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Speaker 1: We're from Marhard where innovation, money and power.

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Speaker 2: Collie in Silicon Valley, NBN.

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Speaker 3: This is Bloomberg Technology with Caroline Hide and Ed Ludlove.

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Speaker 4: IM Ed Ludlow in San Francisco.

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Speaker 5: Caroline Hides out today this is Bloombag Technology. China's semiconductor

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Speaker 5: and electronics output drops in the first quarter as a

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Speaker 5: bullish rebound in the economy is.

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Speaker 4: At odds with a smartphone slow.

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Speaker 5: Down, and Apple pushes higher as Tim Cook opens the

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Speaker 5: iPhone maker's first store in India. We bring you the

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Speaker 5: details from Mumbai and California, and in Europe, bench capitalists

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Speaker 5: are on pace for their worst funding year since twenty fifteen.

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Speaker 5: Race Capitals Alfred Trung joins US to talk private markets.

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Speaker 5: Does less capital mean fewer checks being cut? Well, first,

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Speaker 5: it's going to check on those market's move As Katie

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Speaker 5: Greif found out in New York, Hi, Kittie Hi.

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Speaker 6: Ed, well, the bid has disappeared from the equity market.

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Speaker 6: You're looking at the S and P five hundred off

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Speaker 6: by about two tenths of a percent. The same thing

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Speaker 6: sort of goes for the NASAQ one hundred, those big

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Speaker 6: tech names. It's the financials that are interesting today. We're

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Speaker 6: actually off the session lows that sector down about three

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Speaker 6: tenths of percent.

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Speaker 7: We know that Goldman Bake of America big.

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Speaker 6: Wait today after reporting earnings earlier today, and the two

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Speaker 6: year treasure yield up slightly about two.

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Speaker 7: Basis points or so.

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Speaker 6: You can see we are above four twenty on the

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Speaker 6: two year treasure field.

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Speaker 7: Let's get to the fun stuff though. Let's talk about Bitcoin.

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Speaker 6: Bitcoin has been really interesting. It used to trade hand

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Speaker 6: in hand with those tech socks. You can see that

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Speaker 6: the relationship is really broken apart, and today's.

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Speaker 7: Action drives that point home.

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Speaker 6: You can see Bitcoin up by two and a half percent.

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Speaker 6: It is above thirty thousand once again. It's going to

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Speaker 6: be interesting to continue to watch this one and keep an.

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Speaker 7: Eye on that correlation.

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Speaker 6: But let's go from the big picture to some of

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Speaker 6: those micro own names, and we should start with Nvidia

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Speaker 6: higher by almost three percent today. It had one cell

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Speaker 6: rating left that was HSBC that in lists changing its

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Speaker 6: tune today a rare double upgrade. He went from a

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Speaker 6: cell to a bye can see that is filtering through

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Speaker 6: to n video shares. We're also looking at AMD. Not

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Speaker 6: too much action there no real news that stock is

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Speaker 6: hired by about half a percent or so on some

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Speaker 6: heavy volume two, so keep an eye on that. And

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Speaker 6: Southworth West Airlines briefly halted all of its flights due

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Speaker 6: to a technology issue. As we understand, those flights of

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Speaker 6: rezumed stock still off by about one point six percent.

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Speaker 5: Yeah, we're going to get a deeper report in Southwest

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Speaker 5: later on in the show. But it is interesting to

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Speaker 5: note a little outperformance in the chip space. Thank you,

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Speaker 5: Katie Greifert out in New York. So despite a bullish

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Speaker 5: rebound in the economy, China's production of chips and other

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Speaker 5: electronics are declining from slower sales as well as competitive

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Speaker 5: pressures from factories that are in other locations joining me

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Speaker 5: here in San Francisco, Bloomberg's Ian King. There is a

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Speaker 5: short term story here and there is a longer term story.

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Speaker 4: Let's start with the short term. What's happening?

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Speaker 8: Yeah, I mean, think about what the companies have told us.

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Speaker 8: I've said, Look, there's just too much inventory out there.

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Speaker 8: There isn't enough phone demand, there isn't enough PC demand.

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Speaker 8: We need to dig our way out of that mound

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Speaker 8: of inventory and then we can go back to shipping

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Speaker 8: towards what end demand is. The question is, well, where

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Speaker 8: is end demand? Are we pre pandemic levels or are

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Speaker 8: we at some level in between the pigs that we

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Speaker 8: saw during the pandemic. We'll see in the second.

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Speaker 5: Half that the broader debate is about supply chain de

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Speaker 5: risking or diversifying moving out of China. What does this

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Speaker 5: data signal about that?

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Speaker 8: I think the big underlying concern and we won't really

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Speaker 8: see that manifest itself until so the next year, the

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Speaker 8: year after when a lot of these factories get built.

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Speaker 8: Is governments everywhere around the world are saying, hey, we

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Speaker 8: want a chip industry, we want a chip industry, throwing

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Speaker 8: money at it. The economics that once drove where these

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Speaker 8: chip plans were made arguably being upturned. So are we

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Speaker 8: going to see excess.

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Speaker 5: Supply over the Taiwan straight there's a bit more feel

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Speaker 5: good about the state of chips and manufacturing TSMC. It's

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Speaker 5: interesting look at the data on the Bloomberg the subject

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Speaker 5: of our Techwatch column. A lot of bullishnists around that name.

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Speaker 8: Yeah, I mean TSMC is a conduit for everyone. So

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Speaker 8: if you believe in videos ai story, where does in

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Speaker 8: video get its chip mode in Taiwan at TSMC, So

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Speaker 8: you know, TSMC is kind of the way to play

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Speaker 8: every angle here. Even though smartphones and PCs are kind

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Speaker 8: of down, maybe AI is the play, as in videos

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Speaker 8: would suggest.

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Speaker 4: We I probably should have started with.

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Speaker 5: In video Katie mentioned it it's final cell rating gone

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Speaker 5: this morning, we'll bring up the where analysts see the

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Speaker 5: stop but lots of bullishnis and it's all, well, it's

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Speaker 5: partly about artificial intelligence.

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Speaker 8: Yeah, I mean the HSBC report which was the final

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Speaker 8: one to flip said, look, even though there aren't that

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Speaker 8: many AI chips in the world, these things cost ten

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Speaker 8: twenty grand each, right, that's ten times what a PC

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Speaker 8: GPU cost. So even if PCs are bad, AI is

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Speaker 8: good in terms of the ASP, the margins and everything else.

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Speaker 4: That's the argument, all right.

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Speaker 5: Thanks to Bloombozine king on Everything Semiconductor, and we talked

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Speaker 5: about China. China's economy actually growing at the fastest pace

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Speaker 5: in a year in the first quarter, giving the market

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Speaker 5: some optimism, which I have to say was pretty short

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Speaker 5: lived because we're now getting some jitters over a report

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Speaker 5: that Saint Louis fed President James Billard is in favor

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Speaker 5: at this time of more policy tightening, joining us to

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Speaker 5: talk these markets. Emily Hill, CEO and founding partner of

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Speaker 5: Bawasok Capital. Let's go to China first, Emily, in very

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Speaker 5: basic terms, there was optimism and around that the reopening

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Speaker 5: of the economy, strong GDP print. How in the markets

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Speaker 5: do you interpret that?

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Speaker 9: Well, we got pretty good GDP numbers out of China,

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Speaker 9: four to five percent. The government's target for the year

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Speaker 9: is about five So I think it shows that reopening

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Speaker 9: is having exactly the effect that people anticipated. Consumers are

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Speaker 9: getting out spending and that will be inflationary for the

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Speaker 9: rest of the global economy. More demand for commodities, including oil,

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Speaker 9: and so while it will help economic growth from an

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Speaker 9: inflation perspective, is probably not a positive.

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Speaker 5: Let's bring it back here to the United States and

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Speaker 5: the FED, and I promise you we will talk about

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Speaker 5: the technology sector. But Fed's Ballard saying that basically these

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Speaker 5: ideas of recession are a little bit overdone and that

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Speaker 5: he wants to see the discussion around more hikes. What's

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Speaker 5: your interpretation of FED speak right now?

