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 jay My, Memily Tang in San Francisco, and this
Speaker 1: is Bloomberg Technology. Coming up in the next hour, Starlink
Speaker 1: in focus after Elon Musk says SpaceX can't fund satellites
Speaker 1: in Ukraine indefinitely. How could it impact the war? Will
Speaker 1: discuss plus new filing show Elon Musk is under federal
Speaker 1: investigation over his deal with Twitter or potential deal. We
Speaker 1: should say, we'll talk about all this and what it
Speaker 1: means for the company's future with Twitter founding member and
Speaker 1: a former board member, Jason Goldman, and pure speculation that
Speaker 1: is what Meta is calling the FTCs antitrust concerns over
Speaker 1: a deal to buy the VR fitness company within unlimited
Speaker 1: What hurdle Zuckerberg will face trying to dismiss the case
Speaker 1: this hour, all of that in a moment, But first
Speaker 1: it was a brutal end of the week for markets.
Speaker 1: We're gonna get the latest now with Bloomberg's Emily Graffito. Emily,
Speaker 1: what a week? And what a Friday? Hi, Emily, what
Speaker 1: a week? I mean? Stocks pretty much ending in the red.
Speaker 1: To finish a volatile week. We saw the SMP five
Speaker 1: hundred pretty much falling all day, finishing down about two
Speaker 1: point four percent. This is after that one year um
Speaker 1: you Michigan inflation expectations survey rose for the first time
Speaker 1: in seven months. We saw traders ramping up expectations for
Speaker 1: how aggressive the federal reserve was going to be. That
Speaker 1: US two year yield topping four point five percent for
Speaker 1: the second day in a row. NASDAC one hundred underperforming
Speaker 1: and really coming under pressure. In the technology spaces, those semiconductors,
Speaker 1: the Philadelphia semi Conductor's indexed down about four point four
Speaker 1: six percent, all about a lack of demand and again
Speaker 1: can scerns of those rising rates. Taking a look at
Speaker 1: some of the individual movers in the SMP five hundred
Speaker 1: in the stock market, Apple down about three point two
Speaker 1: percent today. It was actually the biggest contributor to the
Speaker 1: SMP five hundreds declined today. Twitter, though rare stand out here,
Speaker 1: up just a little bit about point two percent to
Speaker 1: finish the day. This is after it's reversing course after
Speaker 1: it fell yesterday on news that Twitter sawt documents last
Speaker 1: week related to a federal investigation into that Musk deal.
Speaker 1: And speaking of Elon Musk, let's take a look at
Speaker 1: Twitter stock falling about seven percent seven point seven percent today.
Speaker 1: It actually closed today fifty percent below it's November closing high.
Speaker 1: The stock has just been absolutely crushed me one year
Speaker 1: down about twenty percent. However, I looked back to how
Speaker 1: it performs since the end of twenty nineteen, it's still
Speaker 1: up about six hundred thirty percent. It's easy to forget
Speaker 1: about that that Tesla has had when we look at
Speaker 1: these short term movements, but overall, Tesla getting crushed with
Speaker 1: the rest of the stock market. Emily Good good point, Emily,
Speaker 1: thank you for that update, Emily Graffeo. Meantime, the Pentagon
Speaker 1: says it is in touch with SpaceX in regards to
Speaker 1: Starlink satellites in Ukraine that provide crucial broadband support in
Speaker 1: the war against Russia. This following Elon Musk's threat to
Speaker 1: cut off financial support for Starling terminals in the region.
Speaker 1: He's putting pressure on other entities now to step in
Speaker 1: and make up the shortfall after costing SpaceX at least
Speaker 1: eighty million dollars. The Pentagon says it could turn two
Speaker 1: options other than Starlink. This all following an earlier dispute
Speaker 1: over public comments suggesting the government and Kiev seed territory
Speaker 1: in exchange for peace with Russia. For more on this,
Speaker 1: I want to bring in Bloomberg's at Ludlow as well
Speaker 1: as Dr d J. Peterson, president of long Geoglobal Advisors,
Speaker 1: which is advising business leaders and investors on short and
Speaker 1: long term risks of the Russia. You crane war and
Speaker 1: I want to start with you. What exactly did Elon
Speaker 1: Musk say and why is he saying it right now? Yeah?
Speaker 1: So in a tweet response, uh, he basically said that
Speaker 1: he was following the advice of a Ukrainian diplomat Ukrainian
Speaker 1: envoy who had used profane language which I won't repeat
Speaker 1: on this program, but basically said Elon Musk should take
Speaker 1: a hike for want of a better expression, and must
Speaker 1: said in his tweet, we're just following his recommendation. That
Speaker 1: led to a wide range of media coverage and suggestions
Speaker 1: that actually Elon Musk might pull support either funding support
Speaker 1: or literally operational support for Starlink in the country. And
Speaker 1: we know, as you said, m that that the Pentagon
Speaker 1: say As of Friday, they're engaged with SpaceX over the
Speaker 1: broad issue of starlink and depends on saying that they'd
Speaker 1: have other issues. But for SpaceX, this is very much
Speaker 1: an issue of cost in terms of how starlink's operating
Speaker 1: in that country. Did you how crucial is starlink to
Speaker 1: Ukraine's defenses? Emily, I think it's central to their defenses.
