United States is not equal to begin with. One example

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Speaker 1: that you pointed out, Frankly Head is that that the

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Speaker 1: rollback and rules really helped catapult the expansion here of

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Speaker 1: Silicon Valley Bank in the most recent years. I would

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Speaker 1: also say that when it comes to the way they

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Speaker 1: lent to businesses, they had different rules and some of

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Speaker 1: the largest banks that are occ Charter, that is the

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Speaker 1: Office of the Control of Currency Charter, they had really

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Speaker 1: strict rules around leverage lending and lending to unprofitable venture

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Speaker 1: backed companies, which is why now when you're seeing these

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Speaker 1: firms trying to buy in circle assets around that venture

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Speaker 1: backed loan portfolio. Even private equity in private capital firms

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Speaker 1: are saying this is a no go because it's not

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Speaker 1: how they were used to lending. So it's a complicated equation.

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Speaker 1: It doesn't mean things won't get sold. People are definitely

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Speaker 1: looking at the pieces of the pie in the assets here.

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Speaker 1: But to your point here regulation the lack thereof the

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Speaker 1: process and kind of pushing for lighter regulations, that won't

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Speaker 1: just be looked at for this firm, guys, it will

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Speaker 1: be looked at for a lot of the smaller firms

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Speaker 1: that have done the exact same thing. Well, we talk

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Speaker 1: about seven days since Silicon Valley Bank failed Caroline, and

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Speaker 1: I think the question we're going to answer out this

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Speaker 1: program is about accountability. In other words, who is responsible

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Speaker 1: for what happened to We actually do not have a

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Speaker 1: clear answer on that yet and it's something Shannali that

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Speaker 1: Joe Biden, President Joe Biden is looking into accountability. We

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Speaker 1: still have yet ships to fall with other regional lenders.

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Speaker 1: We certainly do. I think we have to look at

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Speaker 1: that drop off in the stock price as well as

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Speaker 1: the easing of the bonds as well, when you look

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Speaker 1: at First Republic, just how much in value this company

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Speaker 1: has lost this week a loan. It's now less than

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Speaker 1: a five billion dollar company by market value. We look

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Speaker 1: at what has to then at SVB, we've been talking

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Speaker 1: about this. My sources were saying, this is a bank

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Speaker 1: you could have maybe bought on Thursday night before that

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Speaker 1: forty billion, forty two billion dollars deposit flight. But things

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Speaker 1: deteriorated quickly. They're trying not to make this happen for

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Speaker 1: First Republic. First Republic still has a lot of amazing assets.

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Speaker 1: By the way, for the California community. You talk to

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Speaker 1: banks across the country. First Republic really dove in in

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Speaker 1: a way that a lot of big banks were not

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Speaker 1: on top of as quickly as they were when it

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Speaker 1: came to catering to the elite of California certainly the

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Speaker 1: country big wealth manager, big mortgage lender for example. And

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Speaker 1: so a lot of questions about the future First Republic

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Speaker 1: as well, both for the California community as well as

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Speaker 1: the rest of the country, and whether this is a

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Speaker 1: bank that can be sold ultimately, and that is something

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Speaker 1: that market is watching for very closely. Bloomberg Snali Basset.

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Speaker 1: You have been everywhere this week. Thank you for your reporting.

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Speaker 1: Happy Friday. I want to stick with the markets and

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Speaker 1: the market impact of what's playing out across asset and

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Speaker 1: bringing Sylvia Jablonsky Defiance ETFs CEO and CIO and Sylvia.

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Speaker 1: Caroline made a really good point at the top of

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Speaker 1: the show. You look at the NAZAC one hundred, for example,

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Speaker 1: headed for its best weeks since November, despite sort of

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Speaker 1: the broad risk off sentiment that we've seen throughout this

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Speaker 1: week driven by headlines. Yeah, great to be here, and yes,

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Speaker 1: it was a great point made at the top of

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Speaker 1: the show. And actually it's something that I've been talking

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Speaker 1: about and thinking about for weeks prior to the banking

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Speaker 1: crisis here. So in my mind, even if you take

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Speaker 1: away the banking crisis, some of the top fang companies

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Speaker 1: out there are the top tech names, especially are on

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Speaker 1: the precipice of innovation with chat GYBT. We all sort

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Speaker 1: of know AI and how we expect that to play out.

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Speaker 1: So there's a good reason to invest for that reason alone.

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Speaker 1: But then on top of it, they are battered last year,

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Speaker 1: but look where they are. They still sit with very

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Speaker 1: strong balance sheet and you have a macro you know

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Speaker 1: overhang here of a hawkish FED that is now shifting

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Speaker 1: regardless of the banking crisis. So now throw an SVB.

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Speaker 1: You have some you know, deflationary pressures. You have a

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Speaker 1: FED that is likely to think about pausing and sort

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Speaker 1: of stopping on the rates. And who does that benefit

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Speaker 1: that if it's you know, tech companies, their costs to

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Speaker 1: borrow becomes cheaper, they can do the RD and just

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Speaker 1: to jump in on the FED. Do you think that

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Speaker 1: they won't be hiking the will come next week? Oh?

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Speaker 1: I think that the FEDER will likely you know, I

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Speaker 1: don't know what the FEDER will do, but in my opinion,

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Speaker 1: I think, you know, twenty five pips is likely to

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Speaker 1: be on the table with a long explanation that is

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Speaker 1: not as hawkish around the idea that they're going to

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Speaker 1: pause and and you know, taking the environ and see

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Speaker 1: what happens. Because I think there's this massive need now

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Speaker 1: to reinstall confidence in the banking system and a shock

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Speaker 1: like that and a scare like that actually does have

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Speaker 1: an impact on consumers and investors and makes investors want

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Speaker 1: to sit on the sideline, makes consumers not want to

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Speaker 1: spend because they're worried about that recession, you know, and

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Speaker 1: so on. So I do think that beyond this next

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Speaker 1: rate hike, it's going to be a much different story

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Speaker 1: than it was a month ago. So when you're looking

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Speaker 1: at allocating money, have you been this week and into wold?

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Speaker 1: You know? I have not yesterday when the market was rallying.

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Speaker 1: But I you know, I look at the long term

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Speaker 1: as an investor, and the things that I like in

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Speaker 1: the long term are that Fourth Industrial Revolution trade, right,

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Speaker 1: but with the quantum of machine learning and the AI,

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Speaker 1: I continue to allocate there. So when we have these

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Speaker 1: pullbacks days like today's names, I like to look at

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Speaker 1: a basket of stocks that represents those teams, whether it's

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Speaker 1: semi conductors, the big tech companies, and you know, in

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Speaker 1: my mind, I'm going to hold those for the next

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Speaker 1: three to five years and that'll pay off. And then

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Speaker 1: I diversify too, right. I like defensive portfolios. I like

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Speaker 1: alternative energy things like hydrogen, you know, the way of

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Speaker 1: the future of how we'll sort of power our cars

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Speaker 1: at homes and things like that. That's a growing trend

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Speaker 1: and all of these names are battered along with the

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Speaker 1: rest of the market. This week. So in general, though,

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Speaker 1: if you're an investor, you know, I think even index

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Speaker 1: exposures to pick up at these levels when we get

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Speaker 1: pullbacks like today. When I think of defiance, of course, ed,

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Speaker 1: I think of the ETFs that are related to crypto

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Speaker 1: and not just an announced that a boy, what a

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Speaker 1: week for crypto. Well, I guess, Sylvia. My question would

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Speaker 1: be that there is this high degree of bullishness around

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Speaker 1: crypto or digital assets, right yet the world around that industry,

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Speaker 1: the startups, the companies are under quite severe dress. How

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Speaker 1: do you square that? Yeah, so you know, the going

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Speaker 1: back to you know, Caroline, I think we square it

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Speaker 1: by creating a short fund. So we're actually sort of

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Speaker 1: worried about some of that risk, and we think that

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Speaker 1: a lot of investors in the short term will be bearish.