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Speaker 9: I think that the market is continuing to not get

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Speaker 9: the FED message, and I've been saying that consistently and

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Speaker 9: I think part of the issue is that all of

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Speaker 9: the hikes in recent memory, if you look back at

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Speaker 9: the last thirty years, took place in an environment that

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Speaker 9: was essentially disinflationary. We had low inflation. It was a

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Speaker 9: very different environment than one we have now. And so

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Speaker 9: last thirty years, the pauses by the FED have extended

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Speaker 9: from about six months to about fourteen months. And you're

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Speaker 9: still seeing large parts of the market expecting a rate

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Speaker 9: cut by the end of this year. And so I

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Speaker 9: think they're going to be some disappointed investors. And so

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Speaker 9: I think, you know, while you do have some dubbish

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Speaker 9: members FED, none of them are really talking about a

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Speaker 9: rate cut in twenty twenty three. If we were to

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Speaker 9: have a rate cut, it would mean that we had

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Speaker 9: a hard landing, and that's not good for stock Emily.

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Speaker 5: This is Bloomberg Technology. Let's talk a little bit about

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Speaker 5: the technology sector. You know, if you expect this rate

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Speaker 5: and inflation regime to persist, where do you want to

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Speaker 5: position yourself within the technology landscape.

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Speaker 9: Well, you know, there's defensive tech, which I would put

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Speaker 9: Apple into that category, and I think it is sort

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Speaker 9: of Apple is the you know, Johnson and Johnson of

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Speaker 9: the twenty first century. Right, it's it's it's looked at

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Speaker 9: as a safe bet. You know, it now comprises seven

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Speaker 9: to eight percent of the S and P, which I

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Speaker 9: think is something that you know, should raise a few eyebrows.

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Speaker 9: But if the parts of you know, but I would

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Speaker 9: say that Apple and these this you know, safe defensive

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Speaker 9: tech is now a little bit richly priced. So if

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Speaker 9: I want to look in the tech sector for good values,

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Speaker 9: I'm going to look at or I would really actually

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Speaker 9: even look at tech adjacent sectors. So the parts of

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Speaker 9: the of the tech sector that have not gone through

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Speaker 9: the roof this year, you know, the NAVVAC one hundred

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Speaker 9: is up almost twenty percent, and I think that's overdone.

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Speaker 5: If you're going to be a little bit more dynamic

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Speaker 5: and look for opportunity in this market away from when

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Speaker 5: you call them a defensive riting, you're suggesting look at

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Speaker 5: the balance sheet, look at this company's staying power through session.

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Speaker 5: But technologically speaking, what are the corners of the market

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Speaker 5: that excite you?

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Speaker 9: Okay, well, I would say companies like Corning that are

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Speaker 9: manufacturing products used by Apple, so they make differentiated glass products.

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Speaker 9: They make the gorilla glass for iPhone ceramic shield. They

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Speaker 9: make ceramic substrates that are used in cutting carbon emissions,

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Speaker 9: and so they're you know, a less exciting, you know,

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Speaker 9: tech software innovative company. But this company has been innovating

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Speaker 9: for you know, one hundred and seventy years. So I've

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Speaker 9: got an alarm going off here that I'm going.

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Speaker 4: To now dealing with the technology in real time. We

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Speaker 4: love it.

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Speaker 5: This is Bloomberg Technology, put it into practice.

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Speaker 10: Bostonmai and that in Deli. Customers are lining up as

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Speaker 10: Apple opens its first two stores in India. They may

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Speaker 10: not be as unique as the Cube in New York,

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Speaker 10: but they have all the features that Apple stores do

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Speaker 10: worldwide today in Apple Apple store trade ins and the

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Speaker 10: customery site of CEO Tim Cook at the front door

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Speaker 10: on the first day welcoming the first few customers. Now

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Speaker 10: between meeting Prime Minister Mobi of knobbing with business leaders

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Speaker 10: here in Mumbai and then in Delhi and eating Mumbai

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Speaker 10: Verapau with film stars. Tim Cook's visit to India and

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Speaker 10: these store openings mark a significant next step in the

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Speaker 10: India Apple relationship. India presents a critical supply chain diversification

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Speaker 10: opportunity for Apple China manufactures more than ninety percent of

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Speaker 10: iPhones to airports. Tim Cook says Apple is taking all

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Speaker 10: that it learned in China out of scale China and

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Speaker 10: bringing that to bear here in India. Compared to its neighbor,

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Speaker 10: India is a tiny market for Apple, with just about

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Speaker 10: six billion dollars in annual sales last year, but that's

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Speaker 10: about fifty percent more than the year before. Local manufacturer

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Speaker 10: will allow Apple to reduce some of the import taxes

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Speaker 10: that it pays and make its products less expensive for

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Speaker 10: Indian consumers. Two of Apple's three contract manufacturers here in

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Speaker 10: the country are major beneficiaries of a flagship production incentive

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Speaker 10: scheme launched by Prime Minister or In Removie's government. India

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Speaker 10: too is hoping that Apple can pull a China here

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Speaker 10: help build a manufacturing ecosystem that boosts jobs and exports. Medikadoshi,

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Speaker 10: Bloomberg News.

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Speaker 5: That was Bloomberg's India Senior editor Mana Kadoshi. Let's guess

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Speaker 5: more on Apple's new expansion in India and bring in

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Speaker 5: Bloomberg's Mark German Mark You reported a few weeks ago

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Speaker 5: that even internally, Apple has been restructuring to to serve

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Speaker 5: that market in India. What's the latest there.

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Speaker 11: Yeah, India's all the hype for Apple right now. Really

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Speaker 11: outside of these two retail stores, right, these retail stores

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Speaker 11: probably not going to move the needle for Apple as

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Speaker 11: a company revenue wise, even in India itself. Most Apple

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Speaker 11: products in India and elsewhere, of course are going to

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Speaker 11: be bought by consumers at third party retail stores or

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Speaker 11: online or carrier partners, right. But this shows Apple's dedication

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Speaker 11: to the area. These stores are not small investments. You

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Speaker 11: have to hire one hundred people plus per store, You

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Speaker 11: have to do inventory. They're setting up the Genius Bar

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Speaker 11: and classes in India for the first time, and internally

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Speaker 11: this year, they're restructuring their sales organization. So the head

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Speaker 11: of India sales, right, what's known as their managing director

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Speaker 11: or country manager for India, is now going to report

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Speaker 11: directly to Apple's head of sales globally.

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Speaker 4: Right.

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Speaker 11: That's going to be a first. Previously you had a

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Speaker 11: vice president in between who oversaw India as well as

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Speaker 11: other emerging markets like Eastern Europe and Africa, So that

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Speaker 11: layer has been removed, sort of elevating the importance of

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Speaker 11: India within the company's operations itself.

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Speaker 5: There's a lot of data when it comes to Apple

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Speaker 5: flying out of India right now. You know that the

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Speaker 5: latest reporting from Bloomberg is from a sales perspective, six

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Speaker 5: billion dollars for the twelve month period through March. That's

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Speaker 5: just one side of the story. The other is supply

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Speaker 5: chain and manufacturing, right and I think the latest reporting

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Speaker 5: from Bloomberg is the dollar value of exports or iPhones

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Speaker 5: constructed in that nation hitting new milestone as well. What

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Speaker 5: is the strategy for Apple in having a supply chain

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Speaker 5: base in that nation.

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Speaker 11: Yeah, the strategy for Apple to have a supply chain

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Speaker 11: base in India is twofold one. You really need to

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Speaker 11: manufacture devices that you're selling in India in India itself

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Speaker 11: to save on some of those import taxes, right, which

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Speaker 11: are incredibly high as they are in Brazil, another place

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Speaker 11: where Apple has set up shop to produce iPhone. So

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Speaker 11: that's one part of it. The bigger component is diversification.

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Speaker 11: Right until now, Apple had mostly produced all of its

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Speaker 11: devices in China. But over the last four to five

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Speaker 11: years or so, you've seen issues related to tariffs, You've

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Speaker 11: seen the potential trade war between the US and China.

