Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Ja I met Lolow in San Francisco in for
Speaker 1: Emily Chang. This is Bloomberg Technology coming up in the
Speaker 1: next hour. Crypto sector shake up f t X pounder
Speaker 1: Sam Bankman Freed signing an option to buy crypto lender
Speaker 1: block five, an exclusive conversation with SPF and why he
Speaker 1: thinks there are synergies between the two businesses. Plus misinformation
Speaker 1: moment one week on from the U. S. Supreme Court
Speaker 1: overturning Roe v. Wade, doctors tell Bloomberg potentially deadly abortion
Speaker 1: advice is spreading online and Tesla test The ev makers
Speaker 1: expected to report quartly production numbers this weekend. A hot
Speaker 1: streak of records is on the line as Shanghai shutdowns
Speaker 1: and supply chain snags leave Wall Street to cut forecasts.
Speaker 1: Let's continue the week, Let's switch to crypto. Fd X
Speaker 1: sign an agreement with block fire today. The deal includes
Speaker 1: an option to purchase the crypto lender for as much
Speaker 1: as two hundred and forty million dollars. Sam Bankman Freed,
Speaker 1: co founder of FDx, spoke exclusively with Bloomberg Shinnaldi Bassak
Speaker 1: about how the deal and the companies will align. H
Speaker 1: I think that there are a lot of ways that
Speaker 1: our products can work together and can mesh together in
Speaker 1: a way that's sort of better than you know, either
Speaker 1: would be independently. And I will also say that you know,
Speaker 1: they've been working really productively with regulators on you know,
Speaker 1: building out regulated yield products and licensed yield products, which
Speaker 1: which you know were it stated about and excited that
Speaker 1: they've been doing it in a regulated way. I think
Speaker 1: that's the healthy way to do it. And I think
Speaker 1: that's to serve them well, um, you know long term, um.
Speaker 1: And it's something that you know worksage work with as well.
Speaker 1: You know you told political that f TX is looking
Speaker 1: for opportunities to bail out, you know, places where customers
Speaker 1: would otherwise be underwater. But are you worried here about
Speaker 1: moral hazard at all that bailing out a company may
Speaker 1: not actually be what's best for the industry at large.
Speaker 1: It's a good question, and you know, and and guessing
Speaker 1: what you're getting at there is like does that bail
Speaker 1: out a company that really should have failed? And and
Speaker 1: teacher is the wrong lesson to that company. Um. And
Speaker 1: I think what I would say, there's two things. First
Speaker 1: of all, I'm way more excited to bail out customers
Speaker 1: than shareholders, right. And so the focus of this is
Speaker 1: not how do we deliver as much shareholder value do
Speaker 1: troubled assets as possible? Right, It's how do we protect customers?
Speaker 1: And I think those imply pretty different things. Um uh.
Speaker 1: So that that's that's one thing that will say. And
Speaker 1: I think that one of them is way more important
Speaker 1: for the ecosystem and the other is the one that
Speaker 1: has the biggest moral hazard. Um. The other thing is
Speaker 1: that um uh, is that you know, we are trying
Speaker 1: to find who were the responsible players who were building
Speaker 1: out you know, a good business you know, how to
Speaker 1: sustainable model and you know would use short term liquidity
Speaker 1: um and and and and that that could help protect
Speaker 1: customer funds fundamentally built you know, a a a real
Speaker 1: valuable business that I think, um, you know, had something
Speaker 1: real to offer to customers rather than you know, which
Speaker 1: companies honestly should never have existed probably and um and
Speaker 1: you know as of today, you know, maybe we should
Speaker 1: just let let them sort of uh you know, diet
Speaker 1: quiet death joining me. Now is Bloomberg shallybas act for
Speaker 1: more and I mean sly what strikes me this is
Speaker 1: a guy who who's just strengthening his grip on this industry, right,
Speaker 1: talk us about, talk to us about I guess the
Speaker 1: importance of this deal in the landscape. Yeah, it's it
Speaker 1: is a really interesting deal because remember there are other
Speaker 1: firms that have paused withdrawals. A lot of people talking
Speaker 1: about how Black five was one that, with the help
Speaker 1: of sam BANKM and Freedom f TX, has been able
Speaker 1: to make it through and be there for their clients
Speaker 1: even in the midst of these really tumultuous times. I
Speaker 1: want to point out also what's happening with Voyager, because
Speaker 1: they are suspending certain operations and you do you they
Speaker 1: have the withdrawal issue as well. And remember another sam
Speaker 1: Bankman Free entity had lended them credit line as well,
Speaker 1: So that question of moral hazard is a real one.
Speaker 1: Who will make it through and who won't. It's interesting
Speaker 1: on block Fire as well, Like if I slept through
Speaker 1: the last year, I thought this was a three billion
Speaker 1: dollar company. This seems to value them at a much
Speaker 1: lower evaluation. Yeah, absolutely, And you know, you think about
Speaker 1: it when from three billions to potentially one billion, and
Speaker 1: now you have them much low or four million dollars
Speaker 1: with the credit line, as well as that money that
Speaker 1: you had been talking about here two million dollars with
Speaker 1: that option to purchase, and you think about it. And
Speaker 1: when we spoke to Sam, he really said opportunistic buying
Speaker 1: valuations were really a big reason here. But he also
Speaker 1: hinted that really some firms will just simply not get
Speaker 1: back to their former glory. Yeah, I think on the
Speaker 1: Bloomberg Tamino, I'm seeing this guy's name over and over again.
Speaker 1: What did he have to say about M and A.