Speaker 1: If you think about first of all their ability to
Speaker 1: wage war, you think about how much they have integrated
Speaker 1: Western military gear into their operations. Well, the communications is
Speaker 1: essential as well. And one of the things that Ukrainians
Speaker 1: have done much better than the Russians is actually coordinate
Speaker 1: their defense and offense across a very very long a
Speaker 1: line of contact. And so this is essential, um for coordination,
Speaker 1: it's essential for targeting and using the Western technology very well. Um,
Speaker 1: if you think about a lot of this area, it's
Speaker 1: very rural, it's spread out, their very great distances, so
Speaker 1: traditional radios might not work. As we know, Um, the
Speaker 1: Russians have knocked out so much infrastructure, So this is
Speaker 1: crucial and it's it's actually a very important leveraging factor
Speaker 1: of leveraging all this other assistance at the West is giving,
Speaker 1: can you give us an idea dj how much these
Speaker 1: satellites costs to manage and whether that resonates with what
Speaker 1: Elon Musk has said here right that there's a lot
Speaker 1: of just kind of debate around the numbers, and as
Speaker 1: we saw with the Twitter deal, kind of playing loose
Speaker 1: with numbers around what is real and what is not
Speaker 1: real in the in the Twitter verse. So I think
Speaker 1: we do have to take these numbers with the grain
Speaker 1: of salt um. You know, generally speaking, if you look
Speaker 1: at what has been deployed in the field already that
Speaker 1: we know is about twelve thousand units, it is has
Speaker 1: cost probably around eighty eight million UM two hundred millions.
Speaker 1: So that number that that that that that he has
Speaker 1: put out is not is not too bad. I mean
Speaker 1: when you get to these issues around he's raised the
Speaker 1: issue of just maintaining the satellite network and side or security. Well,
Speaker 1: that's the cost of doing business as a big global firm.
Speaker 1: So I'm a little bit less um, I'm a little
Speaker 1: bit more skeptical of that. I think another thing we
Speaker 1: need to pay attention to if you're looking at the
Speaker 1: cost side is obviously the Ukrainians have asked for much
Speaker 1: more in terms of these units on the ground, the
Speaker 1: transmitter units, I mean, do they need them all when
Speaker 1: they get them all? So that goes into say the
Speaker 1: four hundred million dollar number that UM that UM SpaceX
Speaker 1: has put out, So that's that's an ask, it's not
Speaker 1: necessarily going to be delivered. And then finally I want
Speaker 1: to add that we've talked about a commitment about over
Speaker 1: a year, and frankly, from my perspective, long Global Advisors
Speaker 1: take is that this war is not gonna last another year.
Speaker 1: Russia has only months to fight, so it's not clear
Speaker 1: really how at this point. Well, they need all these
Speaker 1: all the satellite comms for for an entire year, so
Speaker 1: it needs to be played out. But officials that I've
Speaker 1: talked to in the US government say it's not a
Speaker 1: reasonable ask, and it's not an unreasonable left not only
Speaker 1: for the US but also for all of our allies
Speaker 1: that are supporting so combined UM, I think there's a
Speaker 1: lot of countries that would be willing to contribute. Meantime,
Speaker 1: there's a report that Elon Musk spoke to Russian President
Speaker 1: Vladimir Putin before he made those public tweets public comments
Speaker 1: that public Twitter Bowl poll suggesting how Ukraine could seek
Speaker 1: peace with Russia, of course widely criticized. Elon Musk is
Speaker 1: denying that that he spoke to Putin. What do we
Speaker 1: know about this? Yeah, and categorically Elon Musk has denied
Speaker 1: that he spoke directly to put In about Ukraine. So
Speaker 1: Monday of this week, Ian Brema, who is the head
Speaker 1: of Risk consultancy Group Eurasia, said that he spoke to
Speaker 1: Musque about two weeks ago. He hadn't been planning on
Speaker 1: revealing what was in that conversation, but decided to in
Speaker 1: his regular newsletter after he saw Musk's own comments on
Speaker 1: Twitter about Ukraine, and he said that Musk had told him.
Speaker 1: Musk had told Maramma that he had spoken to Putin
Speaker 1: about the issue of Ukraine, you know, which was controversial.
Speaker 1: Um so must denied it that. Musk went further to
Speaker 1: say that he hadn't spoken to Putin for about eighteen months,
Speaker 1: which you know essentially predates the war the current conflicts
Speaker 1: in Ukraine. Did you why imagine Musk would present this
Speaker 1: starlink issue to the public, given the controversy about whether
Speaker 1: or not he spoke to Putin and when, and given
Speaker 1: the controversy over his Twitter poll in general. Emily, that's
Speaker 1: a great question, and frankly I find a dumbfounding. Um
Speaker 1: really Um. Musk got into a lot of trouble um
Speaker 1: politically obviously as as as as as well as reputationally
Speaker 1: by making uh this statement about Russia. He got a
Speaker 1: lot of favorable press in Russia. Um. Not a good thing.
Speaker 1: I also think the timing is very bad because it's
Speaker 1: on the heels of days of massive Russian attacks on
Speaker 1: Ukrainian infrastructure. So is he It looks like he's you know,
Speaker 1: he's trying to pick play up a situation where Ukraine's
Speaker 1: in a bind um and that's not good either. There
Speaker 1: is a deal to be had here. I think the
Speaker 1: Allies are more than willing given all that we've spent.
Speaker 1: Four million UM dollars is actually not that much. So
Speaker 1: there is a deal to be had here. But he's
Speaker 1: not doing He should not be presenting himself as a
Speaker 1: global states and as not his strength, and he is
Speaker 1: clearly screwing up on this repeatedly. All right, not mincing
Speaker 1: words there. Dr D J. Peterson, long View Global Advisors President,
Speaker 1: along with our own ad Ludlow, we're gonna have a
Speaker 1: little bit more on the musk Twitter saga later this hour.
Speaker 1: Here's something else we're following. Instacart slashing its valuation for
Speaker 1: the third time. The new valuation of about thirteen billion
Speaker 1: dollars was announced internally this week. According to sources, it
Speaker 1: was valued at most thirty nine billion dollars back in March,
Speaker 1: instat Carts executives reiterated the company still intends to go public,
Speaker 1: but is waiting for market conditions to improve. Meta is
Speaker 1: pushing back against the FTC's attempt to block its acquisition
Speaker 1: of the virtual reality app within Unlimited Meta, arguing the
Speaker 1: FTC hasn't laid out the elements to show the deal
Speaker 1: announced in October would actually hurt potential competition in VR fitness.