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Speaker 11: You've seen these COVID zero policies in China. You've seen

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Speaker 11: the impact of the virus in China on Apple's production,

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Speaker 11: so you've seen delay after delay to key products, the

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Speaker 11: MacBook Air last year, the iPhone fourteen Pro. This was

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Speaker 11: just at the end of twenty twenty two, right two

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Speaker 11: years plus into COVID, and you saw major shutdowns at Fox.

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Speaker 11: Cond prevented Apple from selling as many iPhone fourteen pros

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Speaker 11: as possible. So you really need to diversify to try

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Speaker 11: to avoid problems like that, and that's what you're seeing

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Speaker 11: Apple lay the groundwork for in India primarily, but also

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Speaker 11: in places like Vietnam, in Malaysia and Brazil as well,

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Speaker 11: plus a little bit of Ireland.

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Speaker 5: So that's the India story. Let's go a bit more global.

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Speaker 5: We asked our audience if you're going to buy an

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Speaker 5: Apple products, where do you do it?

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Speaker 4: Install?

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Speaker 5: Online or as you explaining from a third party right

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Speaker 5: other retailers. Fifty five percent respondents online is where they're buying.

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Speaker 5: What is store strategy broadly for Apple? What is the

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Speaker 5: future of the Apple store with its shiny glass windows?

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Speaker 11: You know, I think the poll is a little skewed, right,

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Speaker 11: it was a Twitter poll and perhaps our audience on Twitter.

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Speaker 11: There are people who you know want to go to

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Speaker 11: an Apple store to buy an iPhone, or they live

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Speaker 11: near Apple stores. But the actual truth is that the

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Speaker 11: vast majority of iPhones, at least they're actually purchased through

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Speaker 11: third party retailers and carriers, right, whether that's your Verizon

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Speaker 11: store in the US, or your O two store in

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Speaker 11: the UK, or in Best Buyer Target or elsewhere in

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Speaker 11: the US, or Carphone Warehouse in Europe.

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Speaker 6: Right.

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Speaker 11: And so Apple really wants a lot more of those

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Speaker 11: sales to flow through its own retail stores, right. And

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Speaker 11: we've seen a slow down and expansion for retail stores

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Speaker 11: over the last three to four years or so, primarily

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Speaker 11: due to COVID.

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Speaker 4: And other reasons.

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Speaker 11: They have so many at this point, But what you're

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Speaker 11: seeing is they're pushing more stores now in that Asia area, right.

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Speaker 11: You have India, They've opened more stores in Korea recently,

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Speaker 11: and then they have stores coming in Malaysia as well,

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Speaker 11: So clearly their expansion is Asia related at this point.

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Speaker 4: Mark.

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Speaker 5: The other big story of the week is Apple in

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Speaker 5: partnership with Goldman Sachs offering a savings account with a

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Speaker 5: four point one five percent yield.

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Speaker 4: Why is Apple doing that?

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Speaker 11: Yeah, so this was actually introduced several months ago, right,

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Speaker 11: it was a little bit delayed. It's now rolling out

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Speaker 11: in the Wallet app if you have an Apple Card.

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Speaker 11: And you know, some people think that Apple has big

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Speaker 11: ambitions here, and that is absolutely true.

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Speaker 4: But the reality is is.

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Speaker 11: That this is still going to be US only and

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Speaker 11: still Apple Card only. Eventually, this is probably going to

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Speaker 11: expand as the Apple Card expands, hopefully. I know a

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Speaker 11: lot of people in Europe and Canada want to get

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Speaker 11: their hands on that. Four point one five percent is

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Speaker 11: a pretty good rate. That's actually a quarter percent higher

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Speaker 11: than the rate that Goldman offers if you were to

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Speaker 11: create a savings account through the Goldman website versus through

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Speaker 11: the Apple Card. And this is Apple wanting to give

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Speaker 11: more people reasons.

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Speaker 4: To hold onto their iPhone.

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Speaker 11: Right, if you have your savings account in your phone,

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Speaker 11: It's gonna make it all but impossible every time they

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Speaker 11: add a new layer or a new feature to switch away

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Speaker 11: to Android or to another product.

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Speaker 5: All right, Bloomberg's Mark German with all the latest on Apple.

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Speaker 5: Thank you coming up. Revenue from fixed income one of

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Speaker 5: the main highlights as big banks like Goldman Sachs but

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Speaker 5: also Bank of America report quarterly results. We'll get more

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Speaker 5: on how those lenders performed coming.

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Speaker 4: Up, But let's take a look at some of the stocks.

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Speaker 4: How we're moving, how we're reacting. Some interesting numbers.

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Speaker 5: But you look at the equity markets in the banking space,

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Speaker 5: Goldman down one and a half percent, Bank of America

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Speaker 5: off by eight tens of a percent. Why we'll ask

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Speaker 5: that question next with Bloomberg shn Ali Bassak.

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Speaker 4: This is Bloomberg.

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Speaker 5: Coarsely results from Bank of America and Goldman Sachs show

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Speaker 5: different approaches to fixed income trading, with Bank of America

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Speaker 5: topping estimates as fixed income trading drives profits. Meanwhile, Goldman

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Speaker 5: Sacks failed to catalyze on the trend.

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Speaker 4: Who else is.

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Speaker 5: Here but Bloomberg News Will Street Reports Shnalie Bassett give

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Speaker 5: me the banking scorecard this Tuesday morning.

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Speaker 12: Yeah, it's hard not to pay attention to those trading

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Speaker 12: numbers because they've posted. Goldman Sachs had posted a drop

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Speaker 12: relative to the others that was worth noticing because you

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Speaker 12: saw beats a JP Morgan City Group and at Bank

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Speaker 12: of America. However, I would still say that these are

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Speaker 12: broader market moves as well, because you have the commodities

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Speaker 12: business not as strong as it was a year ago

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Speaker 12: when you had massive volatility in the industry, and same

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Speaker 12: with currencies.

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Speaker 7: I do want to point to.

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Speaker 12: Some other things in the businesses here too, because remember

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Speaker 12: Goldman Sacks had cut some headcount here, while Bank of

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Speaker 12: America became the third big bank to show increasing headcount.

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Speaker 12: That is a fascinating story at a time where we've

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Speaker 12: seen a lot of pressure on jobs across the entire market.

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Speaker 12: I want to take a little bit of a technology

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Speaker 12: angle here as well, because as we know Goldman, as

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Speaker 12: people look to how they are reshaping the firm to

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Speaker 12: the consumer business, the business tied to Marcus is of

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Speaker 12: high attention, and you have David Solomon, the CEO of

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Speaker 12: Goldman Sachs, saying that they're exploring a sale of green Sky.

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Speaker 12: This is the installment lending platform they had bought just

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Speaker 12: a couple of years ago. So that is still something

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Speaker 12: as Goldman transforms is weighing on its results in the

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Speaker 12: near term. But again we're looking over to the other side.

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Speaker 12: Bank of America, by the way, pulling in lots of

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Speaker 12: deposits here and lots of new clients rather as deposits

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Speaker 12: are under pressure as we watch to see how this

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Speaker 12: kind of banking trump tumble really starts to play out

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Speaker 12: so real quick.

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Speaker 5: There's also tension here for Goldman, right questions about hold

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Speaker 5: on you have Marcus, we also have now Apple savings

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Speaker 5: of four point one five percent yield. Don't they do

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Speaker 5: the same thing.

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Speaker 12: I'm really glad you asked that, because the answer is no.

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Speaker 12: On one hand, you do have a consumer business here.

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Speaker 12: They've folded into platform solutions by working with Apple at

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Speaker 12: four one point one five percent. This really intense yield

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Speaker 12: you're getting from that Apple savings product. With Goldman Sacks,

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Speaker 12: it's pulling deposits, lowering the cost of funding for gold

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Speaker 12: and Sacks, whereas they're selling loans associated with that Marcus

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Speaker 12: portfolio and as you know, lending to high networth individuals

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Speaker 12: and private wealth instead.

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Speaker 5: All right, Bloomberg Shnali Bassek on the Wall Street Beat,

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Speaker 5: Welcome back to Bloomberg Technology, Imed Lovelow in San Francisco.