Speaker 1: In fact, why don't we just take a listen, because
Speaker 1: you asked in directly about some recent reports on interesting
Speaker 1: robin hood. Would we do a large acquisition if it
Speaker 1: did make sense and if all the parties were aligned
Speaker 1: on it, you know we could in theory. Um, you know,
Speaker 1: we we have you know, a few billion on our
Speaker 1: balance sheet right now. We are profitable. Um, you know,
Speaker 1: we are able to further capitalize if we need. Tom
Speaker 1: I mean no name check, but takeaway, yeah, I mean
Speaker 1: the idea that they could buy something. He said, we
Speaker 1: could buy something for billions of dollars, not thirty billion dollars,
Speaker 1: but billions of dollars is certainly possible. Here we talked
Speaker 1: about by versus build because f t X has traditionally
Speaker 1: built before. Of course, you know robin Hood fast growth
Speaker 1: company with a lot of employees under their employee base
Speaker 1: and f t X runs really really lean ed and
Speaker 1: so does that really fit together at the end of
Speaker 1: the day, he has a lot of ambitions, remember a
Speaker 1: firm like robin Hood. He also talked about potentially distressed
Speaker 1: crypto minors. But again it's got to be a strategic
Speaker 1: fit at the end of the day when you take
Speaker 1: a look at what's happening between this potential robin Hood wanderlust,
Speaker 1: the block FI option to purchase maybe crypto miners. The
Speaker 1: question at the end of the day is who does
Speaker 1: Sam Bankman Freed want to be uh And it's got
Speaker 1: to be more than JP Morgan when you look at
Speaker 1: a company that is coming out of this crypto winter
Speaker 1: merging trade FI and defy and looking to the future
Speaker 1: for for what this new market structure could be under
Speaker 1: a new regulatory regime. Right bloom Motion Alie Bassett, my
Speaker 1: good mate, thank you. We'll see you later in the
Speaker 1: show and Crypto will also be on the minds of those.
Speaker 1: Next week in some valley little road trip for us,
Speaker 1: Bloomberg will be there, starting to lie sick for the
Speaker 1: number of great guests, including so far's Anthony no To
Speaker 1: twenty three and me c O and Wijki, Event Brights,
Speaker 1: Kevin Harts, and many others. You don't want to miss it.
Speaker 1: Today marks one week since the U. S. Supreme Court
Speaker 1: overturned Row v. Wade, which allowed women to access an
Speaker 1: abortion if they needed one. In one week's time, medical
Speaker 1: professionals have told Bloomberg that they've seen an uptick in
Speaker 1: the number of social media posts promoting various herbs, tonics,
Speaker 1: and other dangerous substances and not viable substitutes for abortion.
Speaker 1: For more and all of this, including social media's role
Speaker 1: in the conversation on abortion, I'm joined by Bloomberg's Alex
Speaker 1: Brinker along with David Kirkpatrick, founder of Techonomy. Ali gonna
Speaker 1: start with you, what have we learned from doctors? What
Speaker 1: is it that they're seeing and where are they seeing it? Yeah,
Speaker 1: and these doctors are are kind of sounding the alarm
Speaker 1: um a lot earlier, maybe because they are now used
Speaker 1: to this pattern. We have a a health issue. We
Speaker 1: saw it with COVID, we saw it with baby formula,
Speaker 1: and we have social media a place where people go
Speaker 1: to find the latest hack. The problem is, um, we're
Speaker 1: seeing some of these hacks, Um, some of these at
Speaker 1: home solutions start to bleed into really serious health issues
Speaker 1: like lack of abortion care for women. So already in
Speaker 1: less than a week, we have seen at home tonics, herbs,
Speaker 1: things that doctors Bloomberg talked to said are dangerous, potentially fatal.
Speaker 1: We've seen these posts and content pop up across TikTok,
Speaker 1: across Twitter, across Facebook and Instagram. So it's basically everywhere
Speaker 1: if you know where to look, or if you just
Speaker 1: happen to be passively scrolling through your feed and have
Speaker 1: some of this, um what doctors would call misinformation pop
Speaker 1: up in your social media. Well, I get what you mean.
Speaker 1: Right when you're scrolling through Instagram, even when you're on Twitter,
Speaker 1: any social media platform, you come across something that doesn't
Speaker 1: seem to be of any substance. It's it's kind of
Speaker 1: packaged in a lighthearted way. David, how many times have
Speaker 1: we've had this conversation about a number of topics are
Speaker 1: you surprised that the platforms weren't sort of more proactive
Speaker 1: in thinking about this kind of information and how it's
Speaker 1: being shared. That is an understatement, and as Alex points out,
Speaker 1: I mean, we all unfortunately have gotten used to this
Speaker 1: pattern pretty much whenever it comes to any kind of
Speaker 1: misinformation because, for for several reasons, social media generally and
Speaker 1: met US companies in particular, UM have designed their systems
Speaker 1: in a way that make it very hard for them
Speaker 1: to detect and remediate misinformation of any type. And then separately,
Speaker 1: they really have a disincentive to do so because they
Speaker 1: get revenue from eyeballs and attention and also from ads,
Speaker 1: many of which shouldn't be there in the first place.
Speaker 1: For example, you know, Meta allows prescription drug ads to
Speaker 1: go to anyone above eighteen in the United States. They
Speaker 1: don't even have to do that. They could have said
Speaker 1: a much higher limit for that. And you know, prescription
Speaker 1: drug ads are only consumer directed in the United States
Speaker 1: and New Zealand of all developed countries. So you know,
Speaker 1: we have a lot of problems, Alex. When Bloomberg was
Speaker 1: speaking to medical professionals, they raised an issue, which is
Speaker 1: that you know, it's often easier to seek information or
Speaker 1: advice online than it is to book an appointment to
Speaker 1: go and see your practitioner or whatever. Can you explain
Speaker 1: the concerns that doctors had with that respect, of course,
Speaker 1: and I can break it into a couple of groups.