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Speaker 1: But you know that, Beans said, I think it depends

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Speaker 1: on what type of crypto we're talking about. So if

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Speaker 1: you look at bitcoin, you know, bitcoin is almost like

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Speaker 1: the SMP five hundred of of of crypto, right It's

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Speaker 1: it's sort of it's the least risky of crypto assets.

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Speaker 1: And I think that with the bank blow up, a

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Speaker 1: lot of investors have viewed that as a good alternative

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Speaker 1: to not have exposure essentially to both government and bank

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Speaker 1: failures and things like that. So it's essentially catching a bid.

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Speaker 1: But I think if you look at the overall crypto economy,

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Speaker 1: it's the same situation as you have with you know, high,

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Speaker 1: highly leveraged growth companies that are you know, not the

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Speaker 1: friends necessarily, but they're highly impacted by rates, They're highly

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Speaker 1: impacted by inflation, They're very volatile, and when you have

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Speaker 1: to get a bank collapse and you have an uncertain

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Speaker 1: macro backdrop of recession or not, you're unlikely have investors

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Speaker 1: piling into those types of names. In my opinion, I

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Speaker 1: think they'll stick with bitcoin. You know, maybe they'll look

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Speaker 1: at ethereum, but but I think, you know, the smaller

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Speaker 1: names are probably not going to catch a bid. See

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Speaker 1: names that I show you the top of the show

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Speaker 1: where Nvidio and Microsoft and artificial intelligence. Despite all of

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Speaker 1: the chaos and the banking sector is continued to be

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Speaker 1: a theme. At least that's what cell side is are

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Speaker 1: writing about. How are you positioning to kind of take

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Speaker 1: advantage of momentum in that space. Yeah, at our company,

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Speaker 1: they're actually to the top holdings in our in our

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Speaker 1: quantum basket, which is the machine learning and AI trade there.

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Speaker 1: And I think what we're looking for is is just

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Speaker 1: the build out. You know, there's an expected cager of

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Speaker 1: about thirty seven percent in the next five years strictly

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Speaker 1: off of AI. If you think about how it's going

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Speaker 1: to impact every sector from you know, retail, Amazon being

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Speaker 1: able to target ads and you know, kind of put

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Speaker 1: things package your basket more accurately, healthcare, connecting doctors, you know, robots, research,

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Speaker 1: all of these types of things that we've we've talked

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Speaker 1: about before. Defense, you know, more precise targeting. All of

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Speaker 1: this depends on AI. We know that that's growing out

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Speaker 1: and you know, Microsoft just really put themselves in the

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Speaker 1: front of the pack there in terms of our d

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Speaker 1: an investment in the space. Another discussion of a compound

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Speaker 1: annual growth rate. We love at Sylvia Tavlovsky, CEO and

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Speaker 1: CIO of Defiancyts. We wish you were a RESTful weekend. Yeah,

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Speaker 1: I think we all need one carros Staying in the

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Speaker 1: world of crypto, though, a clash involving disgruntled coin based

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Speaker 1: customers will give the US Supreme Court its first taste

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Speaker 1: of the world of cryptocurrencies, foreshadowing future cases that could

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Speaker 1: help define the industry. Next week, justices will hear arguments

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Speaker 1: stemming from coin bases efforts to push two lawsuits into arbitration,

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Speaker 1: so a procedural battle rather than a crypto specific matter

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Speaker 1: coin based. Once court proceeding stopped when an appeal is

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Speaker 1: filed seeking to compel arbitration. The joint case comes as

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Speaker 1: high stakes fights involving the likes of Ripple and Grayscale

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Speaker 1: work their way toward the court, shaping the rights of

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Speaker 1: customers and companies alike in the fledgling industry. We're going

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Speaker 1: to keep across that in the coming weeks. Let's say

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Speaker 1: the thadhand stepped up today in Silicon valid bank Field

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Speaker 1: and like a whole bunch of startups lost their venture dialers.

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Speaker 1: That would that would have been and that would have

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Speaker 1: been an event that I think would have been way

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Speaker 1: worse than oh one like that would have been catastrophic.

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Speaker 1: That was a long time venture capitalist. Bill Gurley was

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Speaker 1: some of his thoughts on the banking crisis in its ramifications.

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Speaker 1: It's been seven days since Silicon Valley Banks collapsed, the

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Speaker 1: biggest US lender to fail in more than a decade,

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Speaker 1: many tech startups and venture catalysts, the same industries by

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Speaker 1: the way that fueled spob's rise, scrambled to pull their

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Speaker 1: money out, and amid the exodus, tech companies diversified away

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Speaker 1: from one single bank to a mix top tier names

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Speaker 1: but also fintech startups that technically aren't banks at all.

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Speaker 1: One of those Mercury, and in the past week, the

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Speaker 1: startup has onboarded thousands of new customers. Mercury's co founder

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Speaker 1: and CEO, Immadachan joins us, Now, you are not a bank, Yes,

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Speaker 1: your banking services are provided by Choice Financial and Evolved Bank.

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Speaker 1: So explain how you've been able to benefit this week

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Speaker 1: from SBB situation. Yeah, so you know, you can go

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Speaker 1: to Mercury dot com and get a bank account. We

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Speaker 1: work with two partner banks, Choice and Evolve, but we've

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Speaker 1: provide a full kind of suite of banking services. You

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Speaker 1: can go check account wires, debit card, credit card, venture debt.

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Speaker 1: We've been you know, we launched about four years ago.

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Speaker 1: We've been kind of successfully doing this. We have a

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Speaker 1: four hundred thousand businesses I use Mercury. It is nine

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Speaker 1: seventeen local time on Friday, twelve seventeen in New York

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Speaker 1: at this moment, give me a dollar value for the

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Speaker 1: business that you've brought in this week. Oh, it's been

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Speaker 1: above two billions so far, and then that equates to

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Speaker 1: deposits or yes, and deposits. Okay, you've explained of course

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Speaker 1: versuscinctly there your business and the partner banks that in

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Speaker 1: particular you lend a pond or use. I'm just interested

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Speaker 1: is to now insurance. Everyone must be coming too, saying

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Speaker 1: am I FDIC insured? And when you go to the website,

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Speaker 1: it shows that actually you can be insured up to

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Speaker 1: five million in terms of deposits. Understand for our audience,

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Speaker 1: how this is protected in particular? Yeah, so yeah, we're

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Speaker 1: not a bank, so we don't take these deposits and

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Speaker 1: lend them out. We work with our partner banks and

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Speaker 1: they have a network of sweep banks underneath them. So

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Speaker 1: in order to provide five million an FDIC insurance that

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Speaker 1: split between twenty banks. You know what we heard Actually

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Speaker 1: last week we had about a million dollars in FDIC insurance.