Speaker 1: Earlier this week, Mark Zuckerberg advertised the metaverse as the
Speaker 1: future of work, gaming and entertainment. Here to discuss Bloomberg's
Speaker 1: alec sparanka, So what precedent, Alex is this feud between
Speaker 1: Meta and the FTC setting. Yeah, so this is actually
Speaker 1: um a move that is under the umbrella of FTC
Speaker 1: chair Lena Cohn. She's taking a much more aggressive stance
Speaker 1: against big tech and this suit to block the acquisition
Speaker 1: of within this virtual reality fitness company is one of
Speaker 1: those kind of big swings she seems to be taking now.
Speaker 1: The latest drama Emily Um last week the FTC actually
Speaker 1: narrowed its argument to block the deal, uh, basically only
Speaker 1: leaning into this idea that the acquisition would kill potential
Speaker 1: competition in a future market. They killed the argument that
Speaker 1: the acquisition would consolidate power under Meta with its feat
Speaker 1: Saber app. In response to that, Meta is coming out
Speaker 1: this week and basically saying, Hey, if this is the
Speaker 1: argument you're making, we don't think you have enough here
Speaker 1: um to actually block this deal, and they're asking the
Speaker 1: judge to dismiss it. In terms of what happens next, Emily,
Speaker 1: the judge can rule on this and have some hearings
Speaker 1: or uh, the hearings on the injunction could actually still
Speaker 1: go forward in December and the judge make a decision
Speaker 1: after that. But either way, Emily, folks who watched the
Speaker 1: FTC and it's anti trust Um actions and Meta and
Speaker 1: the metaverse be paying attention to this at least through
Speaker 1: the end of the year. Why is Meta so keen
Speaker 1: to buy a virtual fitness company? Yeah, and and I
Speaker 1: think an illustration of that, Emily, we saw it firsthand,
Speaker 1: if you were like me with an oculust dropped your face.
Speaker 1: This week, Meta had their Connect product conference on Tuesday,
Speaker 1: and they showed off basically all of the things they're
Speaker 1: bringing to the metaverse right now. Uh, Meta's argument to
Speaker 1: get folks living in this virtuality world, it's really dependent
Speaker 1: on what you can do there. They talked about video games,
Speaker 1: they talked about a lot of new partners, but this
Speaker 1: fitness idea that they spent a number of minutes talking
Speaker 1: about it on Tuesday. Fitness is one of the things
Speaker 1: that they said their users come in every month for
Speaker 1: and within game Supernatural is one of these fitness apps
Speaker 1: where you can have the controllers in your hand, you
Speaker 1: can have the oculus on your face, and you can
Speaker 1: move their body. So it's key to this kind of
Speaker 1: argument for them of why people need to show up
Speaker 1: to the virtual world that frankly, they're spending ten billion
Speaker 1: dollars a year on now. Meta reports earnings in just
Speaker 1: a few weeks. Obviously, the market cape cap has tanked
Speaker 1: over the last year. It's of the revenue is going
Speaker 1: to metaverse efforts. What are you watching for I mean,
Speaker 1: I'm watching what investors think. As you said, the stock
Speaker 1: is down more than six since January. UM. They are
Speaker 1: also paying attention to what's paying the bills for Meta
Speaker 1: you know Meta who used to be called Facebook, who
Speaker 1: owns Instagram and all of the social media properties. It's
Speaker 1: been a really tough year for marketing budgets. Advertisers haven't
Speaker 1: been spending us much on ads, which is where all
Speaker 1: of the social media properties make their money. So that's
Speaker 1: what I'll be paying kind of the most attention to.
Speaker 1: And frankly, Emily, that is probably the thing that's going
Speaker 1: to determine how much patients investors continue to have with
Speaker 1: Mark Zuckerberg, the CEO, and his aspirations to spend a
Speaker 1: tenth of every dollar that comes in onto something that
Speaker 1: you know hasn't really materialized, this metaverseus digital universe. Alright,
Speaker 1: Bloomberg's Alex Bringa, who covers social media for us, Thank
Speaker 1: you for keeping us up to date. Okay, coming up,
Speaker 1: network effects made Facebook, Uber, even Bitcoin a thing. What's
Speaker 1: the next big thing? We're going to talk to an
Speaker 1: investor focused on betting on network effects. Next. This is
Speaker 1: Bloomberg Network effects impacts all of them. If you're gonna
Speaker 1: be spending your life synergies building a startup, it's going
Speaker 1: to take your effort. You're trying to defend the business
Speaker 1: area that you've carved out, you might as well be
Speaker 1: working on a business that has network effects, because then
Speaker 1: you'll have a shot at going the distance and making
Speaker 1: a real impact in the world and creating true value
Speaker 1: for your employees, for your investors, and for your whole network.
Speaker 1: Part of the teaser there for the venture firm NFX
Speaker 1: is Master Class on Network Effects, a new program by
Speaker 1: the venture capital firm to help startups build at scale
Speaker 1: from more on. And I want to bring an NFX
Speaker 1: founding partner, James Currier. James, it's kind of like a
Speaker 1: VC master class if you will. What who founders get
Speaker 1: access to with this and what are you hoping they
Speaker 1: take a way? Yeah, So, as you know, Nfects is
Speaker 1: a seed stage firm, uh, probably the largest seeds stage
Speaker 1: only firm in the in the world. And you know,
Speaker 1: our mission is to help ten million founders. We can
Speaker 1: only invest in a few hundreds, but we can help
Speaker 1: them with software and with content. And the content that
Speaker 1: we've most recently released is this masterclass on network effects.