Speaker 1: Let's say you are a an individual in a state
Speaker 1: that still has access to abortion. It might take seven
Speaker 1: weeks to get into see your primary care doctor. But
Speaker 1: if you're somebody who is seeking an abortion in the
Speaker 1: state where it is suddenly not available, you don't your options.
Speaker 1: You don't know where to look, but you're used to,
Speaker 1: you know, getting your advice from everything firm how to
Speaker 1: style your outfit, to you know what the healthiest meal
Speaker 1: is you can put on your dinner table. You're gonna
Speaker 1: turn to social media. It's there. It's passive and these
Speaker 1: this information is kind of being packaged in this um
Speaker 1: entertainment meets advice, UM, kind of passively going through your
Speaker 1: eyeballs into your brain in a way that feels um
Speaker 1: much with it feels like it has a lot more
Speaker 1: levity than the serious of this information. So um. You know,
Speaker 1: even if you're somebody who still has access and you
Speaker 1: see a quick fix for something that is a really
Speaker 1: serious health issue. You know, folks are used to getting
Speaker 1: this information in this way right now, I think, so
Speaker 1: I want to stick with you. Move to another story.
Speaker 1: Tik Tik TikTok confirming that Chinese nationals will have some
Speaker 1: access to US user data. Can you explain what the
Speaker 1: latest is? I know this is the story you've been covering. Yeah,
Speaker 1: absolutely so. TikTok responded in a letter today to UM
Speaker 1: nine senators who had basically asked TikTok a lot of
Speaker 1: questions that we are starting to hear a lot in
Speaker 1: regards to the company who has access to US users data?
Speaker 1: Do any China employees have access to US users data?
Speaker 1: What about the Chinese government? And hey, what about the algorithm?
Speaker 1: Where does that fall? So there was a big report
Speaker 1: from BuzzFeed a couple of weeks ago. Senator sent a
Speaker 1: letter to them, and TikTok CEO came back today with
Speaker 1: the response basically clarifying and confirming that yes, some employees
Speaker 1: in China do have access to publicly available data for
Speaker 1: TikTok users. This includes things like your videos, comments. But
Speaker 1: he's also saying the company is developing something called Project Texas.
Speaker 1: Basically this is their solution that they're working with the
Speaker 1: US government to court and off US users data, but
Speaker 1: only specific US users data, um the the identifiers, the names,
Speaker 1: the addresses, things that or what we can expect. So
Speaker 1: they're basically coming back saying, hey, this is where we stand. Look,
Speaker 1: this letter came through today. There are folks in the
Speaker 1: US government who are already coming back saying this is
Speaker 1: not enough. I can guarantee you. As we start to
Speaker 1: end closer to things like the mid terms, and questions
Speaker 1: around the veracity of information and is their influence from
Speaker 1: China and US voters start to sneak into uh the
Speaker 1: into the ether here, these questions will continue to get
Speaker 1: louder from US officials. David, your reaction to that, please, Well.
Speaker 1: While I seldom agree with anything, Marsha Blackburn says, I
Speaker 1: have to say that he was quoted by Alex in
Speaker 1: her story today saying that pretty much, if you use TikTok,
Speaker 1: you should assume your data is in the hands of
Speaker 1: the Chinese government. And unfortunately, that is what a lot
Speaker 1: of US observers have recognized for a long time. The
Speaker 1: fact that TikTok's management is directly confirming that today in effect,
Speaker 1: is what is really news here. So you know, it
Speaker 1: amazes me that people aren't We're concerned about this, and
Speaker 1: this is an area where I think these Republican congress
Speaker 1: people and Republican FCC members are really rightly focusing on
Speaker 1: a real issue. David, I want to bring you some
Speaker 1: news just crossing the Bloomberg terminal, Google saying that it's
Speaker 1: going to begin deleting location history and its systems that
Speaker 1: it identifies as being personal information. It gives the example
Speaker 1: of certain medical facilities, for example, the change dudes come
Speaker 1: into effect in the coming weeks. Facilities could include counseling
Speaker 1: centers or domestic violence shelters, abortion clinics, fertility centers. Seems
Speaker 1: to be linked to, you know, search and maps and
Speaker 1: when one might be seeking a destination. What's your sense
Speaker 1: of how Alphabet and Google handling data and privacy at
Speaker 1: this time. Well, I think that's very good news, and
Speaker 1: I'm really glad you told us that. I think Google
Speaker 1: is handling data and privacy better than it used to.
Speaker 1: And I think it's feeling a lot of pressure from
Speaker 1: Apple in particular, because Apple is so rigid about this
Speaker 1: and so principled about privacy. So I think it's great
Speaker 1: to see Alphabet and Google moving more firmly in the
Speaker 1: direction of by default trying to protect user data. That's
Speaker 1: really welcome. David, very quickly, give twenty seconds, give me
Speaker 1: your big tech outlook right now. What's the one thing
Speaker 1: you're watching? Oh my gosh, the the exaggeration of the
Speaker 1: metaverse actually is the thing that I find the most
Speaker 1: kind of satisfying. I think there is absurd over promising
Speaker 1: going on right now about where the kind of consumer
Speaker 1: Internet is going in the near term. There's no way
Speaker 1: it's going to be metaversity in anytime soon. So I
Speaker 1: find that amusing. There's plenty of other things going on.