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Speaker 1: So we've increased it by five x, and that's obviously

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Speaker 1: twenty x bigger than what you would get at one bank. Yeah,

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Speaker 1: you know, we heard people are really concerned about, you know,

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Speaker 1: what's happening and is their money safe at Mercury, And

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Speaker 1: obviously I can say it's safe. Providing that extra insurance

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Speaker 1: with FDIC insurance on their deposits helps a lot. I

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Speaker 1: think the main point you and I have discussed a

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Speaker 1: week right is that diversifying a was something no one

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Speaker 1: had thought about early enough that there were benefits to

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Speaker 1: going to traditional banks and some startups that offer different

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Speaker 1: things to the traditional banks. And to that point, you

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Speaker 1: are offering actually access to money market funds, but they're

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Speaker 1: not your money market funds. It's Vanguards for example. You're offering, therefore,

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Speaker 1: to split up people's deposits and spread them across well

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Speaker 1: and a range of other lenders. Why come to a middleman,

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Speaker 1: Why come to a Mercury when you're worried about the

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Speaker 1: security of all these vendors. Yeah, so Mercury there's a

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Speaker 1: software provider. I mean, at the end of the day,

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Speaker 1: if you're buying a Vanguard fund, you can obviously go

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Speaker 1: to Vanguard, or you can go to e Trade, or

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Speaker 1: you can come to Mercury to do it. We just

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Speaker 1: make it very simple, you know, these business owners have

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Speaker 1: a lot on their mind. They just want to build

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Speaker 1: their business. They don't want to be thinking about where's

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Speaker 1: my money. We can do things like automatically set up

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Speaker 1: rules so when you're when you need more operations normal

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Speaker 1: account of money, it automatically sweeps between the Vanguard fund

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Speaker 1: to your normal operational fund. So we make it very

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Speaker 1: simple and easy, and Mercury is actually not in the

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Speaker 1: money flow at all. We're not a custodian, we're not

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Speaker 1: a bank. We're an enabled to do these companies and

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Speaker 1: do the kind of financial institutions behind the scene. You're

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Speaker 1: backed by CRV andresen Qua two. You raised at a

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Speaker 1: one point six billion dollar valuation twenty twenty one. Yeah

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Speaker 1: you're raising now. No, we're profitable. We're making money every month,

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Speaker 1: so we're able want to write you a check? How

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Speaker 1: we're knocking on that. I've had lots of VC's reach

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Speaker 1: out this week, but you know, it's just been so busy.

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Speaker 1: I'm like, this is yeah, this is not the right

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Speaker 1: time to trying to talk to me. Emad. We thank

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Speaker 1: you for coming on for being so clear with us.

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Speaker 1: All I'm making time amid well the flood of interest

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Speaker 1: of Mercury. Thank you. Coming up, well, we'll turn to

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Speaker 1: artificial intelligence that is buid surges after brokerages tested and approved.

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Speaker 1: The companies just unveiled CHATCHBT like service more next and

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Speaker 1: talking tech and sticking with artificial intelligence. We're watching in video.

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Speaker 1: Shares just upgraded to overweight from equal wait at Morgan

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Speaker 1: Stanley Analysts, saying that the development of generational AI, it's

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Speaker 1: too much of a mega trend to get distracted by

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Speaker 1: tactical concerns. We're going to currently up one percent, offer

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Speaker 1: as high as other day from New York, from San Francisco,

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Speaker 1: the subringberg on a market neutral basis, the quality factors

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Speaker 1: at a new high. So the market perceives these companies,

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Speaker 1: the Apples and the Microsofts of worlds is quality and

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Speaker 1: safe haven. And that's kind of what kept the smp aflow.

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Speaker 1: It's that pushbat the financials getting crushed, but then the

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Speaker 1: tech pawn it. Once the markets start thinking and feeling

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Speaker 1: that on even Apple's that's safe, then the s and

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Speaker 1: people could actually roll over. Kept the mats that higher too.

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Speaker 1: John Colivers, their head of technical strategy at Macro Risk Advisors.

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Speaker 1: Now it's time for talking tech by DO surging one

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Speaker 1: than fourteen percent to day after brokerages including Citigroup tested

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Speaker 1: the company's just unveiled chatboart service granted it that their

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Speaker 1: preliminary approval by Do's link reverse that six percent loss.

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Speaker 1: On Thursday, after the founder you see here, Robin Lee,

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Speaker 1: debut the new artificial intelligent technology via a recorded video

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Speaker 1: speaking of AI. Data analytics firm pre State II opened

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Speaker 1: in Aberdabi G forty two drew orders worth twenty five

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Speaker 1: point eight billion IS four hundred ninety six million initial

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Speaker 1: share offering and then later signed a strong demand for

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Speaker 1: Middle Eastern offerings, and Microsoft handed in formal antitrust commitments

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Speaker 1: to the EU watch dogs. Of course, they're probing the

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Speaker 1: sixty nine billion dollar planned to buy Activision Bizzards. This

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Speaker 1: action now puts the onus on Britain's Merger watchdog to

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Speaker 1: deliver a potentially decisive ruling on the deal and pushes

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Speaker 1: the EU's final deadline from March sixteenth to May twenty. Second,

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Speaker 1: and the CEO of Amazon's Twitch game streaming platform is resigning.

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Speaker 1: Emmett Shier will be replaced by Twitch president Dan Clancy.

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Speaker 1: The departure marks the latest executive turnover over at Amazon,

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Speaker 1: said Sidury's Scher, who has been at Twitch since it's

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Speaker 1: very origins, said he's leaving to spend more time with

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Speaker 1: his son d Welcome back to Bloomberg Technology. I'm Ed

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Speaker 1: Ludlow in San Francisco. It's nine thirty am here on

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Speaker 1: the West coast, but four thirty pm in London. European

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Speaker 1: markets closing. This is the picture the stocks Europe six

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Speaker 1: hundred down one point three percent, passing over economic data

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Speaker 1: and also jitters of course in the banking sector. Euro

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Speaker 1: continuing to strengthen against the dollar one oh six seven

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Speaker 1: on euro dollar up around six tenths of one percent.

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Speaker 1: We've seen some fluctuations in the currency market over the

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Speaker 1: course of the week because of course central bank policy

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Speaker 1: being a key fact at UCB, giving us that half

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Speaker 1: point hype, but not a lot of guidance for what's

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Speaker 1: to come in the months and years ahead. And you know,

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Speaker 1: the bond markets, we're seeing some kind of advancement continue.

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Speaker 1: German tenure burned off by sixteen basis points two point

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Speaker 1: one two percent. The UK two year yield at the

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Speaker 1: short end we're at three point two percent, down sixteen

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Speaker 1: basis points as well. Inflation a big focus right now

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Speaker 1: when it comes to the United Kingdom. Change the boards,

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Speaker 1: and let's look over the course of the week, because

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Speaker 1: the stock six hundred Europe in the equity space having

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Speaker 1: its worst week since September, really feeling the impacts of

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Speaker 1: that banking situation. Compare that with the picture here in

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Speaker 1: the United States Caroline, and then as that one hundred. Yeah,

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Speaker 1: certainly the ripple effects far and wide. Let's talk about

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Speaker 1: how difficult the banking crisis has made it to raise

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Speaker 1: capital for tech startups. Here's what Cleo Capital's co founder

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Speaker 1: Sarah Kunst had to say about it earlier this week.