Speaker 1: So the name of our firm is n Effects, which
Speaker 1: stands for network effects. But you know, and we've done
Speaker 1: blog posts, and we've done tweets, we've done other ways
Speaker 1: of sort of educating folks about what we see with
Speaker 1: network effects and how you use them to build the
Speaker 1: giant companies of today in the future. Uh. This masterclass
Speaker 1: is our next level product where we encapsulate about twenty
Speaker 1: years of learning about network effects and then bring that
Speaker 1: into three hours of video so that founders and teams
Speaker 1: with the founders can really educate themselves quickly about this
Speaker 1: most powerful tool in building giant, important tech companies. So
Speaker 1: we mentioned companies like Facebook and Uber and you know,
Speaker 1: even bitcoin um has been a success because of network
Speaker 1: network effects. What are the startups that are being built
Speaker 1: now based on network effects that you think are going
Speaker 1: to be the next big thing. Yeah, So companies like
Speaker 1: Mammoth Biosciences is building a platform network effect like an
Speaker 1: operating system really like a Microsoft or an iOS but
Speaker 1: they're doing it in the biotech space. They're based in
Speaker 1: the Bay Area, recently raised it over a billion dollars
Speaker 1: and we think, you know, Jennifer Doubt of the ERN
Speaker 1: Nobel Prize winner is one of the founders. This company
Speaker 1: is going to be a monster. Another company you might
Speaker 1: have heard of recently is called Incredible Health, which is
Speaker 1: run by him On Abuside uh in Rome, and they
Speaker 1: have built a marketplace between nurse labor forces and then
Speaker 1: the hospitals that hire them, so they install software in
Speaker 1: the hospitals and then they bring the hiring to to
Speaker 1: the hospital so they can find the nurse. Is that
Speaker 1: they're understaffed on so many businesses, both in marketplaces platforms
Speaker 1: as well as the ones you're talking about like Twitter
Speaker 1: and Facebook which have direct network effects because there are
Speaker 1: actually sixteen different network effects. We're finding a lot of
Speaker 1: different companies that are today building a new ways using
Speaker 1: these techniques that can create multibillion dollar companies and Incredible
Speaker 1: Health at Mammoth or two that are our unicorns and
Speaker 1: and heading on up from there. While we've had both
Speaker 1: u I mon Abusie and Jennifer down on the show,
Speaker 1: so I'm glad we're on the right track. Um, you know,
Speaker 1: we are in the middle of a massive downturn. There
Speaker 1: could be a lot farther to fall here. How concerned
Speaker 1: are you about that? And you know how is it
Speaker 1: impacting your investment strategy. Yeah, you know, NFECTS as sort
Speaker 1: of largest c fund, we see across a whole bunch
Speaker 1: of different verticals like marketplaces and fintech, prop tech, games, biotech,
Speaker 1: web three. We're investing across a lot of different verticals,
Speaker 1: and but we're investing for seven to ten years from now,
Speaker 1: So in that way, we're a little bit insulated from
Speaker 1: the current market conditions and are still looking for founders
Speaker 1: with big ideas, particularly ones with network effects, because the
Speaker 1: next two or three years won't really matter for them
Speaker 1: when we invest this year. What will matter is what
Speaker 1: the market conditions are seven years from now and what
Speaker 1: the market will value them at. Then the market will decide.
Speaker 1: But in the meantime, we're looking to build you a
Speaker 1: hundred million of revenue two million of revenue in real businesses,
Speaker 1: and we can invest now. So actually, we do feel
Speaker 1: like now is the best time in the last four
Speaker 1: years to start a company, So we're leaning aggressively in.
Speaker 1: We leaned aggressively in during COVID. We actually ran a
Speaker 1: program called fast where we offered one to one, one
Speaker 1: to two million dollars for fiftcent of companies within nine days, okay,
Speaker 1: and we touched four thousand companies at that time, right
Speaker 1: at the beginning of COVID, and now that we're in
Speaker 1: this downturn, a similar thing is happening. So so does
Speaker 1: that mean you're not worried? I mean, last quick question.
Speaker 1: I mean we're talking about instant We just talked about
Speaker 1: instat cart slashing its valuation from thirty nine billion to billion.
Speaker 1: I mean, you're seeing some huge haircuts here we are,
Speaker 1: and those companies were seated six twelve years ago. Our
Speaker 1: venture firm started five years ago. So we are still
Speaker 1: in the period of rapid growth for a lot of
Speaker 1: our companies, and so far we're not affected by these
Speaker 1: huge markdowns we're seeing. And again, where we're deploying capital
Speaker 1: is for seven to ten years from now, and most
Speaker 1: seed funds are doing that. That includes us, because we're
Speaker 1: focused on that stage. All right. NFX founding partner James
Speaker 1: Courier on your new VC masterclass, Thank you for stopping by.
Speaker 1: Welcome back to bloom More Technology. I'm emily changing San Francisco.
Speaker 1: We've got some breaking news crossing the terminal now that
Speaker 1: News Corps does indeed UH confirm it will explore a
Speaker 1: combination with Fox Corporation, News Corps saying received letters from
Speaker 1: Rupert Murdoch and his trust to that effect. There had
Speaker 1: been some reporting that Murdoch was considering reuniting his media
Speaker 1: empire if you will, that he split back in, news
Speaker 1: Corps now confirming that it will explore combining once again
Speaker 1: with Fox. Meantime, Elon musk steal to buy Twitter has
Speaker 1: had so many twists and turns that one might forget.
Speaker 1: This all started back on January thirty one, that is,
Speaker 1: when Musk quietly began buying Twitter shares. He's since gotten
Speaker 1: a lot louder in so many ways, and Bloomberg Business
Speaker 1: Week broke down Musk's tweets by the numbers, joining us
Speaker 1: now for more on an in depth look at what's
Speaker 1: been going viral all year long? Really is Bloomberg's at ludlow.