Speaker 1: I mean, obviously the stocks are not great opportunities for
Speaker 1: the short term because they got so valued, so highly valued,
Speaker 1: I couldn't resist. Sorry. Technology Teconomy founded David Kopatrick and
Speaker 1: my mate bloombergs Alex Brinka. Good to see you. Thanks
Speaker 1: to you both. And just coming up on Tuesday, we'll
Speaker 1: have FCC commission a Brending car on the show, where
Speaker 1: we'll ask him about TikTok. Coming up, Spotify's bet on
Speaker 1: podcasting rather than music streaming. Has it paid off? We'll
Speaker 1: discuss this is Bloomberg. Let's take a look at Spotify,
Speaker 1: the music streaming platform. Stock is down almost six this year,
Speaker 1: even after spotify buys move into podcasts made it the
Speaker 1: world's biggest audio service. The idea podcasting offers Spotify exclusive material,
Speaker 1: forcing other tech giants to carry its service, and creating
Speaker 1: a revenue stream music labels can't touch. So why is
Speaker 1: it in trouble? Let's break it all down with Bloomberg's
Speaker 1: Lucas Shure, who wrote about this in quite a lot
Speaker 1: of detail and a fantastic Business Week piece. The strategy working,
Speaker 1: you know, I'd say it's a mixed bag right now.
Speaker 1: It's it's working in the sun that more and more
Speaker 1: people are what are listening to podcasts on Spotify? About
Speaker 1: nine million of Spotify's users listen to podcasts. The revenue
Speaker 1: that it generates from podcasting is growing at a at
Speaker 1: a big clip. But Spotify has spent a lot of money,
Speaker 1: more than a billion dollars so far. And you spend
Speaker 1: all that money and podcasting makes up about seven percent
Speaker 1: of listening and two percent of revenue. And they've done
Speaker 1: a lot of expensive deals with big name talent that
Speaker 1: hasn't gone anywhere, and so there are a lot of
Speaker 1: people inside and outside the company who are questioning where
Speaker 1: some of that money is going. At the heart of
Speaker 1: any good story is is a name a person, And
Speaker 1: for Spotify, that's dull on ostrof Right, What's what's her
Speaker 1: role be and how successful has she been? So she's
Speaker 1: the chief content officer, she also oversees the advertising business.
Speaker 1: A long time TV executive who didn't have a lot
Speaker 1: of background in music or in podcasting before she joined Spotify.
Speaker 1: You know, she's the a in a lot of ways,
Speaker 1: the architect of the strategy. There's some people who work
Speaker 1: for her who were very instrumental in it as well,
Speaker 1: but she in particular has been a big drive. Are
Speaker 1: these deals with big name talent? Uh? You know, the
Speaker 1: the Obama is an higher ground, the Royals, some filmmakers,
Speaker 1: some social media celebrities, Kim Kardashian and there have not
Speaker 1: been a lot of big shows to come out of
Speaker 1: those deals. The big names are important, right and thinking
Speaker 1: about Joe Rogan, shout out, Draymond Green show have been
Speaker 1: a big one for me over the last few months.
Speaker 1: The Obamas, we'll slippa forward. Are they just going to
Speaker 1: have to sign up more names to keep this going.
Speaker 1: You know, a lot of it is going to come
Speaker 1: down to how big the advertising business can get and
Speaker 1: how much Spotify can start to replicate. Uh, you know,
Speaker 1: a service like YouTube, those big name shows are really
Speaker 1: great for getting people in and for marketing. But the
Speaker 1: core and of that Spotify business is supposed to be
Speaker 1: the mass of podcasts. You know, they host four million
Speaker 1: podcast give or take right now right, they said that
Speaker 1: by I think they want to have like fifty million
Speaker 1: creators on the platform. That is a lot of people.
Speaker 1: And they figure if they have that many people posting,
Speaker 1: they will kind of hoover up all the demand and
Speaker 1: they'll be able to sell ads against all these all
Speaker 1: these users, and their ad business is growing, but it's
Speaker 1: still only about of the overall high Alright, bloom Bog's
Speaker 1: Lucas Shore out in l A all Things Spotify, Thank
Speaker 1: you very much. Welcome back to Bloomberg Technology. I'm Ed
Speaker 1: Lovelow in San Francisco. Tesla ends the week in the green,
Speaker 1: but it's been slipping, making it one of the worst
Speaker 1: weeks of the year. This is the company is still
Speaker 1: dealing with delivery issues with its Shanghai factory remaining in lockdown.
Speaker 1: For more on all of this, I'm joined by Bloomberg's
Speaker 1: Shawn o'caine out in Austin, Sean. The expectation we get
Speaker 1: quarterly delivery figures this weekend what you're looking for? I mean,
Speaker 1: the consensus seems to be in the high two thousands,
Speaker 1: maybe around two and sixty thou or so. Which if
Speaker 1: that's the case, we're talking about a quarter that is
Speaker 1: about ut or so delivery short of around where the
Speaker 1: last two quarters, as were an elon Musk at the
Speaker 1: end of que one had said that they expected basically
Speaker 1: a flat quarter to quarter change or or no change.
Speaker 1: So if there is a drop, then we can see
Speaker 1: pretty much just how much we should attribute to the
Speaker 1: Shanghai lockdowns and the trouble that they've had over at
Speaker 1: that plan. So so what is the latest and what
Speaker 1: test is dealing with? Right? We haven't heard from me
Speaker 1: a little mosque for a little while. He's not sent
Speaker 1: any tweets. But in Shanghai things have been tough. I mean,
Speaker 1: their story is still about growth as it kind of
Speaker 1: always has been. I mean they're set up to open
Speaker 1: or have already sort of opened new factories both here
Speaker 1: in Austin and in Berlin. Uh Musk recently made in
Speaker 1: comments in an interview at the end of May. Uh
Speaker 1: maybe the claim that both of these new factories are
Speaker 1: money furnaces, and really what he means by that is,
Speaker 1: you know, he said they're losing billions of dollars right now.