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Speaker 5: Let's get a little check on the markets here. We

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Speaker 5: kind of turned a corner in the last few minutes,

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Speaker 5: and as that one hundred modestly hired just a tenth

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Speaker 5: to one percent, basically flat without performance in the chip sector.

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Speaker 5: Comments from Saint Louis FED President James Bullard basically saying

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Speaker 5: more hikes still on the table and the market digesting that.

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Speaker 5: Look at the short end of the curve, the two

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Speaker 5: year up by three basis points four point two two percent.

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Speaker 5: Bitcoin is Katie Greifeld was telling us earlier in the

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Speaker 5: program holding above thirty five, I was in US dollars

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Speaker 5: per token, So continue to track that. In the risk

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Speaker 5: asset space, There's one mover that we're keeping an eye on,

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Speaker 5: which is Southwest Airlines. A technology issue temporarily grounded a

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Speaker 5: number of flights that the Southwest team had to coordinate

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Speaker 5: with the FAA over We're off session lows, but still

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Speaker 5: lower one point two percent. Let's stick with that story

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Speaker 5: and get the latest details with Catherine Larkin, who's the

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Speaker 5: Global business editor at Bloomberg News. Simply put Kathy, what happened?

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Speaker 7: Oh, thanks for having me in.

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Speaker 3: So yet again we're seeing Southwest with a big operations problem.

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Speaker 3: Today they had a sixteen minute groundhoult that delayed over

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Speaker 3: one thousand planes this morning. They said it had to

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Speaker 3: do with a vendor supplied firewall prevented planes from taking

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Speaker 3: off or leaving the gate. And this is just you know,

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Speaker 3: while a short term problem was you know, sixteen minutes,

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Speaker 3: it really caused a big mass for this morning was

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Speaker 3: air traffic.

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Speaker 5: So as I said, the stock down one point two percent,

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Speaker 5: we have been markedly lower. It was sixteen minutes of chaos. Basically,

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Speaker 5: how impactful was it for flights around the country.

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Speaker 3: Yeah, so the problems actually seem to emerge even before

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Speaker 3: that ground hault was put in place. So, like I said,

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Speaker 3: over one thousand flights, you know, we're delayed. We wouldn't

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Speaker 3: be surprised to see several of these flights be canceled

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Speaker 3: by the end of the day. This is really a

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Speaker 3: ongoing problem for Southwest. You remember in December they stranded

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Speaker 3: tens of thousands of passengers right around the holidays. They

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Speaker 3: are just seeing, you know, repeat problems with their operations

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Speaker 3: and their scheduling. And even here if it's a vendor issue,

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Speaker 3: that still ultimately comes down to management to be accountable.

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Speaker 5: It's interesting because I remember last month there was a

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Speaker 5: partnership announce between Southwest and AWS on the cloud Side

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Speaker 5: to try and rectify some of the sort of long

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Speaker 5: standing systemic technological issues, begs the question of kind of

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Speaker 5: what happens next to Southwest?

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Speaker 3: Cathy, No, they are going to have to answer questions.

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Speaker 3: I mean, this is something like you said, they've been

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Speaker 3: talking about for the last several months. They say that

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Speaker 3: they're putting new systems in place to prevent future issues,

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Speaker 3: and yet here we go again today with a major issue,

441
00:23:10,600 --> 00:23:13,320
Speaker 3: you know as a big Groundhoult, not something we see

442
00:23:13,359 --> 00:23:16,199
Speaker 3: every day. They're going to have their earnings and just

443
00:23:16,840 --> 00:23:19,800
Speaker 3: you know, another like couple of weeks April twenty seventh,

444
00:23:19,840 --> 00:23:22,520
Speaker 3: and management's going to be asked to answer for this.

445
00:23:22,520 --> 00:23:25,760
Speaker 3: This is this is really unacceptable, and I think flyers

446
00:23:25,800 --> 00:23:27,480
Speaker 3: are going to start to think twice whether they want

447
00:23:27,480 --> 00:23:28,480
Speaker 3: a book with Southwest.

448
00:23:29,880 --> 00:23:33,199
Speaker 5: All right, Bloomberg's Global Business editor Katherin Larkin, thank you

449
00:23:33,280 --> 00:23:36,400
Speaker 5: very much. All Right, let's move from transport to cyber

450
00:23:36,440 --> 00:23:39,439
Speaker 5: and in cyber news, the European Union just proposed several

451
00:23:39,520 --> 00:23:43,600
Speaker 5: new cybersecurity efforts basically aimed at bolstering the block's response

452
00:23:43,640 --> 00:23:44,600
Speaker 5: to online threats.

453
00:23:44,800 --> 00:23:46,160
Speaker 4: The new plan, which.

454
00:23:45,920 --> 00:23:47,960
Speaker 5: Still needs to be approved, as is often the case

455
00:23:47,960 --> 00:23:51,280
Speaker 5: in Europe, would link national and cross border operations centers

456
00:23:51,320 --> 00:23:54,919
Speaker 5: across the EU to detect and act on threats, among

457
00:23:55,000 --> 00:23:59,480
Speaker 5: other measures. And what about the USA, how organizations grappling

458
00:23:59,760 --> 00:24:03,560
Speaker 5: with data security and what more can be done? Let's

459
00:24:03,560 --> 00:24:06,879
Speaker 5: ask people sending a CEO of Rubric who joins.

460
00:24:06,640 --> 00:24:08,199
Speaker 4: Me here in San Francisco.

461
00:24:08,280 --> 00:24:11,200
Speaker 5: You've just put out a pretty wide ranging report survey

462
00:24:11,280 --> 00:24:16,119
Speaker 5: based companies all across the country globally keep telling us

463
00:24:16,320 --> 00:24:19,000
Speaker 5: we're investing in cybersecurity data protection.

464
00:24:19,480 --> 00:24:20,639
Speaker 4: What did your report find?

465
00:24:21,119 --> 00:24:23,640
Speaker 13: Thank you so much for the opportunity. They are still

466
00:24:23,680 --> 00:24:28,679
Speaker 13: not secure. What we found was every organization has already

467
00:24:28,720 --> 00:24:32,640
Speaker 13: been infiltrated. Ninety nine percent of the IT and security

468
00:24:32,720 --> 00:24:37,480
Speaker 13: leader that we surveyed reported cyber incidents in their organization

469
00:24:37,920 --> 00:24:40,800
Speaker 13: and fifty two times last year, so almost one cyber

470
00:24:40,840 --> 00:24:44,760
Speaker 13: attack per week, which essentially means that all the preventions,

471
00:24:44,800 --> 00:24:47,479
Speaker 13: tools and technology that they have purchased over the years,

472
00:24:47,840 --> 00:24:50,159
Speaker 13: while needed, is not sufficient. It's not working.

473
00:24:51,480 --> 00:24:54,560
Speaker 5: A part of your findings your survey was actually many

474
00:24:54,600 --> 00:24:58,320
Speaker 5: cases companies across all sectors, do you have a backup plan?

475
00:24:58,760 --> 00:25:02,160
Speaker 5: It's just the backup plan work. Is that a lack

476
00:25:02,240 --> 00:25:06,280
Speaker 5: of investment, a lack of care, a lack of strategy

477
00:25:06,800 --> 00:25:09,879
Speaker 5: are the what is it the core of that vulnerability?

478
00:25:10,600 --> 00:25:14,960
Speaker 13: So legacy backup was built for human error recovery or

479
00:25:15,200 --> 00:25:18,920
Speaker 13: natural disaster recovery. It was not built for cyber As

480
00:25:18,960 --> 00:25:22,800
Speaker 13: a result, it is vulnerable. In our finding, what we

481
00:25:22,960 --> 00:25:27,600
Speaker 13: found that the nine out of the ten organizations actually

482
00:25:28,119 --> 00:25:31,639
Speaker 13: saw an attempt to manipulate their backup And what was

483
00:25:31,680 --> 00:25:34,280
Speaker 13: interesting was that three out of the four attempts we

484
00:25:34,280 --> 00:25:38,280
Speaker 13: are successful. So folks, fundamentally, the bad guys know that

485
00:25:38,400 --> 00:25:41,560
Speaker 13: it is a vulnerability for most of the organizations and

486
00:25:41,600 --> 00:25:42,600
Speaker 13: they are going after it.