Speaker 1: So Business Week seek the numbers here. What interesting insights
Speaker 1: did that yield? Yeah? I think first of all, it's
Speaker 1: the frequency and volume of the tweets since January, right.
Speaker 1: I think in May we were surprised how quickly Elon
Speaker 1: must put the deal on hold and raise his concerns
Speaker 1: about the level of bots on the platform and if
Speaker 1: we put the chart of his weekly tweets volume of
Speaker 1: weekly tweets, you can see that just after that deal
Speaker 1: is put on hold, there's kind of a big spike
Speaker 1: in the number of tweets he's making, right, and he's
Speaker 1: talking a lot about the concerns, in particular about bots,
Speaker 1: and then things go very quiet, and of course, just
Speaker 1: a few weeks laid everything changed because Twitter sues to
Speaker 1: enforce the original terms of the deal. He tweets, means,
Speaker 1: he tweets emojis, he tweets pauls. Does he have a
Speaker 1: favorite kind of tweet? What's really interesting is that the
Speaker 1: overwhelming number of tweets that must sends a replies, and
Speaker 1: this was why everyone was so interested in this deal
Speaker 1: in the first place. Right. Elon Musk is one of
Speaker 1: the most active and well followed users on Twitter. But
Speaker 1: it's not just him sending original tweets. It's mostly him
Speaker 1: replying to other users. And we know that he engages
Speaker 1: really actively with other Tesla users, people that he is
Speaker 1: a fan of, people interested in SpaceX, and you can
Speaker 1: see from that chart quite clearly that that's how he
Speaker 1: uses engagement. Very few of the tweets he sent since
Speaker 1: January thirty one, have been retweets either what's you know
Speaker 1: tweeting about the most? Is it Tesla? Is it Twitter?
Speaker 1: Is it's SpaceX? Isn't repopulating the world? You know, m
Speaker 1: you and I have been living this deal night and
Speaker 1: day about Elon must buying Twitter. But actually, if you
Speaker 1: break down the tweets and do the analysis, he's not
Speaker 1: obsessed with Twitter. He's not tweeting a lot about Twitter.
Speaker 1: Most of it is about his other companies, Tesla, SpaceX.
Speaker 1: You know, he's really engaged when SpaceX has a successful mission.
Speaker 1: He tweets a lot about Tesla. Space generally is a
Speaker 1: topics high up there ev you no surprise and you
Speaker 1: look down, they're Actually the interesting number to me is Crypto.
Speaker 1: You know, he hasn't tweeted as much as one might
Speaker 1: think about Crypto, at least in the tweets sent since
Speaker 1: January thirty one of this year. And and you know
Speaker 1: when he has talked about Twitter, you know where does
Speaker 1: he focus? I mean certain there are certain tweets, of course,
Speaker 1: that have gotten a lot more attention than others. Well,
Speaker 1: this links to that first chart box. He tweets a
Speaker 1: lot about the box issue on the platform, right, he
Speaker 1: doesn't necessarily talk so much about some of the characters
Speaker 1: involved management. He does on occasion, but the focus is
Speaker 1: really on box, which is one big portion of that
Speaker 1: pie chart on your screen. The other one that I
Speaker 1: find really interesting is is the number of tweets about
Speaker 1: issues of censorship and bias. And we know that one
Speaker 1: of the big considerations for Elon Muskus policy, right, we
Speaker 1: want to know what policies will change in terms of
Speaker 1: content moderation and who will be allowed on the platform,
Speaker 1: will allowed back onto the platform, if indeed he does
Speaker 1: go through to buy this deal. But that to me,
Speaker 1: of before that pie shots certainly the most telling. All right,
Speaker 1: i'd lovelo. Thanks for walking through all of that for
Speaker 1: us and bringing us all the data. Joinings. How to
Speaker 1: continue this conversation. Jason Goldman one of the founding members
Speaker 1: of Twitter. Of course, he's also the former White House
Speaker 1: Chief Digital Officer under President Obama. Always some good insider
Speaker 1: outsider perspective from you, Jason. You know, one of the
Speaker 1: latest developments that we haven't talked a lot about yet,
Speaker 1: these revelations from Twitter that Elon Musk was being investigated
Speaker 1: by federal authorities over his acquisition conduct if you will.
Speaker 1: What do you make of this? Yeah, I mean it's
Speaker 1: difficult to say because we don't know which federal agency
Speaker 1: was investigating. I think it's a little premature to think
Speaker 1: there's much fire there, because this could be as simple
Speaker 1: as Twitter's lawyers trying to get their hands on the
Speaker 1: on the information that Ellen shared with the SEC. We
Speaker 1: know that he was contacted by the SEC as related
Speaker 1: to this deal, and so it might just have been
Speaker 1: something that they put in the filing to get information
Speaker 1: and about that. So without actually finding out what kind
Speaker 1: of investigation was involved, it's a little premature to say, oh,
Speaker 1: there's something super nutty going on here. That being said,
Speaker 1: you can never really discount the super nutty in this
Speaker 1: particular story. So what's your hunch. Does a deal happen
Speaker 1: by October? They are there more surprises between now and then?
Speaker 1: I think it's again, I would never rule out more surprises.
Speaker 1: I I believe a deal happens, I just don't have
Speaker 1: a ton of high conviction about it. Um. I think
Speaker 1: what's likely happening now is that the lawyers from both
Speaker 1: sides are trying to figure out how to execute this deal. Uh.
Speaker 1: In in between two parties that have absolutely no reason
Speaker 1: to trust one another. And so it's how do we
Speaker 1: get all of the money in one place and you
Speaker 1: show us that you have all the money, and then
Speaker 1: we quickly take all the money and you get the Twitter,
Speaker 1: uh without you know, without involving a lot of other contingencies,
Speaker 1: which Twitter is just not going to accept at this point.