Speaker 1: The point he was trying to make there is that
Speaker 1: as they scale up production and try to get from
Speaker 1: a hundred units a week or a hous and vehicles
Speaker 1: a week, they're going to be spending far more money
Speaker 1: on building out as factories than they are making any
Speaker 1: money back from them. And you know, I think a
Speaker 1: lot of people looked at that is possibly negative. The
Speaker 1: thing that keep in mind with that is that, like,
Speaker 1: that's just the nature of it, and it's not going
Speaker 1: to slow Tesla down. Tesla's actually still working on expanding,
Speaker 1: especially the factory here in Texas, even though it doesn't
Speaker 1: have production up to the level that he wants it
Speaker 1: at yet. Well, let's talk about it. For those that
Speaker 1: don't know, Sean is out in Austin. He's awesome. If
Speaker 1: you don't follow him on Twitter at s O Kane one,
Speaker 1: I work with him every single day towards me about Austin, Like,
Speaker 1: what is the grand master plan for Austin? What how
Speaker 1: is this Tesla factory change that city? I mean, right now,
Speaker 1: it's still feels very much like the times that I
Speaker 1: went to uh outside Reno when the Giga factory was
Speaker 1: still in its first few years there, the original one
Speaker 1: where you know, certainly you see a lot of Tesla
Speaker 1: cars here more and more every day, but it is
Speaker 1: now a topic of conversation. It's the kind of thing
Speaker 1: that it's an easy conversation to strike up with people
Speaker 1: who have lived here and worked here. Everybody has a
Speaker 1: different opinion on it um, but it is it is
Speaker 1: something that is sort of you know, it is a
Speaker 1: very large facility, but it's also something that looms sort
Speaker 1: of metaphorically in people's minds now that it's up and
Speaker 1: running even right sort of in a in a small volume.
Speaker 1: So it's it's something that is changing what is going
Speaker 1: on here. I think the bigger question about like what
Speaker 1: Elon Must actually wants to do in Austin still is
Speaker 1: an answered. Although we've seen some reporting, including from our
Speaker 1: own Sarah McBride at Bloomberg News, about all the different
Speaker 1: things that he needs to do with other companies like
Speaker 1: the boring company here. I mean, he has a lot
Speaker 1: more plans that he's really publicly led on too for
Speaker 1: this city, right Bloomberg Shawn O'Kaine, awesome, Thank you very much.
Speaker 1: Let's go from public market pain to private markets gain.
Speaker 1: It's been a wild week in the world of venture capital.
Speaker 1: Despite recession fears volatility, new funds are popping me up
Speaker 1: around the world. One report, so KOA Capital is trying
Speaker 1: to raise two point two five billion from investors for
Speaker 1: two new funds. Canada, CIBC Innovation Banking launched a new
Speaker 1: one point five billion dollar venture fund, and around the
Speaker 1: world money seems to be flowing to earlier stage startups,
Speaker 1: but deal counts down. That's a lot's take on board
Speaker 1: joining us to discuss. Kathie gaw, partner of Sapphire Ventures.
Speaker 1: I mean, the world is a bit crazy right now.
Speaker 1: But you, as a venture capitalist, how are you seeing things? Well?
Speaker 1: First of all, it's so great to be back here,
Speaker 1: ed um, wow, it's still I first right, just they
Speaker 1: made it, We made it. You know. The past six
Speaker 1: months have been the worst six months, as you reported
Speaker 1: on earlier in the stock market for over fifty years.
Speaker 1: There's a lot of turmoil in the markets. And I
Speaker 1: always say this that uncertainty is a foe of the markets.
Speaker 1: From my seat in the private markets, we haven't fully
Speaker 1: seen the impact of the effect on the public markets
Speaker 1: flow into the private markets. That's a good point. We've
Speaker 1: got this chart that looks at deal count, basically the
Speaker 1: number of rounds or venture backed startups bringing in fundraising,
Speaker 1: and between the first quarter in second quarter, there is
Speaker 1: this dip, you know, we see it on our screens,
Speaker 1: particularly pronounced in early stage, but there still seems to
Speaker 1: be money flowing to early stage. I mean, where are
Speaker 1: you looking right now in the world. Is now a
Speaker 1: great time to fund young startups? Or are you looking
Speaker 1: at later stages. That's a very complicated situation for me personally.
Speaker 1: I focus on the Series B all the way up
Speaker 1: to pre I p O stage. When we think about
Speaker 1: what's been happening in the markets, all this volatility, everything
Speaker 1: from you know, record high interest rates to rising inflation
Speaker 1: and even geopolitical risk. We saw that impact in the
Speaker 1: public markets. The next group of assets to be affected
Speaker 1: are the very late stage private markets companies like Karna
Speaker 1: and instat cart and then it's kind of my stage.
Speaker 1: My stage is a little bit frozen right now, because,
Speaker 1: on one hand, a lot of companies raise a lot
Speaker 1: of money in they might have thirty months of runway.