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Speaker 1: It's going to be a hard quarter to pitch in,

428
00:22:58,600 --> 00:23:00,800
Speaker 1: you know, getting net new capit a lot of vcs

429
00:23:00,800 --> 00:23:03,960
Speaker 1: who don't already have an obligation to the money they've

430
00:23:03,960 --> 00:23:06,120
Speaker 1: put with you is going to be harder than ever.

431
00:23:06,160 --> 00:23:08,359
Speaker 1: And it doesn't mean it's totally dried up, and there

432
00:23:08,400 --> 00:23:10,919
Speaker 1: will be tons of people starting great new companies, but

433
00:23:11,080 --> 00:23:14,040
Speaker 1: this is going to be a much different fundraising environment

434
00:23:14,040 --> 00:23:17,720
Speaker 1: than even a few months ago. For some the funding

435
00:23:17,760 --> 00:23:20,720
Speaker 1: is still open. Let's bringing Parker Conrad for his take

436
00:23:20,760 --> 00:23:23,680
Speaker 1: on all of the CEO Payroll service provider, Rippling, it's

437
00:23:23,720 --> 00:23:28,440
Speaker 1: just raised five hundred million dollars in three days alone. Parker,

438
00:23:28,800 --> 00:23:31,679
Speaker 1: this is all in many ways because of what occurred

439
00:23:31,680 --> 00:23:34,119
Speaker 1: with Silicon Valley Bank. Can you talk us through the

440
00:23:34,160 --> 00:23:39,800
Speaker 1: money that you've managed to raise and why. Yes. Rippling is,

441
00:23:39,840 --> 00:23:42,199
Speaker 1: among other things, a payroll company. We make software for

442
00:23:42,240 --> 00:23:48,480
Speaker 1: businesses to manage everything related to employees, so payroll, hr IT, finance, expense, reimbursements,

443
00:23:48,520 --> 00:23:50,480
Speaker 1: and we think we can cut a lot of the

444
00:23:50,480 --> 00:23:53,480
Speaker 1: administrative work involved in running those things out by doing

445
00:23:53,520 --> 00:23:55,840
Speaker 1: it all in one place. And the way payroll works

446
00:23:55,880 --> 00:23:57,840
Speaker 1: is companies send us money a few days ahead of

447
00:23:57,880 --> 00:24:00,000
Speaker 1: pay day and then we send it along to their employees.

448
00:24:00,119 --> 00:24:03,240
Speaker 1: And so when Silicon Valley Bank failed, they were previously

449
00:24:03,280 --> 00:24:06,440
Speaker 1: the rails for our payroll service. We had to move

450
00:24:06,480 --> 00:24:09,120
Speaker 1: in just a few hours over to JP Morgan Chase.

451
00:24:09,960 --> 00:24:12,880
Speaker 1: But we also we knew on Friday when the bank

452
00:24:12,920 --> 00:24:15,879
Speaker 1: failed there were fifty thousand people that we needed to

453
00:24:15,880 --> 00:24:19,119
Speaker 1: make sure got paid whose companies had already sent us money.

454
00:24:19,680 --> 00:24:21,440
Speaker 1: And so what we did is we actually took about

455
00:24:21,480 --> 00:24:23,720
Speaker 1: one hundred and thirty million dollars of our own capital

456
00:24:24,119 --> 00:24:26,040
Speaker 1: and sent it out the door to make sure that

457
00:24:26,080 --> 00:24:28,960
Speaker 1: everybody got their paycheck on Friday and moved heaven and

458
00:24:29,040 --> 00:24:32,240
Speaker 1: earth to do that. My colleague Katie Reef has just

459
00:24:32,320 --> 00:24:35,080
Speaker 1: texted me, she's been writing about your situation this morning.

460
00:24:35,600 --> 00:24:38,199
Speaker 1: Given now that the SVB situation is kind of more resolved,

461
00:24:38,240 --> 00:24:40,800
Speaker 1: what are you going to do with that five hundred million? Yeah,

462
00:24:40,840 --> 00:24:42,720
Speaker 1: So we raised the money to make sure that we'd

463
00:24:42,760 --> 00:24:45,320
Speaker 1: be able even if the fdi C did nothing, that

464
00:24:45,400 --> 00:24:48,960
Speaker 1: we'd be able to backstop our client funds. But as

465
00:24:48,960 --> 00:24:52,280
Speaker 1: it turns out, you know, depositors were protected. So we

466
00:24:52,840 --> 00:24:56,359
Speaker 1: now Ripley is incredibly well capitalized. We have, you know,

467
00:24:56,480 --> 00:24:59,800
Speaker 1: almost a billion dollars on our balance sheet. What would

468
00:24:59,800 --> 00:25:03,879
Speaker 1: you done if the deposits were not ensured. We wanted

469
00:25:03,880 --> 00:25:06,399
Speaker 1: to make sure that any company that had sent us

470
00:25:06,480 --> 00:25:09,640
Speaker 1: money we were going to get their employees paid. And

471
00:25:09,680 --> 00:25:11,600
Speaker 1: so that was why we wanted to make sure we

472
00:25:11,640 --> 00:25:13,960
Speaker 1: had this as a backup plan to a backup plan

473
00:25:14,040 --> 00:25:17,400
Speaker 1: to a backup plan. Carroy, this is an amazing conversation

474
00:25:17,400 --> 00:25:20,359
Speaker 1: because it's a snapshot of what happened in the moment.

475
00:25:20,400 --> 00:25:24,119
Speaker 1: We're hearing so many founders sort of pretty dire about

476
00:25:24,200 --> 00:25:26,480
Speaker 1: the long term impacts of SVV and being able to

477
00:25:26,560 --> 00:25:28,480
Speaker 1: raise funds, and yet you have a company here that

478
00:25:28,640 --> 00:25:32,040
Speaker 1: did it in three days. And also you luckily already

479
00:25:32,080 --> 00:25:35,520
Speaker 1: had a banking provider other than SVB, which JP Morgan.

480
00:25:35,600 --> 00:25:37,440
Speaker 1: But we went to our own audience said, how hard

481
00:25:37,560 --> 00:25:40,240
Speaker 1: is it as a founder, as a fund even to

482
00:25:40,320 --> 00:25:43,720
Speaker 1: diversify your banks? It's pretty hard. It's complicated, said forty

483
00:25:43,720 --> 00:25:47,679
Speaker 1: four percent. To that point, Parker, was it complicated for

484
00:25:47,720 --> 00:25:50,320
Speaker 1: you to rev up the JP Morgan? And also are

485
00:25:50,359 --> 00:25:54,280
Speaker 1: you now more diversified even than that? It was? I mean, look,

486
00:25:54,320 --> 00:25:57,960
Speaker 1: we have a number of different banking relationships, many different

487
00:25:57,960 --> 00:26:01,800
Speaker 1: bank accounts across the world. But we always assumed that,

488
00:26:02,240 --> 00:26:04,560
Speaker 1: you know, if something happened with SVB, which was the

489
00:26:04,600 --> 00:26:08,600
Speaker 1: main rails for our payroll service, we'd have about two