487
00:25:42,920 --> 00:25:47,320
Speaker 5: The behavior of attackers and the industry response really interesting.

488
00:25:47,400 --> 00:25:50,960
Speaker 5: Ransomware being a great example. There are lots of incidences

489
00:25:51,040 --> 00:25:55,720
Speaker 5: of late where in a ransomware attack, the hackers leaked

490
00:25:55,920 --> 00:25:59,120
Speaker 5: the information they obtained, the data they attained in order

491
00:25:59,240 --> 00:26:01,080
Speaker 5: to kind of induce a pay up.

492
00:26:02,040 --> 00:26:03,359
Speaker 4: How do you protect against that?

493
00:26:04,520 --> 00:26:08,200
Speaker 13: Ransomware is particularly nasty problem. What we found was that

494
00:26:08,480 --> 00:26:13,320
Speaker 13: over seventy two percent of the organizations we surveyed paid ransom.

495
00:26:13,920 --> 00:26:17,560
Speaker 13: That was an incredible stance. And what is interesting is

496
00:26:17,600 --> 00:26:21,920
Speaker 13: that only sixteen percent of these organizations, after paying ransom,

497
00:26:22,280 --> 00:26:25,720
Speaker 13: could recover their data using the decryptor tool from the

498
00:26:25,800 --> 00:26:29,880
Speaker 13: threat actors. So essentially, businesses are at their wits end

499
00:26:30,240 --> 00:26:34,199
Speaker 13: to really take care of the ransomware problem, not only

500
00:26:34,600 --> 00:26:36,720
Speaker 13: in terms of the locking of their data, but as

501
00:26:36,760 --> 00:26:41,520
Speaker 13: you said, in terms of exposure of their business critical data,

502
00:26:41,560 --> 00:26:44,840
Speaker 13: whether it's customer data or their own internal data.

503
00:26:45,200 --> 00:26:46,679
Speaker 4: Rubrick, let's talk about the company.

504
00:26:46,680 --> 00:26:49,760
Speaker 5: I think you've been quite open about a cybersecurity incident

505
00:26:49,840 --> 00:26:53,919
Speaker 5: where hackers leak some data linked to you. Did you

506
00:26:54,000 --> 00:26:56,320
Speaker 5: pay a ransom in that case? What was the scenario

507
00:26:56,359 --> 00:26:57,040
Speaker 5: that played out?

508
00:26:57,800 --> 00:27:01,359
Speaker 13: I mean, a threat actor got hold of one of

509
00:27:01,359 --> 00:27:04,440
Speaker 13: our test bed system in the IT department, and we

510
00:27:04,480 --> 00:27:07,719
Speaker 13: actually laid it out what happened. It's a case study

511
00:27:07,840 --> 00:27:11,000
Speaker 13: as a case study as how they entered and what

512
00:27:11,040 --> 00:27:13,600
Speaker 13: did they do as part of our blog post. And

513
00:27:13,640 --> 00:27:16,040
Speaker 13: then the threat actually put our name in their name

514
00:27:16,080 --> 00:27:19,120
Speaker 13: and shame website. People who don't pay ransom.

515
00:27:18,840 --> 00:27:23,000
Speaker 4: They get their name and pay their ransom, and I mean.

516
00:27:22,840 --> 00:27:25,240
Speaker 13: It is very clear what we did we did not

517
00:27:26,080 --> 00:27:30,440
Speaker 13: and then and then what we did was we used

518
00:27:30,520 --> 00:27:34,639
Speaker 13: Rubric's own technology to restore our services. And this is

519
00:27:34,880 --> 00:27:39,000
Speaker 13: our core message that attacks are inevitable and businesses need

520
00:27:39,040 --> 00:27:41,720
Speaker 13: to have resilience strategy as opposed to just prevention.

521
00:27:42,200 --> 00:27:44,280
Speaker 5: I know there's a lot of interest in Rubric from

522
00:27:44,280 --> 00:27:49,359
Speaker 5: investors globally. Cybersecurity space seems to have some momentum behind it,

523
00:27:49,400 --> 00:27:52,560
Speaker 5: some dollars behind it. So do you take the opportunity

524
00:27:52,560 --> 00:27:54,480
Speaker 5: in that and go public? Have you thought about a

525
00:27:54,520 --> 00:27:55,959
Speaker 5: timeline to an IPO.

526
00:27:56,600 --> 00:27:58,440
Speaker 13: We want to be a public company. We want to

527
00:27:58,440 --> 00:28:02,359
Speaker 13: build a long term company. Going public is the is

528
00:28:02,400 --> 00:28:05,480
Speaker 13: the route. We are doing work on our end to

529
00:28:05,520 --> 00:28:08,119
Speaker 13: prepare ourselves. We are also looking at the at the

530
00:28:08,200 --> 00:28:11,119
Speaker 13: markets and trying to understand how where the market is.

531
00:28:11,760 --> 00:28:13,720
Speaker 13: We'll want to be public when the market is ready

532
00:28:13,760 --> 00:28:14,440
Speaker 13: and we are ready.

533
00:28:15,720 --> 00:28:18,720
Speaker 5: Fil Senya, CEO Rubig, thank you for joining me here

534
00:28:19,080 --> 00:28:22,640
Speaker 5: in San Francisco. Now we ramp up to Earth Day

535
00:28:22,680 --> 00:28:25,240
Speaker 5: this Saturday. We considue to take a look at new

536
00:28:25,280 --> 00:28:29,760
Speaker 5: technologies in the fight against climate change, like air travel.

537
00:28:30,080 --> 00:28:35,920
Speaker 5: Bloomberg Steve Rappaport has more.

538
00:28:41,520 --> 00:28:44,160
Speaker 2: The race to reduce carbon emissions from air travel has

539
00:28:44,160 --> 00:28:47,720
Speaker 2: seen multiple milestones this year, with two companies having completed

540
00:28:47,760 --> 00:28:51,760
Speaker 2: successful test flights of hydrogen powered aircrafts UK startup Zero

541
00:28:51,880 --> 00:28:54,720
Speaker 2: Obvious said it successfully conducted a test flight of a

542
00:28:54,800 --> 00:28:58,400
Speaker 2: hydrogen powered nineteen seater plane in January and in March,

543
00:28:58,400 --> 00:29:01,640
Speaker 2: at universal hydrogen plane, ifquipped with the largest hydrogen fuel

544
00:29:01,680 --> 00:29:04,680
Speaker 2: cell ever to power in aircraft, had a successful fifteen

545
00:29:04,680 --> 00:29:08,080
Speaker 2: minute flight of a modified Dash eight aircraft in Washington State.

546
00:29:08,400 --> 00:29:10,600
Speaker 1: It is the beginning of a flight test campaign that

547
00:29:10,640 --> 00:29:14,280
Speaker 1: will ultimately culminate in a twenty twenty five entry into

548
00:29:14,280 --> 00:29:20,880
Speaker 1: passenger service of fifty to sixty seat regional airplanes starting

549
00:29:20,920 --> 00:29:22,000
Speaker 1: with the ATR seventy two.

550
00:29:22,280 --> 00:29:24,840
Speaker 2: The Paris Agreement has a goal of net zero emission

551
00:29:24,880 --> 00:29:27,920
Speaker 2: air travel by twenty to fifty, and hydrogen powered planes

552
00:29:27,920 --> 00:29:29,840
Speaker 2: present one of the most promising options.

553
00:29:29,960 --> 00:29:32,080
Speaker 1: So aviation is one of the few sectors that's actually

554
00:29:32,120 --> 00:29:35,280
Speaker 1: forecasted to grow in emissions on the time horizon of

555
00:29:35,280 --> 00:29:41,000
Speaker 1: the Paris Agreement by twenty fifty, and so hydrogen probably

556
00:29:41,040 --> 00:29:44,720
Speaker 1: represents the best that only hope the sector really has

557
00:29:44,800 --> 00:29:48,560
Speaker 1: to make a meaningful dent right enough to offset continuing

558
00:29:48,560 --> 00:29:51,560
Speaker 1: traffic growth. The only alternative we as an industry have

559
00:29:51,680 --> 00:29:56,160
Speaker 1: is curtailing traffic volumes in order to reduce emissions.