Speaker 1: They don't need to absolutely raise now. On the other hand,
Speaker 1: investors don't know where the valuation is going to set
Speaker 1: at all quite just yet. I would to bring you
Speaker 1: up on that point. Down rounds. You know, we've seen
Speaker 1: a few. What's your read on that it's not necessarily
Speaker 1: a bad thing. But what's your take? It's definitely not
Speaker 1: necessarily a bad thing. I think it's inevitable given some
Speaker 1: of the run ups that we saw in and it
Speaker 1: might feel really bad, you know, with all the headlines
Speaker 1: we're seeing around layoffs and everything like that. But this
Speaker 1: is an opportunity for companies to re evaluate what they're
Speaker 1: actually worth and prepare themselves for future rounds that they
Speaker 1: may have to raise. I want to ask you about opportunities,
Speaker 1: but we just showed some of your portfolio companies on
Speaker 1: the screen. What are you telling your founders, you know,
Speaker 1: what advice are you giving to them if there is
Speaker 1: a recession looming about how they manage their businesses? About
Speaker 1: their cash. You're telling them, you know, in any times
Speaker 1: with uncertainty, there's so many things they can't control, But
Speaker 1: what can they do to gain ball control? Right to
Speaker 1: control their own destiny. So the top two things are
Speaker 1: Number one, cash is king in a recession. Keep a
Speaker 1: very very sharp eye in cash and a related matter,
Speaker 1: really focus on efficiency, take a hard look at your
Speaker 1: go to market and overall burn efficiency and make changes
Speaker 1: if you have to. And also it's an opportunity to
Speaker 1: play offensive. You know, we always talk about some of
Speaker 1: these great companies. Are you always come in with a
Speaker 1: smile on your face, You're you're optimistic about opportunity. Where
Speaker 1: do you see the opportunity? Oh, I'm very very optimistic.
Speaker 1: I mean at a high level, we're very very bullish
Speaker 1: on general cloud based staff. I think the transformation to
Speaker 1: cloud is still in this early endings. And there are
Speaker 1: many pockets that I am focused on in my firm,
Speaker 1: sapphires focus on that I think are going to be
Speaker 1: doing well regardless of any market. You know, things like
Speaker 1: cyber security right always going to be a hot topic.
Speaker 1: Things like future of work, things like healthcare and how
Speaker 1: technology can transform healthcare. With the greatest respect cloud sas
Speaker 1: cybersecrazy that these things always come across in a lot
Speaker 1: of abstract you know, the president in everyday lives. How
Speaker 1: do you deter I mean, what's a real company, one
Speaker 1: that's product is going to thrive with those things being
Speaker 1: important to Corporate America the world. Yeah. We look at
Speaker 1: two things very very closely UM. The first one being
Speaker 1: how do customers actually use a product and do they
Speaker 1: love the product? This is where being a later stage
Speaker 1: investor is a little bit easier than a super early
Speaker 1: stage investor because the companies I'm looking at they have
Speaker 1: real customers. So we spend a lot of time talking
Speaker 1: to the customers and understanding, hey, is this solution really
Speaker 1: solving an important pain point for you? And importantly are
Speaker 1: you willing to pay for this solution. The second thing
Speaker 1: we look at is a proxy of how strong the
Speaker 1: product market fit is, and that's how efficiently can you
Speaker 1: sell your product very quickly? Are you optimistic about the
Speaker 1: second half of UM. I think it's going to take
Speaker 1: some time for the changes to flow through the market.
Speaker 1: I think we're in for some hard times ahead. I
Speaker 1: don't know if it's going to be one quarter, two quarters,
Speaker 1: three quarters, or more. But again my message to everyone
Speaker 1: is this is an opportunity to look inwards, you know,
Speaker 1: get your house and shape and be ready for the future.
Speaker 1: Sapphire Ventures, Cafe Gow, thank you, such a pleasure to
Speaker 1: have you here. Coming up crypto lawsuits from deceitful marketing
Speaker 1: to pump and dump schemes. Why there's an uptick in
Speaker 1: retail investor lawsuits and what the app called Do Not
Speaker 1: Pay wants to do about it? More on that. Next,
Speaker 1: this is gloom Bug. How do you take on a
Speaker 1: crypto lawsuit? People are dying to know, even VC investor
Speaker 1: Channa Pella Avatia reference one Bloomberg article on the battle
Speaker 1: of an investor with finance. Is it tried to sue
Speaker 1: the crypto platform and take a listen, lost one point
Speaker 1: two million dollars who wanted to file a lawsuit and
Speaker 1: they have every right to do that. UM couldn't even
Speaker 1: find the corporate entity to to actually file. This lawsuit
Speaker 1: against crypto has generated more than two hundred class action
Speaker 1: lawsuits and private litigation cases up more than fifty since
Speaker 1: the start of according to law firm Morrison Cohen, which
Speaker 1: attracks the activity. Our next guest, Joshua a Browder, CEO
Speaker 1: of Do Not Pay the Legal services chatbot that wants
Speaker 1: to help the average crypto investor get their money back,
Speaker 1: along with our crypto Contributortionalie Bassett back with us, Joshua,
Speaker 1: thank you for having me answer that question. How do
Speaker 1: you tackle a lawsuit like that? So everyone talks about
Speaker 1: class actions, but in all of these big companies, like
Speaker 1: Celsius's terms of service, they say that you can't actually
Speaker 1: sue them in federal court, but there's a loophole which
Speaker 1: says that you can sue them in small claims court.