Speaker 1: So say you On gets the Twitter and it happens
Speaker 1: in a couple of weeks, what do you think happens
Speaker 1: to Twitter under Elon Musk And what's the biggest risk?
Speaker 1: I think the biggest risks are sort of twofold. One
Speaker 1: is I think there's gonna be a lot of brain drain.
Speaker 1: I think a lot of people are going to either
Speaker 1: leave of their own volition or or be fired, and
Speaker 1: we'll get into why I think that's a problem for
Speaker 1: the company in the world. And then the other is
Speaker 1: I think Twitter is just going to be subject to
Speaker 1: the kind of reactive decision making that Ellen has shown,
Speaker 1: both publicly in his comments about the company and now
Speaker 1: privately in what we've seen from the tax Uh to
Speaker 1: be someone who's just you know, doesn't respond well to
Speaker 1: pushback or criticism, likes to be praised, likes to be given.
Speaker 1: Uh you know, accolades about um, you know, how smart
Speaker 1: he is and and and what great ideas you could
Speaker 1: bring forward and but despite all of that, just still
Speaker 1: does not have a serious plan for what to do
Speaker 1: with the for what to do with the platform. And
Speaker 1: I think that puts the company in a dangerous place,
Speaker 1: and I think it puts its users in a dangerous place. Okay,
Speaker 1: here here's a some our question another way. What's one
Speaker 1: thing that Musk could do that would make Twitter better?
Speaker 1: And do you think he'll do it? I think, oh,
Speaker 1: the easiest thing that he could do to make it
Speaker 1: better is to immediately remove himself from the decision making
Speaker 1: involved in it, Like if he if he somehow moved
Speaker 1: the company into some kind of foundation and said this
Speaker 1: is going to be running a nonprofit way. You know, actually,
Speaker 1: you know, Jack and I don't agree on a lot
Speaker 1: of things. But Jack has this notion about, you know,
Speaker 1: Twitter returning to be a protocol, and you know, this
Speaker 1: this notion that it needs to be just one client
Speaker 1: running on top of a technical protocol. If if Elon
Speaker 1: were to kind of divest himself of the authority and
Speaker 1: decision making power around the platform. That would be one
Speaker 1: positive thing he could do and then just leave it
Speaker 1: to actual subject matter experts to evolve the technology needed
Speaker 1: to do that. So I've been dying to know what
Speaker 1: your thoughts are on the text exchanges between Musk and Jack.
Speaker 1: You know, what was your big takeaway? I mean, of
Speaker 1: course you had this hunch all along that they were
Speaker 1: somehow in cahoots. Yeah, I mean, I think it was
Speaker 1: pretty obvious from the proxy filing that Jack had had
Speaker 1: a conversation with Ellen in which he expressed his own
Speaker 1: opinion that would be better in independent hands. We find
Speaker 1: out from the text the text that Jack, when Ellen
Speaker 1: agrees to do this, the Jack has overcome with emotion
Speaker 1: that he would then say later publicly, as you know,
Speaker 1: the singular solution to Twitter's problems has shown up. You know,
Speaker 1: he was he just couldn't believe that this, you know,
Speaker 1: Messiah had arrived to save Twitter from this board that
Speaker 1: Jack had both put together as during his ten years
Speaker 1: running the company, but now simply couldn't stand to be
Speaker 1: in business with anymore. And so the text reveals someone
Speaker 1: you know and Jack who was just frustrated and pretty
Speaker 1: much done running the company, and then willing to completely
Speaker 1: throw under the bus anyone at the company, including Prague,
Speaker 1: the CEO, who got in the way of Ellen coming
Speaker 1: in to take it over, despite the fact that Ellen
Speaker 1: at no point to Jack, either in private or in public,
Speaker 1: expressed any real idea of what he wanted to do
Speaker 1: with it, certainly nothing that was in line with what
Speaker 1: Jack thought needed to happen. This idea of making it
Speaker 1: a protocol, that's nothing that Ellen has picked up at all.
Speaker 1: So I think the text just revealed, not only from
Speaker 1: Jack but in general, just how uh, you know, how
Speaker 1: willing people are to appease Elon and that anyone who
Speaker 1: pushes back on him immediately gets, you know, pushed to
Speaker 1: the side. We haven't heard from the other Twitter founders
Speaker 1: of Williams and biz Stone, you know, I know you're
Speaker 1: close with them, and I'm what do they think about
Speaker 1: this to the extent that you can share. Yeah, I
Speaker 1: prefer to just sort of speak for myself. I I
Speaker 1: am close with the other the founders and a number
Speaker 1: of other early employees. Um, but you know, I think
Speaker 1: for for all of us that were there in the
Speaker 1: early time of the company, you know, we've all we've
Speaker 1: always had self inflicted wounds. We've always had, you know,
Speaker 1: periods of turmoil with the company. I think despite differences
Speaker 1: in terms of like, oh, you know, I didn't think
Speaker 1: Jack should be CEO, and then Jack didn't think that
Speaker 1: I should be CEO, and that was a big rift
Speaker 1: in the company, I never really doubted, for example, Jack's
Speaker 1: willingness to do what was necessary to make Twitter a
Speaker 1: better product in ordered, I doubt that he had true
Speaker 1: conviction and passion about how Twitter should grow into the world.
Speaker 1: What we're seeing now, though, is just someone who who
Speaker 1: doesn't have that kind of expertise. We're seeing instead someone
Speaker 1: who's been told by everyone who's blowing up his text
Speaker 1: messages in the world where at large, that he's the
Speaker 1: second coming of Thomas Edison. He's a genius who can
Speaker 1: enter any problem, and despite a lack of subject matter expertise,
Speaker 1: he's going to be able to um fix these very
Speaker 1: difficult problems. And that's dangerous. That's dangerous for the geopolitical
Speaker 1: reasons that you talked about at the top of the show.