490
00:26:08,640 --> 00:26:10,760
Speaker 1: weeks to get something up and running. And then what

491
00:26:10,840 --> 00:26:13,280
Speaker 1: happened is when the bank failed, we only had about

492
00:26:13,280 --> 00:26:15,800
Speaker 1: three and a half hours, and so we put a

493
00:26:15,920 --> 00:26:18,680
Speaker 1: team of fifteen of the best engineers in the company

494
00:26:19,119 --> 00:26:21,439
Speaker 1: on getting this up and running in that time frame

495
00:26:22,040 --> 00:26:24,439
Speaker 1: time frame, and then a much larger team over the

496
00:26:24,520 --> 00:26:27,320
Speaker 1: weekend and the days to come, really just making sure

497
00:26:27,359 --> 00:26:30,080
Speaker 1: that everything was solid, everything was well grooved and sort

498
00:26:30,080 --> 00:26:32,879
Speaker 1: of compressed that timeline to make sure that nothing was

499
00:26:32,920 --> 00:26:36,679
Speaker 1: interrupted for our clients. What's also so fascinating about your story, Parker,

500
00:26:37,240 --> 00:26:40,879
Speaker 1: is the support of your venture capital supporters and in

501
00:26:40,920 --> 00:26:44,360
Speaker 1: particular the realm that was led by Green Oaks Neil Meta.

502
00:26:44,480 --> 00:26:47,560
Speaker 1: How important was it to have vcs on hand that

503
00:26:47,600 --> 00:26:49,879
Speaker 1: would just rally the troops and give you money when

504
00:26:49,920 --> 00:26:52,960
Speaker 1: you needed it. We're you know, we're incredibly fortunate that

505
00:26:53,000 --> 00:26:54,800
Speaker 1: there are a bunch of investors that have been really

506
00:26:54,840 --> 00:26:57,040
Speaker 1: supportive of for a plane that we've known for a

507
00:26:57,040 --> 00:27:00,560
Speaker 1: long time, and that have you know, even as the

508
00:27:00,600 --> 00:27:03,919
Speaker 1: funding environment for late stage startups has gotten shaky, have

509
00:27:04,040 --> 00:27:06,919
Speaker 1: always really wanted to find ways to own more of Rippling,

510
00:27:07,040 --> 00:27:09,240
Speaker 1: and so we were able to put together on very

511
00:27:09,240 --> 00:27:12,480
Speaker 1: short notice around you know, at a really fair price,

512
00:27:14,000 --> 00:27:16,679
Speaker 1: you know, at an eleven point two five billion dollar valuation,

513
00:27:16,920 --> 00:27:19,199
Speaker 1: to get a bunch more capital in the business. And

514
00:27:19,240 --> 00:27:20,959
Speaker 1: that's going to allow us, sort of, no matter what

515
00:27:21,040 --> 00:27:23,920
Speaker 1: happens here, to focus on building the right products for

516
00:27:23,960 --> 00:27:28,280
Speaker 1: our customers and growing our company. You kind of scrambled

517
00:27:28,359 --> 00:27:30,359
Speaker 1: to take money from your balance sheet to help with

518
00:27:30,480 --> 00:27:34,080
Speaker 1: payroll for others. Have you been made whole again after

519
00:27:34,160 --> 00:27:38,560
Speaker 1: what's happened, and just reflecting on your customer base, is

520
00:27:38,600 --> 00:27:41,960
Speaker 1: there still problems out there. Oh, there's still problems out

521
00:27:41,960 --> 00:27:44,479
Speaker 1: there for people trying to make payroll to move money around.

522
00:27:45,040 --> 00:27:48,480
Speaker 1: We on Monday morning when SVB reopened, we got all

523
00:27:48,480 --> 00:27:51,280
Speaker 1: of the customer funds out of SVB, and so we've

524
00:27:51,280 --> 00:27:54,239
Speaker 1: been made completely whole for all of this. And there

525
00:27:54,240 --> 00:27:57,679
Speaker 1: are problems still in the ecosystem, not for us. I mean,

526
00:27:57,720 --> 00:28:01,040
Speaker 1: our systems are as solid as ever, just with a

527
00:28:01,080 --> 00:28:04,440
Speaker 1: different bank, with JP Morgan Chase. You know, I don't

528
00:28:04,480 --> 00:28:06,040
Speaker 1: I don't know what's going to happen, you know, more

529
00:28:06,080 --> 00:28:08,520
Speaker 1: broadly to the economy as a result of some of

530
00:28:08,560 --> 00:28:11,240
Speaker 1: the shakiness in the banking sector. But we feel very

531
00:28:11,240 --> 00:28:14,159
Speaker 1: good about about sort of our service we're billing. This

532
00:28:14,240 --> 00:28:17,240
Speaker 1: five hundred million is an emergency fund raise, and I

533
00:28:17,359 --> 00:28:20,840
Speaker 1: just wanted to ask how you felt about the terms

534
00:28:20,840 --> 00:28:23,440
Speaker 1: of that raise. Were you happy? Was it a compromise?

535
00:28:23,760 --> 00:28:26,520
Speaker 1: You know, I really disagree with the character characterization of

536
00:28:26,560 --> 00:28:29,520
Speaker 1: it as an emergency. I think it came together very quickly.

537
00:28:30,520 --> 00:28:33,920
Speaker 1: But look, this was great capital on attractive terms. I mean,

538
00:28:33,920 --> 00:28:36,520
Speaker 1: there aren't a lot of late stage startups that can

539
00:28:36,640 --> 00:28:39,280
Speaker 1: raise dat amount of capital and a very short period

540
00:28:39,280 --> 00:28:42,600
Speaker 1: of time at these valuations. I thought it was a

541
00:28:42,680 --> 00:28:44,800
Speaker 1: great deal for the company, and I feel really good

542
00:28:44,840 --> 00:28:47,840
Speaker 1: about it. I had lyone currently says emergency funds will

543
00:28:47,920 --> 00:28:52,120
Speaker 1: quickly maybe update that to new funds. Parker, Ultimately, what

544
00:28:52,360 --> 00:28:55,080
Speaker 1: now do you expand do use a five hundred million

545
00:28:55,120 --> 00:28:58,480
Speaker 1: to grow or can you in some way sort of

546
00:28:58,520 --> 00:29:02,400
Speaker 1: give it back. We're going to focus. We We're going

547
00:29:02,400 --> 00:29:04,600
Speaker 1: to use this money to sort of continue to invest

548
00:29:04,640 --> 00:29:08,760
Speaker 1: in our product in research and development. Rippling has a

549
00:29:08,840 --> 00:29:12,840
Speaker 1: really unusual commitment to r and D among SaaS tech companies.

550
00:29:12,840 --> 00:29:15,800
Speaker 1: We spend an enormous amount in comparison to our revenue

551
00:29:15,880 --> 00:29:19,600
Speaker 1: on developing new products, building new software, and we think

552
00:29:19,640 --> 00:29:22,840
Speaker 1: it's what makes us have the best product on the market. Puka,

553
00:29:23,320 --> 00:29:27,800
Speaker 1: you're a fintech. You understand financial plumbing better than most.