Speaker 1: And so what my company does is we automate small
Speaker 1: claims court lawsuits. And so it's almost fitting that the
Speaker 1: answer to decentralized crypto fraud is thousands of small claims
Speaker 1: decentralized lawsuits. So, Joshua been excited to speak to you
Speaker 1: because you know that I went to law school and
Speaker 1: it was never cut out to be an attorney. Just
Speaker 1: bring me back to basics. He is laughing in New
Speaker 1: York and shes bring me back to basics. What is
Speaker 1: a chat bought lawyer? So do not pay his messioners
Speaker 1: to empower the consumer to fight back. We've been operating
Speaker 1: for about six years taking on big companies like Equifax
Speaker 1: and Comcast. When United doesn't refund your money, consumers come
Speaker 1: to us. And recently we decided why not help consumers
Speaker 1: get justice against these crypto companies that are freezing people's
Speaker 1: money like Celsius. Well, why have you chosen to move
Speaker 1: over to crypto companies? Obviously there are a lot of
Speaker 1: them right now, and if many of them that are
Speaker 1: freezing withdrawals at this point in time, and if you're
Speaker 1: a crypto customer, that is part of that pain. It's
Speaker 1: not like you have a lot of money left over
Speaker 1: to spend on a lawsuit like this. So why have
Speaker 1: you moved over from other forced arbitration clauses into into
Speaker 1: this world? So All Claims Court is an amazing tool.
Speaker 1: It can get consumers between ten and twenty five thousand
Speaker 1: dollars and it's a very easy process. A judge will
Speaker 1: often side with a consumer in their local jurisdiction just
Speaker 1: because they feel bad for them. And so if Celsius
Speaker 1: doesn't show up to all these small claims court lawsuits
Speaker 1: across the country, the consumer wins by default. And so
Speaker 1: because it's such an easy process, it only takes about
Speaker 1: a month or two, and it allows the consumer to
Speaker 1: get justice before these companies declare bankruptcy, which is looking
Speaker 1: very likely. What's the likelihood of really recouping funds here
Speaker 1: and how costly do you think it could be for
Speaker 1: a from like Celsius. So Celsius has to send someone
Speaker 1: in every single case, even if it's for ten thousand
Speaker 1: dollars sount So Do Not Pay has initiated over one thousand,
Speaker 1: five hundred lawsuits against Celsius in different parts of the country,
Speaker 1: even in rural towns. They have to stand a lawyer
Speaker 1: just to defend themselves, and in my opinion, I don't
Speaker 1: think they will and the consumers will when so even
Speaker 1: an average of ten tho dollars a lawsuit, these these
Speaker 1: small claims lawsuits are going to cost them millions um.
Speaker 1: But these are small retail investors who are getting their
Speaker 1: money back, and once a judgment has gotten in small
Speaker 1: claims court, you're actually at the front of the line
Speaker 1: in the bankruptcy proceeding. So it's very good that small
Speaker 1: retail investors can be ahead of the institutional investors if
Speaker 1: things really go bad with these big platforms. Joshua, can
Speaker 1: we talk about Twitter Yes, I spend a lot of
Speaker 1: time on Twitter. You spend quite a lot of time
Speaker 1: on Twitter. Yes, I'm addicted to Twitter. I'm not gonna
Speaker 1: go as far as to say I'm addicted. But there's
Speaker 1: a lot of tweeting about cryptocurrencies from very well known people,
Speaker 1: Elon Musk probably being the easiest example, through two accounts
Speaker 1: with very few users. But markets seem to move on tweets. Yes,
Speaker 1: what's your take on that. I think everything you say
Speaker 1: on Twitter is has to be legal and everything and
Speaker 1: the same standards as everything you say in real life.
Speaker 1: People think that just because it's an online platform they
Speaker 1: aren't held to the same standard it, but they really are,
Speaker 1: and we're seeing this in crypto fraud. We've used tweets
Speaker 1: in the past in small claims law lawsuits, and it's
Speaker 1: the same with moving markets and sec violations and things
Speaker 1: like that. Well, that's a fascinating question too, about tweets
Speaker 1: and where it falls in regard to customers getting bunny back,
Speaker 1: any any distortions in the markets. There's a lot of
Speaker 1: questions about even some of the advertising some of these
Speaker 1: crypto firms had done prior to pausing withdrawals. I mean,
Speaker 1: what type of um evidence does that create for the
Speaker 1: retail investor in terms of being encouraged to put their
Speaker 1: money into something that was not going to work out later, Well,
Speaker 1: if it seems too good to be true, it probably is.
Speaker 1: And a lot of these platforms one advertising the risks
Speaker 1: of getting interest rate properly. They were saying things like
Speaker 1: your money is safe and secure, you can get it
Speaker 1: back very quickly. And even though they buried in the
Speaker 1: times of service, they have all of these special clauses
Speaker 1: that's really not clear and consent based on like FTC guidelines,
Speaker 1: and so if you're not clear with the consumer, you
Speaker 1: will face all of this litigation and regulatory problems if
Speaker 1: things go badly. We're seeing a pretty ugly chart on
Speaker 1: the screen Bitcoin year to date one year, it's down
Speaker 1: a lot. That's been a part of the story. I'm
Speaker 1: going to use Shinnali's favorite word, regulation, you reckon that
Speaker 1: we'll see some more regulation in this space. I think
Speaker 1: we will. I think so many people will lose so
Speaker 1: much money that everyone is going to write to their
Speaker 1: congressmen do not pay. Also, does that to get as
Speaker 1: much regulation as possible be more specifical there, what exactly
Speaker 1: is do not pay asking for for regulation here, especially
Speaker 1: because you know there is a sense that the SEC
Speaker 1: might come down harder on the enforcement side than it
Speaker 1: will on the actual regulatory side in creating new rules.