Speaker 1: That you're talking about someone who is incredibly susceptible to
Speaker 1: flattery and influence and believes too highly in his own
Speaker 1: abilities and that's going to create the context for a
Speaker 1: large mistake to happen, whether that's you know, shutting off
Speaker 1: access UH in Ukraine, or that's UH inadvertently or purposely
Speaker 1: revealing user data to an authoritarian state that's trying to
Speaker 1: get information about dissidents who are coordinating on Twitter. Remember
Speaker 1: Twitter has never really had a problem with China because
Speaker 1: Twitter doesn't exist in China, but Elon us in China.
Speaker 1: Tesla exists in China. So now China has an incredibly
Speaker 1: strong lever over Elon in order to jeopardize user safety
Speaker 1: and and and jeopardize dissidents in Hong Kong, time one
Speaker 1: or wherever else. That's a real problem. Uh. And it
Speaker 1: doesn't require it doesn't require a secret you know, conversation
Speaker 1: between Elon and Putin. It's just obvious on his face
Speaker 1: that he's going to be susceptible to these kind of
Speaker 1: pressures quickly. How concerned are you about this all happening
Speaker 1: right before a midterm election, you know, especially given your
Speaker 1: time with the Obama administration. I'm not too concerned about
Speaker 1: I'm not too concerned about the mid terms. I think
Speaker 1: it's too close to the to the mid terms to
Speaker 1: be a problem I think for future election cycles, not
Speaker 1: just domestically about but around the world. I think it
Speaker 1: is a concern because not so much for putting the
Speaker 1: thumb on the on the scale for a particular political party.
Speaker 1: And I don't think Trump should be on Twitter, but
Speaker 1: I also kind of discount how important that is. I
Speaker 1: think it's more than a problem that around the world.
Speaker 1: We know, as you know the Washington Report Washington Post
Speaker 1: said that autocrats are to use the platforms to spread
Speaker 1: lies about opponents and whip up violence and mail on
Speaker 1: and that's a problem because Ellen is going to be
Speaker 1: able to tip the scales for those kind of forces
Speaker 1: around the world. Jason Goldman, one of the founding members
Speaker 1: of Twitter, the former White House Chief Digital Officer. Always
Speaker 1: good to hear your thoughts. Jason, thank you for stopping
Speaker 1: by coming up the crypto exchange that just raised a
Speaker 1: hundred ticks five million in a downturn. You just swap
Speaker 1: CEO Mary Catherine later with us next to tell us
Speaker 1: more this is Bloomberg crypto exchange unit swap is just
Speaker 1: raised a hundred sixty five million dollars in a series
Speaker 1: be funding round led by Polychain Capital. This value is
Speaker 1: the company at one point six six billion dollars. Unit
Speaker 1: Swap says it's one of the largest of funding rounds
Speaker 1: for a crypto firm since the market downturn earlier this year.
Speaker 1: Even as the cryptal market is still struggling and some
Speaker 1: of investors are starting to lose confidence in d five,
Speaker 1: Unit Swap CEO Mary Catherine later joins us. Now, So, um,
Speaker 1: Mary Catherine, what is it do you think about unit
Speaker 1: Swap that you know god investors to pay up given
Speaker 1: these very difficult market conditions. Thanks well, thanks for having
Speaker 1: me on. I think what we've learned in the past
Speaker 1: six months in crypto as we've seen the importance of
Speaker 1: decentralized systems at the core of some of this new technology,
Speaker 1: and also the importance of safety and security. And Unit
Speaker 1: Swap has been committed to safety and security since day
Speaker 1: one and never takes custody of user funds. We are
Speaker 1: decentral We've built decentralized trading protocols and then products on
Speaker 1: top of them that essentially they are I mean that
Speaker 1: you're not managing actual assets, you're not managing users assets,
Speaker 1: You're giving them open source technology. And then web and
Speaker 1: mobile applications to access that technology. So I think what's
Speaker 1: really different about unit swap is again it's a fundamentally
Speaker 1: different technology stack from a centralized exchange. It's a it's
Speaker 1: a novel innovation, completely new technology, Whereas the crypto firms
Speaker 1: that you saw software over the past six months are
Speaker 1: those that are really using traditional, traditional tech stacts. Traditional
Speaker 1: centralized exchange models ultimately had risk management failures. And so
Speaker 1: I think that in our investors recognized and the market
Speaker 1: recognized that decentralized protocols have unique advantages that not only
Speaker 1: can benefit crypto markets, but also traditional markets more broadly,
Speaker 1: and that you know, swap Labs is really committed to
Speaker 1: as I mentioned, security, but also bringing more and more
Speaker 1: users into this space because the entire ecosystem and market
Speaker 1: needs to grow and again needs to be more accessible,
Speaker 1: easier to use, and safer in order for that to happen.