554
00:29:28,640 --> 00:29:30,880
Speaker 1: Do you think at this moment, this single point of

555
00:29:30,920 --> 00:29:34,760
Speaker 1: failure that you had avoided by having other banks, does

556
00:29:34,800 --> 00:29:37,120
Speaker 1: it mean you worry about a centralized financial system as

557
00:29:37,120 --> 00:29:42,160
Speaker 1: it stands? I mean, look, we have different banking relationships

558
00:29:42,200 --> 00:29:44,920
Speaker 1: with a number of different banks, and we continue to

559
00:29:45,000 --> 00:29:49,960
Speaker 1: sort of diversify sort of the rails that we have

560
00:29:50,240 --> 00:29:54,640
Speaker 1: within the banking sector. I think in this case things

561
00:29:54,760 --> 00:29:58,920
Speaker 1: worked out pretty well. We found out nine am on Friday,

562
00:29:59,080 --> 00:30:01,680
Speaker 1: on the day that employees were supposed to get paid,

563
00:30:02,640 --> 00:30:05,120
Speaker 1: that SVB was shut down and all of the funds

564
00:30:05,120 --> 00:30:08,160
Speaker 1: that were supposed to arrive for payday on Friday were

565
00:30:08,200 --> 00:30:11,160
Speaker 1: locked up, and we had three and a half hours

566
00:30:11,680 --> 00:30:14,680
Speaker 1: to get things up and running with JP Morgan, and

567
00:30:14,800 --> 00:30:16,280
Speaker 1: we were able to do that in three and a

568
00:30:16,320 --> 00:30:19,680
Speaker 1: half hours and get people paid using our own capital.

569
00:30:19,760 --> 00:30:21,400
Speaker 1: So I look at it as sort of a real

570
00:30:22,320 --> 00:30:25,320
Speaker 1: success story about our ability to make sure that you know,

571
00:30:25,400 --> 00:30:29,680
Speaker 1: fifty thousand ordinary Americans that were paid through Rippling got

572
00:30:29,680 --> 00:30:33,120
Speaker 1: paid last Friday. Rippling CEO Parker Comrade, thank you for

573
00:30:33,160 --> 00:30:36,360
Speaker 1: sharing that story with Caroline and I. Now coming up,

574
00:30:36,360 --> 00:30:38,640
Speaker 1: we're going to be joined by vinod Kosla to talk

575
00:30:38,640 --> 00:30:41,840
Speaker 1: all things VC after what was, let's be honest, Caroline,

576
00:30:41,880 --> 00:30:44,640
Speaker 1: a crazy week in the world of banking, but also

577
00:30:44,760 --> 00:30:48,960
Speaker 1: critically for technology. But look at the big tech benchmarks

578
00:30:48,960 --> 00:30:52,160
Speaker 1: and maybe you'd be okay at thinking it wasn't as

579
00:30:52,200 --> 00:30:54,720
Speaker 1: crazy as many felt. Four and a half percent higher

580
00:30:54,720 --> 00:30:57,360
Speaker 1: on the NASTAC over the last five days, Big Tech

581
00:30:57,640 --> 00:31:31,240
Speaker 1: still pretty being attractive this has been big time for

582
00:31:31,320 --> 00:31:34,880
Speaker 1: a global VC roundup. Pt Teal has fifty million dollars

583
00:31:34,960 --> 00:31:37,440
Speaker 1: or had fifty million dollars of his own money in

584
00:31:37,520 --> 00:31:40,640
Speaker 1: Silicon Valley Bank when it went under, the Financial Times reports.

585
00:31:40,680 --> 00:31:43,160
Speaker 1: Teal says he did not draw down from his own

586
00:31:43,200 --> 00:31:45,840
Speaker 1: account because he believed the bank would not fail, even

587
00:31:45,920 --> 00:31:49,440
Speaker 1: though his founders fund had warned its portfolio companies to

588
00:31:49,560 --> 00:31:54,160
Speaker 1: move money away from the tech focus lender. Malaysia's Patronus

589
00:31:54,280 --> 00:31:56,960
Speaker 1: plans to expand its corporate vcarm by up to two

590
00:31:57,080 --> 00:32:00,920
Speaker 1: hundred million as early as April, according to Router's citing sources.

591
00:32:00,960 --> 00:32:04,680
Speaker 1: The branch will focus on making innovation and technology investments

592
00:32:04,720 --> 00:32:08,720
Speaker 1: across Asia Pacific, but the plan still being finalized. And finally,

593
00:32:08,800 --> 00:32:12,520
Speaker 1: Walmarts is investing another two hundred million dollars in Indian

594
00:32:12,600 --> 00:32:15,680
Speaker 1: payments arm Phone pay. The investment was done at a

595
00:32:15,720 --> 00:32:18,520
Speaker 1: pre money valuation of twelve billion dollars and it's part

596
00:32:18,520 --> 00:32:21,240
Speaker 1: of an ongoing financing effort to raise a total of

597
00:32:21,360 --> 00:32:24,240
Speaker 1: up to one billion dollars for the startup Caroline and

598
00:32:24,360 --> 00:32:26,920
Speaker 1: Let's dig in to the flow of money at the moment,

599
00:32:26,920 --> 00:32:29,959
Speaker 1: particularly at around the impact the current banking crisis were

600
00:32:30,000 --> 00:32:33,760
Speaker 1: still consumed in how it's unfolded, who it's tainted, who

601
00:32:33,760 --> 00:32:36,720
Speaker 1: it's managed to highlight their strength. The VC world, of course,

602
00:32:36,800 --> 00:32:38,520
Speaker 1: is one that we're going to focus on. The Silicon

603
00:32:38,600 --> 00:32:42,040
Speaker 1: Valley Bank and others within the realm still being a concern.

604
00:32:42,320 --> 00:32:44,360
Speaker 1: We've got a perfect voice, Finnode Cosal, a founder of

605
00:32:44,400 --> 00:32:47,080
Speaker 1: Cosal Ventures with us, and I say we are not

606
00:32:47,200 --> 00:32:50,640
Speaker 1: quite out the woods yet because First Republic Bank still struggling,

607
00:32:50,800 --> 00:32:53,960
Speaker 1: still needing support from other banks in the system. Are

608
00:32:54,000 --> 00:32:56,480
Speaker 1: we through the woods or do you think there's still

609
00:32:56,520 --> 00:33:00,840
Speaker 1: more areas of concern for ode as we be for

610
00:33:01,000 --> 00:33:05,960
Speaker 1: sure is completely safe today. It is ensured by the FDIC.

611
00:33:06,240 --> 00:33:09,680
Speaker 1: So in fact it's the best place to money put

612
00:33:09,720 --> 00:33:14,200
Speaker 1: money because it's yielding more better interest rates than treasury

613
00:33:14,640 --> 00:33:18,479
Speaker 1: and it's very very safe or just as safe in

614
00:33:18,520 --> 00:33:21,440
Speaker 1: many ways. You over the course of the crisis, we

615
00:33:21,520 --> 00:33:25,320
Speaker 1: can wanted to make it safe for your own portfolio companies.