560
00:29:56,720 --> 00:29:59,760
Speaker 2: Connect the Airlines, which operates regional flights between Toronto and

561
00:30:00,080 --> 00:30:03,040
Speaker 2: Cargo and Philadelphia, has already placed in order to convert

562
00:30:03,040 --> 00:30:06,480
Speaker 2: seventy five planes to hydrogen power through Universal Hydrogen and

563
00:30:06,600 --> 00:30:08,960
Speaker 2: Air New Zealand is working with a series of partners

564
00:30:09,000 --> 00:30:12,400
Speaker 2: as it looks to make its aircraft fleet zero emission. However,

565
00:30:12,520 --> 00:30:16,200
Speaker 2: several hurdles remain, including how best to transport the hydrogen

566
00:30:16,280 --> 00:30:19,600
Speaker 2: and space limitations of the hydrogen modules aboard the aircrafts.

567
00:30:19,840 --> 00:30:22,200
Speaker 2: But these test flights present a promising step in the

568
00:30:22,280 --> 00:30:26,680
Speaker 2: right direction as airlines work towards reduced emissions. Steve Rappaport,

569
00:30:26,720 --> 00:30:27,880
Speaker 2: Bloomberg News.

570
00:30:31,400 --> 00:30:34,560
Speaker 5: Let's stick with the hydrogen story. Nikola shares jumping as

571
00:30:34,640 --> 00:30:37,640
Speaker 5: much as twelve percent on Monday, now up around nine percent,

572
00:30:38,360 --> 00:30:41,160
Speaker 5: coming off an all time low last Friday. What's astonishing

573
00:30:41,160 --> 00:30:44,280
Speaker 5: with this stock up for a second consecutive day, biggest

574
00:30:44,320 --> 00:30:45,240
Speaker 5: two day game.

575
00:30:45,120 --> 00:30:46,320
Speaker 4: Going back to October.

576
00:30:47,200 --> 00:30:49,360
Speaker 5: This is one of those companies that went public virus

577
00:30:49,480 --> 00:30:52,880
Speaker 5: back twenty twenty. But the long term story is around

578
00:30:52,960 --> 00:30:57,080
Speaker 5: not just building fuel cell trucks, but also the hydrogen

579
00:30:57,120 --> 00:31:00,800
Speaker 5: infrastructure to power them. But again very at all, you know,

580
00:31:00,960 --> 00:31:03,880
Speaker 5: really really heading towards penny Stock territory.

581
00:31:04,000 --> 00:31:04,440
Speaker 4: Interesting.

582
00:31:04,440 --> 00:31:06,000
Speaker 5: Now coming up, we're going to take a pulse of

583
00:31:06,000 --> 00:31:09,360
Speaker 5: the VC landscape and what generative AI has to offer

584
00:31:09,400 --> 00:31:13,280
Speaker 5: two bench capitalists with Race Capital General Partner Alfred Chuang,

585
00:31:13,640 --> 00:31:14,320
Speaker 5: that's next.

586
00:31:14,720 --> 00:31:16,000
Speaker 4: This is Bloomberg.

587
00:31:27,600 --> 00:31:27,800
Speaker 14: Time.

588
00:31:27,840 --> 00:31:29,360
Speaker 4: Now for the VC roundup.

589
00:31:29,400 --> 00:31:32,200
Speaker 5: Let's start with Devon, the pioneer of the shale revolution

590
00:31:32,360 --> 00:31:35,600
Speaker 5: that reignited US oil and n actural gas production, is now

591
00:31:35,600 --> 00:31:39,000
Speaker 5: getting into geoform or renewable energy. A ten million dollar

592
00:31:39,080 --> 00:31:44,520
Speaker 5: investment into geofirm will startup Fervo Energy, and over in Europe,

593
00:31:44,560 --> 00:31:46,880
Speaker 5: Venge capital firms are on pace for their lowest year

594
00:31:46,880 --> 00:31:50,280
Speaker 5: of funding since twenty fifteen. A's the weaker stock market

595
00:31:50,400 --> 00:31:55,280
Speaker 5: rising interest rates is causing larger institutional investors LPs like

596
00:31:55,360 --> 00:31:59,560
Speaker 5: pension funds to pull back in the VC space. Let's

597
00:31:59,560 --> 00:32:02,600
Speaker 5: bring in Castle General Partner Alfred Juwang for his read

598
00:32:02,880 --> 00:32:06,160
Speaker 5: on the VC landscape here in the US, in Europe

599
00:32:06,520 --> 00:32:11,000
Speaker 5: and globally. You issued this like rallying cry in the

600
00:32:11,000 --> 00:32:15,160
Speaker 5: pandemic era. You wanted your founders and CEOs to be

601
00:32:15,320 --> 00:32:18,640
Speaker 5: more active, do more. You wanted your industry peers to

602
00:32:18,680 --> 00:32:21,240
Speaker 5: do more, and then the world sort of fell apart,

603
00:32:21,600 --> 00:32:25,440
Speaker 5: higher rates, the war in Ukraine. Where does your rallying

604
00:32:25,480 --> 00:32:26,280
Speaker 5: cry sit now?

605
00:32:27,560 --> 00:32:29,520
Speaker 14: Good morning and very good to see you. Thank God

606
00:32:29,560 --> 00:32:33,240
Speaker 14: for having me back most definitely. I think this is

607
00:32:33,560 --> 00:32:37,560
Speaker 14: an economic environment that clearly is for investing, is not

608
00:32:37,640 --> 00:32:39,760
Speaker 14: for the faint hearted at all. I think we have

609
00:32:39,840 --> 00:32:45,720
Speaker 14: seen VC funding for startups dropped over fifty percent down

610
00:32:45,760 --> 00:32:47,560
Speaker 14: to seventy six billion dollar in the first quarter.

611
00:32:47,640 --> 00:32:50,240
Speaker 4: That was globally. That globally, yes.

612
00:32:50,400 --> 00:32:53,160
Speaker 14: And then we saw all the specteal, the whole frenzy

613
00:32:53,200 --> 00:32:57,280
Speaker 14: went away. We also saw the IPR marketers and our

614
00:32:57,280 --> 00:33:01,800
Speaker 14: time law. We also heard Silken Value Bank went under

615
00:33:02,240 --> 00:33:06,560
Speaker 14: after four decades of service, specific specifically for our industry.

616
00:33:07,200 --> 00:33:09,920
Speaker 14: So these are a huge monumental impact that we've seen

617
00:33:10,280 --> 00:33:12,800
Speaker 14: in the industry yourself, so tough time.

618
00:33:12,920 --> 00:33:13,160
Speaker 4: Yeah.

619
00:33:13,400 --> 00:33:17,080
Speaker 5: I am really interested on the relationship between the public and

620
00:33:17,120 --> 00:33:20,920
Speaker 5: private markets, but also how you follow the same data

621
00:33:21,000 --> 00:33:23,480
Speaker 5: sets that the public market investor would be. So today

622
00:33:23,640 --> 00:33:26,280
Speaker 5: one of the stories is fed speak James Blood of

623
00:33:26,280 --> 00:33:28,960
Speaker 5: the Saint Louis fed saying actually more hikes. So if

624
00:33:29,000 --> 00:33:32,240
Speaker 5: you think about an inflation regime, the hike regime being

625
00:33:32,280 --> 00:33:34,960
Speaker 5: there for longer, how does that impact the mindset of

626
00:33:34,960 --> 00:33:35,920
Speaker 5: aventure capitalist.

627
00:33:36,440 --> 00:33:37,480
Speaker 4: So obviously it has.