Speaker 1: What do you think this says about the popularity of
Speaker 1: decentralized projects in crypto over the longer term. Well, my
Speaker 1: hope is that the benefits of the decentralized protocols will
Speaker 1: become recognized and that will have again more products that
Speaker 1: make them easier to use. Today, it's still a little
Speaker 1: bit too cumbersome. It's too hard to explain what are
Speaker 1: the benefits of the central ovation or to the benefits
Speaker 1: of being able to have different custody models, uh, the transparency,
Speaker 1: the lower costs that come with the centralized technology as prastructure,
Speaker 1: it's a lot to explain. And so what we're focused
Speaker 1: on for the next several years with this funding is
Speaker 1: making it easier and more accessible from more retail users
Speaker 1: but also UM even traditional investors and pools of capital
Speaker 1: to access the technology and realize it's benefits. So I
Speaker 1: think it's an endorsement of the fundamental innovation in the
Speaker 1: technology and in de centralized finance UM. But again when
Speaker 1: it's being built by teams that really understand the importance
Speaker 1: of security and simple use for experiences. And then still
Speaker 1: a concern about security. Why has there been so many
Speaker 1: hacks in defy and how do we prevent those in
Speaker 1: the future. Yeah, well, just as with any financial system
Speaker 1: or technology, UH, there are course risks UM that need
Speaker 1: to be managed. Some of those are technical, So having
Speaker 1: audited code is critical. UM. We have multiple audits, multiple
Speaker 1: third party audits of all of our code. UM. It's
Speaker 1: a key part of deploying smart contracts, and so I
Speaker 1: think that's the best practice that in an open source
Speaker 1: UM sort of open garden, what people can just launch
Speaker 1: new technology, UH, they don't necessarily not all projects necessarily
Speaker 1: go through those same controls UM. So that's a key
Speaker 1: part of that technical risk. There's also an element of
Speaker 1: just having a security mindset of anticipating all the different
Speaker 1: things that can go long UM, both in the UM
Speaker 1: in anything that's a financial transaction, and also into in
Speaker 1: deploying smart contracts. When you deploy a smart contract to blockchain,
Speaker 1: it's effectively permanent, it's effectively immutable, and so the level
Speaker 1: of battle testing in advance of that is huge UM.
Speaker 1: And not all projects treat deployment as a final commitment,
Speaker 1: and so it means that sometimes people are launching projects
Speaker 1: and users may access them UM and not realize the
Speaker 1: risk that they're taking. So I think that we're going
Speaker 1: to see UM, We're going to see a whole new
Speaker 1: level of UM security and see if you expectation among
Speaker 1: users and cautiousness and so winning users trust, earning their trust,
Speaker 1: earning their UH their business is going to become all
Speaker 1: the more important because unfortunately many people have been burned,
Speaker 1: but that is in the context of defied where many
Speaker 1: of the risks are like the technical. Over the past
Speaker 1: six months, many of the large crypto challenges and failures
Speaker 1: have been failures of risk management, had been traditional financial
Speaker 1: services style failures of not managing users funds accurately. And
Speaker 1: I think that it's it's really important that people understand
Speaker 1: those companies, uh, you know, Celsius and the like. Um,
Speaker 1: we're not necessarily we're not using the technology that we're
Speaker 1: going to swop used for example. Um, they were traditional,
Speaker 1: their traditional models were frankly they mismanaged their users assets.
Speaker 1: So too important. It's very important we just aggregate those risks,
Speaker 1: the financial risk management that is critical for those companies
Speaker 1: that do touch users funds unlike us, and then also
Speaker 1: the technical risks. All right, Mary Catherine later CEO of Units,
Speaker 1: thanks for sharing your perspective. Guilty. That is the verdict
Speaker 1: from a jury in the fraud trial against Nicola founder
Speaker 1: Trevor Milton. Let's bring back I'd love who's been following
Speaker 1: this case every step of the way, and you've been
Speaker 1: in the courtroom. Tell us a little bit more about
Speaker 1: the verdict today. Yes, so Trevor Milton was found guilty
Speaker 1: on one count of securities fraud in two counts of
Speaker 1: y fraud. It's important to note that he was found
Speaker 1: not guilty on the most serious counts of securities fraud,
Speaker 1: which would carry a maximum penalty of twenty five years
Speaker 1: in prison. Um Like, this was an astonishing case. It
Speaker 1: went on for a month and essentially what the government
Speaker 1: proved was that Trevor Milton lied, made misleading statements and
Speaker 1: exaggerations about the company's technology, it's progress, it's order book,
Speaker 1: but crucially that those statements had pushed investors, retail investors
Speaker 1: in particulars by the stock. That is the burden of
Speaker 1: proof that was on the government, and the jury returned
Speaker 1: an astonishingly quick verdict on Friday. Right. Why do you
Speaker 1: think the jury returned it so quickly. It's it's impossible
Speaker 1: to say, m I mean, it has been a one
Speaker 1: month trial. Um that there was a pause for around
Speaker 1: ten days because some of the defense council got COVID frankly,
Speaker 1: um but one juror that Bloomberg spoke to leaving the
Speaker 1: courts simply said the evidence was clear. That the government
Speaker 1: presented a number of witnesses, many Nikler employees, present employees,
Speaker 1: people that were there at the time, documentary evidence, appearances
Speaker 1: from Trevor, text messages is um and the defense's argument
Speaker 1: was very simple that that basically Trevor genuinely believed that
Speaker 1: what he was saying was true. He never set out
Speaker 1: to defraud everyone, and that everyone around him at the
Speaker 1: company was saying the same thing, and that if investors
Speaker 1: really looked at regulatory filing scuments, they would have found
Speaker 1: the information that should have informed their decision anyway. So
Speaker 1: it's it's been a very busy long trial, but five
Speaker 1: hours that's a very quick verdict. Interesting, and you've made
Speaker 1: the point that the defense argued he didn't lie, he
Speaker 1: just may be overpromised and said what he believed to
Speaker 1: be true with which is something that is, you know,
Speaker 1: maybe kind of common in Toilkin Valley. So it'll be
Speaker 1: interesting to see how this impacts the tech industry more broadly.
Speaker 1: At Ludlow, thank you for your excellent reporting on this case.
Speaker 1: That does it for this edition of Bloomberg Technology. Coming
Speaker 1: up next week, we've got next few venture partners Melody
Speaker 1: Co joining us to talk about women lead and minority
Speaker 1: leads to artups um. Have a wonderful weekend everyone. I'm
Speaker 1: Emily Check in San Francisco. This is Bloomberg