616
00:33:25,640 --> 00:33:27,880
Speaker 1: Look at a tweet we're tweeting out on March twelve

617
00:33:28,280 --> 00:33:31,880
Speaker 1: talking about how you we're not using LP money and

618
00:33:31,920 --> 00:33:35,200
Speaker 1: you're trying to help your companies basically using through loans

619
00:33:35,440 --> 00:33:38,160
Speaker 1: basically depending on your own personal wealth and known that

620
00:33:38,120 --> 00:33:43,720
Speaker 1: has been reported. What made you decide to do this? Well,

621
00:33:43,720 --> 00:33:47,800
Speaker 1: our companies needed help. We didn't want to and couldn't

622
00:33:47,920 --> 00:33:52,280
Speaker 1: use LP money unless we were in ensuring great terms

623
00:33:52,280 --> 00:33:55,640
Speaker 1: for our LPs. So we decide to use personal funds

624
00:33:55,760 --> 00:34:01,320
Speaker 1: and at zero at the zero profit for us, but

625
00:34:01,960 --> 00:34:06,960
Speaker 1: provide launch to our companies directly from our personal lenders

626
00:34:07,480 --> 00:34:12,440
Speaker 1: to the companies. You know, I understand next week you

627
00:34:12,480 --> 00:34:16,160
Speaker 1: will be one of many traveling to Washington, DC for

628
00:34:16,280 --> 00:34:18,239
Speaker 1: a summit of sorts. What is it that you'll be

629
00:34:18,320 --> 00:34:24,160
Speaker 1: discussing with your industry peers and others. Well, next week's

630
00:34:24,200 --> 00:34:29,440
Speaker 1: dinner that has been reported in various publications is about

631
00:34:29,520 --> 00:34:33,400
Speaker 1: the influence of China in our technology race and economic

632
00:34:33,480 --> 00:34:40,239
Speaker 1: war with China. So that's the topic of discussion. Have

633
00:34:40,360 --> 00:34:44,920
Speaker 1: you the last week for some has been unthinkably hard.

634
00:34:45,560 --> 00:34:49,160
Speaker 1: For others, you know, they moved quickly. My question is

635
00:34:49,239 --> 00:34:52,080
Speaker 1: has this derailed all of the things that your firm

636
00:34:52,120 --> 00:34:55,440
Speaker 1: and the venture community were working on or does business

637
00:34:55,480 --> 00:34:57,840
Speaker 1: now carry on as normal, the writing of checks, the

638
00:34:57,920 --> 00:35:03,160
Speaker 1: focus on AI. I believe in a few months, three

639
00:35:03,200 --> 00:35:07,120
Speaker 1: to six months, business will be back to normal. We

640
00:35:07,239 --> 00:35:11,080
Speaker 1: of course encouraged our founders to leave everything but three

641
00:35:11,120 --> 00:35:14,759
Speaker 1: months of money. Yeah, in Silicon Valley Bank have three

642
00:35:14,800 --> 00:35:18,319
Speaker 1: months worth of cash outside, so we didn't want to

643
00:35:18,360 --> 00:35:22,279
Speaker 1: cause a bank run. Unfortunately, all our peers didn't do

644
00:35:22,320 --> 00:35:25,880
Speaker 1: the same, so we saw the phenomena that we saw.

645
00:35:26,440 --> 00:35:30,520
Speaker 1: At this point, FDIC money is safe. We're encouraging our

646
00:35:30,520 --> 00:35:35,560
Speaker 1: founders to put money back in SVB, so we are

647
00:35:35,640 --> 00:35:38,680
Speaker 1: in pretty good shape now. I think the interest in

648
00:35:38,719 --> 00:35:41,880
Speaker 1: AI is driven by fundamentals, not by hype. I believe,

649
00:35:41,920 --> 00:35:45,640
Speaker 1: though there is plenty of hype too. I'm pretty excited

650
00:35:45,680 --> 00:35:51,840
Speaker 1: about where AI and some other technologies can lead us. Caroline,

651
00:35:51,880 --> 00:35:54,799
Speaker 1: I think that the key unanswered question, and it may

652
00:35:54,840 --> 00:35:58,160
Speaker 1: take time, is who's accountable for what happened? Right we're

653
00:35:58,160 --> 00:36:01,600
Speaker 1: still asking how this happened, but who let it happen?

654
00:36:01,920 --> 00:36:04,840
Speaker 1: And no, do you have a perspective on that because

655
00:36:04,840 --> 00:36:08,080
Speaker 1: some look at the VC community itself and say, kind

656
00:36:08,080 --> 00:36:12,840
Speaker 1: of added fuel to the fire. Well, the VC community

657
00:36:12,920 --> 00:36:16,400
Speaker 1: added purely to the fire by being a little irresponsible

658
00:36:16,520 --> 00:36:20,719
Speaker 1: at the last minute. I believe what SPV was doing

659
00:36:20,840 --> 00:36:25,440
Speaker 1: was running a hedge fund based on interest rates inside

660
00:36:25,440 --> 00:36:28,200
Speaker 1: a bank, and that was where the fourth lies. I believe,

661
00:36:28,880 --> 00:36:32,920
Speaker 1: to the best of the information I have and that

662
00:36:33,160 --> 00:36:37,800
Speaker 1: is such should be subject to regulation. Meanwhile, of course,

663
00:36:37,920 --> 00:36:40,279
Speaker 1: the VC community comes together once again as you just

664
00:36:40,400 --> 00:36:43,920
Speaker 1: articulated a dinner in Washington, thinking about relationships between the

665
00:36:44,000 --> 00:36:46,640
Speaker 1: US and China. We think of the tiktoksy of course,

666
00:36:46,719 --> 00:36:50,680
Speaker 1: going in front of Congress next week. What is the

667
00:36:50,800 --> 00:36:54,080
Speaker 1: status between China and the US in terms of technology

668
00:36:54,080 --> 00:36:58,000
Speaker 1: at the moment. Well, the dinner was set up long

669
00:36:58,120 --> 00:37:02,920
Speaker 1: before either the current or TikTok events. It's not really

670
00:37:02,960 --> 00:37:08,680
Speaker 1: related to TikTok. It's related to the larger technological race

671
00:37:08,800 --> 00:37:15,120
Speaker 1: we have for global technology power and hence economic power globally,

672
00:37:15,320 --> 00:37:18,080
Speaker 1: and I think many of us feel the US and

673
00:37:18,239 --> 00:37:23,880
Speaker 1: the Western world should in general investing technology and continue

674
00:37:23,920 --> 00:37:29,680
Speaker 1: to be part of that winning strategy. I hope venture

675
00:37:29,719 --> 00:37:32,480
Speaker 1: capital has been a big part of GDP growth in

676
00:37:32,520 --> 00:37:36,120
Speaker 1: the US. It's been a big part of innovation, and

677
00:37:36,200 --> 00:37:39,360
Speaker 1: I hope it continues to be and it's critically important

678
00:37:39,360 --> 00:37:44,560
Speaker 1: for the Western world. That happened. Then, TikTok and AI

679
00:37:44,719 --> 00:37:48,040
Speaker 1: are two fields that seems to be increasingly at the

680
00:37:48,080 --> 00:37:51,239
Speaker 1: center of the relationship between the United States and China.