628
00:33:37,360 --> 00:33:40,240
Speaker 14: An impact that's clearly have an impact on evaluation. So

629
00:33:40,280 --> 00:33:43,520
Speaker 14: if you look at like very lay stage deal like

630
00:33:43,600 --> 00:33:47,240
Speaker 14: Stripe is now down thirty percent during this time, so

631
00:33:47,280 --> 00:33:50,320
Speaker 14: we have to expect lay stage deals when its prices

632
00:33:50,320 --> 00:33:52,640
Speaker 14: goes down, it will triggle down all the way to

633
00:33:52,680 --> 00:33:56,240
Speaker 14: the earlier stage deal. The impact to the deals that

634
00:33:56,360 --> 00:33:59,280
Speaker 14: my team and I, that is capital are involved in

635
00:33:59,360 --> 00:34:03,320
Speaker 14: a very early they see than preseed in those particular

636
00:34:03,400 --> 00:34:06,040
Speaker 14: kind of investments, the impact has been a lot less

637
00:34:06,200 --> 00:34:09,480
Speaker 14: because people are still very helpful to look out a

638
00:34:09,560 --> 00:34:12,800
Speaker 14: much longer period of time horizon for technological innovation.

639
00:34:13,480 --> 00:34:18,280
Speaker 5: We discussed that contrast on the program Pretty dowur broad

640
00:34:18,320 --> 00:34:22,240
Speaker 5: outlook from VCS. A lot of excitement about the seed

641
00:34:22,320 --> 00:34:25,320
Speaker 5: and pre seed stage. Is it just simply because it's

642
00:34:25,800 --> 00:34:28,440
Speaker 5: easier to write a smaller check and not lose as

643
00:34:28,480 --> 00:34:29,360
Speaker 5: much sleep over it?

644
00:34:30,000 --> 00:34:32,040
Speaker 14: Yeah, Actually I don't think that's the case. I think

645
00:34:32,040 --> 00:34:34,080
Speaker 14: actually it has a lot more to do the visas

646
00:34:34,080 --> 00:34:36,960
Speaker 14: of self. If you look at what we do, because

647
00:34:36,960 --> 00:34:39,560
Speaker 14: we're so early, we have the lookout for the kind

648
00:34:39,560 --> 00:34:43,080
Speaker 14: of company and technological innovation. What will happen to them?

649
00:34:43,280 --> 00:34:46,080
Speaker 14: What impact would they have ten years down the road

650
00:34:46,160 --> 00:34:49,760
Speaker 14: or sometimes longer. So for that downturn has.

651
00:34:49,640 --> 00:34:50,440
Speaker 4: Always been proven.

652
00:34:50,480 --> 00:34:54,120
Speaker 14: I mean myself had gone through ran large companies, tech

653
00:34:54,280 --> 00:34:57,600
Speaker 14: public company during up and downturns, there's no better time

654
00:34:57,640 --> 00:35:01,560
Speaker 14: to invest in early stage things for new invention, for

655
00:35:01,680 --> 00:35:03,720
Speaker 14: the outlook of how a world's going to be evolving

656
00:35:03,840 --> 00:35:08,520
Speaker 14: too ten years down the road artificial intelligence.

657
00:35:08,960 --> 00:35:11,760
Speaker 5: How many times a day do you say, where's artificial

658
00:35:11,760 --> 00:35:12,440
Speaker 5: and intelligence?

659
00:35:12,440 --> 00:35:16,359
Speaker 4: At the moment our offices in Palato not enough.

660
00:35:16,520 --> 00:35:20,480
Speaker 14: Every street corner, every conversation of Starbucks, every conversation and

661
00:35:20,520 --> 00:35:22,240
Speaker 14: the office, every everything.

662
00:35:21,920 --> 00:35:22,600
Speaker 4: Is about generating.

663
00:35:22,640 --> 00:35:25,360
Speaker 5: You're investing in the area, of course we are, and

664
00:35:25,400 --> 00:35:27,280
Speaker 5: how do you invest in the area.

665
00:35:27,360 --> 00:35:32,000
Speaker 14: So we have specifically focused on the impact of this

666
00:35:32,160 --> 00:35:36,560
Speaker 14: level of generative AI for automation in the enterprise. So

667
00:35:36,600 --> 00:35:39,440
Speaker 14: we think the biggest opportunity and the safest place to

668
00:35:39,480 --> 00:35:42,520
Speaker 14: deploy these type of technology is inside the enterprise itself.

669
00:35:42,719 --> 00:35:46,839
Speaker 14: Large banks, large telcos, pharmaceuticals, governments.

670
00:35:47,040 --> 00:35:49,160
Speaker 4: Those are great places that you can wall.

671
00:35:48,960 --> 00:35:52,440
Speaker 14: In the learning itself and then be able to control

672
00:35:52,760 --> 00:35:56,000
Speaker 14: and pace and govern how AI will be used.

673
00:35:56,400 --> 00:35:59,080
Speaker 5: You kind of have this race between Alphabet and the

674
00:35:59,120 --> 00:36:03,520
Speaker 5: parent company of Google, Google and Microsoft and a person

675
00:36:03,640 --> 00:36:06,520
Speaker 5: he may have called heard of, called Elon Musk wade

676
00:36:06,520 --> 00:36:08,320
Speaker 5: into the middle of that. What do you make of

677
00:36:08,360 --> 00:36:10,719
Speaker 5: the Elon Musk saying, you know what, I'm going to enter.

678
00:36:10,640 --> 00:36:11,319
Speaker 4: The AI race.

679
00:36:11,400 --> 00:36:15,160
Speaker 14: Yeah, I think this will be something very difficult to end.

680
00:36:15,760 --> 00:36:17,800
Speaker 14: You Just think about this, right, put it in context.

681
00:36:18,520 --> 00:36:22,480
Speaker 14: We have not seen a disruptive technology like this since

682
00:36:22,560 --> 00:36:25,600
Speaker 14: the late nineties. How the Internet has done the companies.

683
00:36:25,719 --> 00:36:28,400
Speaker 14: Remember what had happened to Microsoft, they were behind in

684
00:36:28,440 --> 00:36:32,440
Speaker 14: the browser war. So this is even bigger. We saw

685
00:36:32,960 --> 00:36:35,319
Speaker 14: Microsoft gone out to do a deal. There's ten billion

686
00:36:35,400 --> 00:36:38,239
Speaker 14: dollar plus with open Ai, a company nobody heard of

687
00:36:38,600 --> 00:36:42,839
Speaker 14: until last year, right, so November November, Okay, So think

688
00:36:42,920 --> 00:36:46,840
Speaker 14: of this context. And now they're using this to disrupt Google,

689
00:36:47,320 --> 00:36:49,600
Speaker 14: which has a franchise have been going on forever on

690
00:36:49,640 --> 00:36:53,040
Speaker 14: search worth one point three trillion dollars. This is the

691
00:36:53,040 --> 00:36:56,120
Speaker 14: only time we've seen little company now have a chance

692
00:36:56,120 --> 00:36:58,840
Speaker 14: to impact and make huge impact in the innovation of

693
00:36:58,920 --> 00:36:59,560
Speaker 14: large companies.

694
00:36:59,600 --> 00:37:01,759
Speaker 5: We've been talking so much about AI that we haven't

695
00:37:01,760 --> 00:37:04,000
Speaker 5: talked so much about crypto, and that was an area

696
00:37:04,040 --> 00:37:07,800
Speaker 5: where you made some pretty fast and in some cases

697
00:37:08,040 --> 00:37:12,760
Speaker 5: not as good bets. What is your reaction to that statement,

698
00:37:12,760 --> 00:37:15,920
Speaker 5: I suppose, but also do you you know, would you

699
00:37:16,080 --> 00:37:18,359
Speaker 5: change how you do your due diligence now how you

700
00:37:18,360 --> 00:37:19,320
Speaker 5: look at that space.

701
00:37:19,400 --> 00:37:23,800
Speaker 14: Yeah, so with our adult crypto was you know, the

702
00:37:23,920 --> 00:37:26,200
Speaker 14: last excitement that we saw in twenty twenty and twenty

703
00:37:26,200 --> 00:37:29,800
Speaker 14: twenty one. We made some vact some very extremely good bets,

704
00:37:29,880 --> 00:37:31,640
Speaker 14: you know, our contray to the believe itself.

705
00:37:31,640 --> 00:37:33,400
Speaker 4: So obviously we're in some bad bets. Oh and some

706
00:37:33,440 --> 00:37:33,799
Speaker 4: bed better.