Speaker 1: So all of these crypto companies generally have money transmitter licenses,
Speaker 1: which is a very low standard of regulation. What they're
Speaker 1: actually doing is something called being a broker ealer. And
Speaker 1: so at the very least, we would want them to
Speaker 1: all be licensed as broker dealers versus money transmitters. And
Speaker 1: I think that would lead to more disclosures and consumers
Speaker 1: feeling like they're better protected. And there are lots of
Speaker 1: legitimate companies like coin base who would probably go in
Speaker 1: that direction. But last legitimate players like Celsius that are
Speaker 1: speculating with funds um might not survive all right. Joshua Browder,
Speaker 1: CEO Do Not Pay, and Bloomberg's Shinnali Bassek thank you
Speaker 1: to you both. More news in the app store ecosystem,
Speaker 1: Google reached an agreement with US developers that will let
Speaker 1: consumers subscribe to services outside the company's play store. This
Speaker 1: after Apple made a similar deal last year with small developers.
Speaker 1: Bloomberg's scoop Dogg German joins us for more on this mark.
Speaker 1: How does this impact Google the for having me? Well,
Speaker 1: it doesn't really impact Google that much, right, So if
Speaker 1: they're gonna start allowing, just like Apple has allowed starting recently,
Speaker 1: is they're gonna allow if you're a third party developer
Speaker 1: to point users to the web essentially to subscribe to
Speaker 1: your services. Right. I still think a lot of people
Speaker 1: that are gonna want to subscribe to services within the
Speaker 1: actual apps themselves, which then they still have to use
Speaker 1: the Google Play processing engine, which then we'll give Google
Speaker 1: a percentage there, right, So I think most consumers are
Speaker 1: not going to want to go to the web to
Speaker 1: sign for applications, So I don't really think it's going
Speaker 1: to hurt Google long term at all. Obviously, a ninety
Speaker 1: million dollar payout is probably an hour's worth the revenue
Speaker 1: for Google, so that's not really gonna hurt them elsewhere.
Speaker 1: They also decided that they're going to keep that fifteen
Speaker 1: percent revenue share feed long term. That's for developers that
Speaker 1: make up to two million dollars per year on the
Speaker 1: Google Play Store. They never really said they would get
Speaker 1: rid of it, but at least they now have in
Speaker 1: writing as part of the settlement. They're not going to
Speaker 1: get rid of it, so you're not going to see
Speaker 1: that fifteen percent go up to act to any point soon.
Speaker 1: So that is an interesting little, you know, piece of
Speaker 1: the pie right there. Right, It's that's the kind of
Speaker 1: business side. This is about consumer choice, right drawl the
Speaker 1: parallel with Apple. What has the difference been since Apple
Speaker 1: made that same move last year? Yes, so right now,
Speaker 1: Apple and Google in terms of their app store distribution,
Speaker 1: in their policies, they're nearly at an identical point. The
Speaker 1: only differences is that Apple's fiftcent program where they charge
Speaker 1: a developer off the costs instead of that's only up
Speaker 1: to a million dollars in sales, Googles is going to
Speaker 1: be up to two million dollars of sale. So it's
Speaker 1: about doubles. That's really you know, the loan hold out
Speaker 1: big difference. You're seeing app removal transparency reports from both companies. Now,
Speaker 1: you're seeing the ability from both companies now to allow
Speaker 1: developers to advertise lower pricing from outside the Google Play
Speaker 1: Store and the Apple App Store. You're seeing this idea
Speaker 1: where they can go to the web to sign up
Speaker 1: for subscription services. You see that happening on both platforms,
Speaker 1: so they're really unequal footing right now in terms of
Speaker 1: consumer behavior, do we see any material fact like is
Speaker 1: it made consumers go out and and make different choices
Speaker 1: and they would have otherwise had to make when they
Speaker 1: were forced to stay within those platforms? You know, I
Speaker 1: think consumers only really care if they're going to be
Speaker 1: paying more money or less money. Right if Netflix is
Speaker 1: charging ten dollars a month if you sign up through
Speaker 1: their app, or if they're charging ten dollars a month
Speaker 1: if you go to sign up through their website. If
Speaker 1: I'm just a consumer, I'm going to just sign them
Speaker 1: through the app because it's much easier. Right, Apple and
Speaker 1: Google already have my billing information on hand. I don't
Speaker 1: need to go and make an account and sign up
Speaker 1: online and put my credit card information again. Right, So
Speaker 1: from a consumer choice perspective, I don't really think that's,
Speaker 1: you know, changing much. I think developers are need to
Speaker 1: adjust their pricing and tell consumers, hey, if you go
Speaker 1: to the web and in put your credit card information
Speaker 1: through the web and you go through that process, we're
Speaker 1: going to charge you seven dollars a month instead of
Speaker 1: ten dollars a month. But if pricing is equal on
Speaker 1: both platforms, I think any you know, normal consumer is
Speaker 1: going to go right through the absolutely Google play story.
Speaker 1: All right, Bloomberg's Mark German out in l A thank
Speaker 1: you that doesn't for this edition of Bloomberg Technology Rules
Speaker 1: Wall Street Week is up next from my colleague David Western.
Speaker 1: Next week Bloomberg and me will be in live in
Speaker 1: some Valley, Idaho. Media moguls, billionaires, and some of the
Speaker 1: biggest names from tech, media and business will converge on
Speaker 1: July six. Will bring you live reports from the ground
Speaker 1: and interviews with some of the n t S attendees,
Speaker 1: with Sophi c O nt NO to twenty three c
Speaker 1: O and with Jicky event Brights, Kevin Harts, and many
Speaker 1: others you definitely don't want to miss it. Will be
Speaker 1: there Tuesday onwards. This is Bloomberg