681
00:37:51,400 --> 00:37:55,319
Speaker 1: Let's start with TikTok Bloomberg's reported that US officials are

682
00:37:55,400 --> 00:37:59,160
Speaker 1: essentially saying to bite, dance, sell your interests in TikTok,

683
00:37:59,280 --> 00:38:01,960
Speaker 1: or it will be and from the United States as

684
00:38:02,000 --> 00:38:04,879
Speaker 1: a long time name in the world of technology in

685
00:38:04,880 --> 00:38:09,040
Speaker 1: this country. What do you make of that? Well, they've

686
00:38:09,080 --> 00:38:11,760
Speaker 1: kick in the position they have. I think in general

687
00:38:11,880 --> 00:38:15,279
Speaker 1: TikTok has been used for spying on US citizens. So

688
00:38:16,280 --> 00:38:20,120
Speaker 1: if that's true, and I don't have as much information

689
00:38:20,280 --> 00:38:24,200
Speaker 1: as the administration does, then we clearly should penalize that

690
00:38:24,320 --> 00:38:28,200
Speaker 1: kind of behavior. As to the AI battle, it's a

691
00:38:28,320 --> 00:38:31,399
Speaker 1: much more critical battle than the TikTok battle, and a

692
00:38:31,480 --> 00:38:37,680
Speaker 1: general race for technological superiority and AI and hence all

693
00:38:37,760 --> 00:38:40,840
Speaker 1: the areas of effects which in twenty twenty five years

694
00:38:41,000 --> 00:38:45,600
Speaker 1: will be almost all of the kind of Then, Caroline

695
00:38:45,640 --> 00:38:50,200
Speaker 1: and I have been talking a lot about artificial intelligence

696
00:38:50,280 --> 00:38:52,279
Speaker 1: for weeks and months, and we joke that at the

697
00:38:52,360 --> 00:38:54,759
Speaker 1: beginning of this week the air went out of the

698
00:38:54,840 --> 00:38:58,799
Speaker 1: room for AI, but actually it started to creep back

699
00:38:58,840 --> 00:39:01,799
Speaker 1: in in recent days. Is that an area you're still

700
00:39:01,840 --> 00:39:05,200
Speaker 1: focused on and will you be writing checks for AI

701
00:39:05,280 --> 00:39:11,400
Speaker 1: related startups? Absolutely? Remember we invested in AI in Open

702
00:39:11,440 --> 00:39:14,440
Speaker 1: AI five years ago. You were the first venture invested

703
00:39:14,520 --> 00:39:18,839
Speaker 1: in open air, and the trend is long term and consistent,

704
00:39:19,000 --> 00:39:21,960
Speaker 1: and I've been writing about it for the last ten years.

705
00:39:22,480 --> 00:39:26,680
Speaker 1: AI It's implications for the economy, it's implications for cyber war,

706
00:39:26,920 --> 00:39:33,040
Speaker 1: for war both defense and non defense uses. It's a

707
00:39:33,160 --> 00:39:38,080
Speaker 1: very important technology. I think small time perturbations like we

708
00:39:38,200 --> 00:39:43,879
Speaker 1: saw and it was significant but still temporary perturbation will

709
00:39:43,920 --> 00:39:47,200
Speaker 1: not affect the trend in AI and our investing interest

710
00:39:47,680 --> 00:39:50,440
Speaker 1: in AI. It does want to take all open AI.

711
00:39:51,280 --> 00:39:56,160
Speaker 1: GPT four really seemed to impress I do didn't initially

712
00:39:56,239 --> 00:39:58,040
Speaker 1: and now it seems to be getting some applaud with

713
00:39:58,080 --> 00:40:02,680
Speaker 1: its chat GPT like Ernie. Can there be space for

714
00:40:02,840 --> 00:40:08,160
Speaker 1: many really additive startups in this space. I do believe

715
00:40:08,200 --> 00:40:11,279
Speaker 1: there'll be multiple platforms. Google has a very good play

716
00:40:11,320 --> 00:40:15,680
Speaker 1: in Microsoft has embraced open the Eye, Bailou will of

717
00:40:15,719 --> 00:40:19,520
Speaker 1: course with backing from the Chinese government's try and win.

718
00:40:20,040 --> 00:40:23,239
Speaker 1: I do think there's room for more than one platform.

719
00:40:23,840 --> 00:40:27,759
Speaker 1: I do think number of applications and TARPA these platforms

720
00:40:27,800 --> 00:40:31,360
Speaker 1: will be very very large and very very robust area

721
00:40:31,480 --> 00:40:35,279
Speaker 1: for investment for no Cosla fascinating to talk to you

722
00:40:35,320 --> 00:40:38,080
Speaker 1: through the ramifications of this last week. From a banking perspective,

723
00:40:38,280 --> 00:40:40,719
Speaker 1: from an investing perspective, from an AI perspective, Fan ro

724
00:40:40,800 --> 00:40:50,719
Speaker 1: Cosla Ventures, we thank you stay well. Look, aside from

725
00:40:50,760 --> 00:40:53,200
Speaker 1: bank collapses, it's what everyone else has been talking about.

726
00:40:53,280 --> 00:40:55,959
Speaker 1: The March Madness bracket, the manners that was of course

727
00:40:56,000 --> 00:40:58,920
Speaker 1: for many, all the planning preparation going into brackets. It's

728
00:40:58,960 --> 00:41:03,520
Speaker 1: been brown out. Number fifteen seed Princeton's shock victory against

729
00:41:03,520 --> 00:41:06,759
Speaker 1: the number two seeded Arizona. Now we at Bloomberg were

730
00:41:06,800 --> 00:41:08,719
Speaker 1: like numbers, we like estimates, and we are some of

731
00:41:08,760 --> 00:41:11,600
Speaker 1: the wealthiest to Wall Street on CEOs of technology companies

732
00:41:11,640 --> 00:41:14,840
Speaker 1: to join this year's at Bloomberg brackets for a cause fundraiser.

733
00:41:14,840 --> 00:41:17,680
Speaker 1: The entrance donate twenty thousand, and they select a charity

734
00:41:17,680 --> 00:41:20,240
Speaker 1: that receives the funds if they're in the top three finisher.

735
00:41:20,360 --> 00:41:22,640
Speaker 1: And the men's and women's brackets the results nearly forty

736
00:41:22,680 --> 00:41:25,560
Speaker 1: percent of the roughly fifty participants seemed to be choosing

737
00:41:25,560 --> 00:41:29,239
Speaker 1: Alabama to win the men's NCAA basketball tournament in Alabama,

738
00:41:29,320 --> 00:41:33,040
Speaker 1: which will play against Alburn on Saturday. Ed whining Wolf

739
00:41:33,080 --> 00:41:35,760
Speaker 1: heard she came second last year. Yeah, look, I married

740
00:41:35,800 --> 00:41:37,800
Speaker 1: into a Brewin's household and I don't really have a

741
00:41:37,840 --> 00:41:39,680
Speaker 1: strong opinion on it either way, but I know our

742
00:41:39,800 --> 00:41:42,080
Speaker 1: terminal audience does and the world is watching on social

743
00:41:43,120 --> 00:41:45,799
Speaker 1: It is all about university basketball, folks. Meanwhile, that does

744
00:41:45,800 --> 00:41:48,280
Speaker 1: it for this edition of Blomberg Technology. Follow us on Twitter.

745
00:41:48,360 --> 00:41:49,800
Speaker 1: Top of the hour. We're going to have a Twitter

746
00:41:49,800 --> 00:41:54,520
Speaker 1: spaces ed big conversation coming up on the week. This

747
00:41:54,920 --> 00:41:55,640
Speaker 1: is Bloomberg