707
00:37:33,880 --> 00:37:35,680
Speaker 14: I mean we learned a lot in this process, but

708
00:37:35,800 --> 00:37:37,600
Speaker 14: we didn't make huge bed bets, you know, so I

709
00:37:37,600 --> 00:37:41,279
Speaker 14: think that was what we are designed to do as

710
00:37:41,280 --> 00:37:43,239
Speaker 14: an early stage Friendshire from you.

711
00:37:43,160 --> 00:37:44,160
Speaker 4: Look at what had happened.

712
00:37:44,320 --> 00:37:48,520
Speaker 14: Twipto is addressing a much smaller addressable market, so it's

713
00:37:48,560 --> 00:37:52,520
Speaker 14: tem is far smaller than comparing to Lesli Jenei. So

714
00:37:52,880 --> 00:37:55,160
Speaker 14: the merger of I will say Race Capital as the

715
00:37:55,239 --> 00:37:59,239
Speaker 14: fun is. We always said we're all about infrastructure where

716
00:37:59,239 --> 00:38:01,520
Speaker 14: there is work who were free, we do them more.

717
00:38:01,680 --> 00:38:03,520
Speaker 4: So we have wa able to hash those kind of bets.

718
00:38:03,600 --> 00:38:06,319
Speaker 5: All right, Race Capitals ouverage one, thank you so much.

719
00:38:14,880 --> 00:38:18,120
Speaker 5: Lululemon is exploring the sale of Mirror only three years

720
00:38:18,160 --> 00:38:21,640
Speaker 5: after buying the fitness equipment maker. This, according to sources,

721
00:38:21,760 --> 00:38:24,840
Speaker 5: this comes as fitness focus hardware companies have struggled basically

722
00:38:25,120 --> 00:38:28,439
Speaker 5: post pandemic as consumers head back to Jim's for in

723
00:38:28,480 --> 00:38:31,880
Speaker 5: person workouts. Leana deal Leanna Baker, who leads our deals

724
00:38:31,880 --> 00:38:34,960
Speaker 5: coverages here with more. It does feel like just yesterday

725
00:38:35,000 --> 00:38:37,480
Speaker 5: that we were talking about this deal going ahead in

726
00:38:37,480 --> 00:38:38,120
Speaker 5: the first place.

727
00:38:38,600 --> 00:38:41,200
Speaker 15: As a long time deals reporter, we tend to see this.

728
00:38:41,400 --> 00:38:44,560
Speaker 15: Companies will get in a mode where they're buying assets

729
00:38:44,560 --> 00:38:46,840
Speaker 15: and then just a few years later they'll sell assets.

730
00:38:47,080 --> 00:38:49,440
Speaker 15: Bankers luckily get to work on both sides of these

731
00:38:49,480 --> 00:38:52,960
Speaker 15: deals each time, so everyone's happy in terms of getting paid.

732
00:38:53,000 --> 00:38:56,040
Speaker 15: But lul Lemon, definitely here is looking to recoup some

733
00:38:56,120 --> 00:38:58,239
Speaker 15: of that five hundred million that they invested in this.

734
00:38:58,800 --> 00:39:01,080
Speaker 5: Well, that raises the question ofvaluation. Are they going to

735
00:39:01,080 --> 00:39:02,799
Speaker 5: sell it for more than they bought?

736
00:39:03,480 --> 00:39:06,680
Speaker 15: At this point, we don't know what exactly this deal

737
00:39:06,719 --> 00:39:10,239
Speaker 15: will fetch, but it does seem pretty clear that they

738
00:39:10,280 --> 00:39:12,520
Speaker 15: won't get the five hundred million. I think they're just

739
00:39:12,560 --> 00:39:15,520
Speaker 15: trying to recoup some of the investment. But from what

740
00:39:15,600 --> 00:39:18,719
Speaker 15: I've seen, this hasn't performed that well for Lululemon.

741
00:39:19,000 --> 00:39:20,440
Speaker 7: It's unclear if it makes money.

742
00:39:20,640 --> 00:39:23,640
Speaker 15: The company took a charge of four hundred and forty

743
00:39:23,640 --> 00:39:27,640
Speaker 15: three million an impairment charge earlier this year, so clearly

744
00:39:27,840 --> 00:39:31,040
Speaker 15: it's not a huge money maker and that could weigh

745
00:39:31,040 --> 00:39:31,800
Speaker 15: on the valuation.

746
00:39:33,000 --> 00:39:36,279
Speaker 5: It takes two to tango, sometimes more actually in a

747
00:39:36,600 --> 00:39:37,640
Speaker 5: complicated piece of m anda.

748
00:39:37,760 --> 00:39:40,040
Speaker 4: But who could buy Mirror?

749
00:39:40,400 --> 00:39:43,480
Speaker 15: It's a great question you mentioned before the changing habits

750
00:39:43,960 --> 00:39:46,759
Speaker 15: for remote fitness and working out at home, and a

751
00:39:46,760 --> 00:39:49,120
Speaker 15: lot of the companies in the space are challenged right now.

752
00:39:49,160 --> 00:39:51,880
Speaker 15: So Peloton, let's say it could make sense as a buyer,

753
00:39:51,920 --> 00:39:54,000
Speaker 15: but they don't have the money given all the challenges

754
00:39:54,040 --> 00:39:55,560
Speaker 15: that are going on their Tonal.

755
00:39:55,640 --> 00:39:57,439
Speaker 7: Another company in the space, they.

756
00:39:57,480 --> 00:40:00,759
Speaker 15: Just switched out their CEO, they cut their valuation, so

757
00:40:00,800 --> 00:40:03,680
Speaker 15: it is kind of unclear if there's a strategic competitor

758
00:40:03,680 --> 00:40:07,960
Speaker 15: out there that could buy this potentially private equity. They

759
00:40:08,040 --> 00:40:10,560
Speaker 15: love to look at unloved assets to see if they

760
00:40:10,600 --> 00:40:12,920
Speaker 15: could do a turnaround, So I would imagine that the

761
00:40:12,960 --> 00:40:15,880
Speaker 15: investment bankers that are working with Lululemon are casting a

762
00:40:15,920 --> 00:40:18,239
Speaker 15: wide net to find a potential buyer.

763
00:40:19,080 --> 00:40:19,880
Speaker 4: Very very quickly.

764
00:40:19,960 --> 00:40:22,160
Speaker 5: Anna, Do we have a timeline on this, Where is

765
00:40:22,200 --> 00:40:24,440
Speaker 5: this deal stage at.

766
00:40:24,400 --> 00:40:25,960
Speaker 7: At this point it's pretty early.

767
00:40:26,120 --> 00:40:28,440
Speaker 15: We do know there's a bank engaged on this, so

768
00:40:29,719 --> 00:40:32,720
Speaker 15: I would say probably, you know, a few months from now,

769
00:40:32,840 --> 00:40:35,600
Speaker 15: but it's hard to say. With deals and Lulu Lemon,

770
00:40:35,640 --> 00:40:38,160
Speaker 15: of course, could always hold on to the asset. If

771
00:40:38,160 --> 00:40:40,440
Speaker 15: they don't get bis that they like, they might say, okay,

772
00:40:40,680 --> 00:40:42,960
Speaker 15: let's just shut it down or do something else with it.

773
00:40:43,040 --> 00:40:45,840
Speaker 5: We'll keep you posted, right bloombergs Leana Baker on the

774
00:40:45,880 --> 00:40:46,359
Speaker 5: deal's beeed.

775
00:40:46,360 --> 00:40:47,120
Speaker 4: Thank you very much.

776
00:40:47,520 --> 00:40:50,360
Speaker 5: That does it for this edition of Bloomberg Technology. Stay

777
00:40:50,360 --> 00:40:54,080
Speaker 5: with Bloomberg in the next hour. Ryan Reynolds joins US

778
00:40:54,440 --> 00:40:58,880
Speaker 5: well known technology investor and football club owner. Don't forget

779
00:40:58,960 --> 00:41:01,239
Speaker 5: recap the show, check out the podcasts wherever you get

780
00:41:01,280 --> 00:41:05,239
Speaker 5: your podcasts, Apple, Spotify, iHeart, and all of the Bloomberg platforms.

781
00:41:05,520 --> 00:41:07,759
Speaker 4: From San Francisco, This is Bloomberg