Speaker 1: From the heart of where innovation, money and power colli
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily changing San Francisco and this is
Speaker 1: Bloomberg Technology coming up. In the next hour. US stocks
Speaker 1: oscillating as investors rushed to position after the latest comments
Speaker 1: from FED chair j Powell saying a recession could indeed
Speaker 1: lie ahead. We'll speak with Shopify president Harley Finkel signed
Speaker 1: about how it's all impacting consumers and where the company
Speaker 1: is placing its bets when it comes to the future
Speaker 1: of e commerce. Plus, Slack unveils a slew of new
Speaker 1: features for a hybrid work world. CEO Stewart Butterfield has
Speaker 1: been building companies since before the dot com boom and bust,
Speaker 1: will join us. We'll also get his view on the
Speaker 1: market meltdown, and Jeffrey Katzenberg joins to talk about the
Speaker 1: future of entertainment and disrupting a legacy industries. Plus we'll
Speaker 1: get his thoughts on what's happening at Netflix and Disney.
Speaker 1: All of that in a moment, But first I want
Speaker 1: to look at the markets with our very own ed
Speaker 1: ludlow Ed walk us through the day, and obviously everyone
Speaker 1: listening to those comments from FED charity plat power. Yeah,
Speaker 1: so like all eyes on the FED and exuty markets
Speaker 1: a little bit softer, were down by less than two
Speaker 1: tents of percent both on the SP five hundred and
Speaker 1: the NASDAT one hundred, and nothing really changed in terms
Speaker 1: of what Fed Powell said on the outlook for rates.
Speaker 1: The conversation is around whether they can deliver a so
Speaker 1: called soft landing, in other words, fight inflation without causing recession,
Speaker 1: the quote being it will be extremely challenging. You see
Speaker 1: tech Heavyn has that one index down by two tents
Speaker 1: of a percent ish snapping two day rally, a short
Speaker 1: lived rally, yields coming down by twelve basis points on
Speaker 1: the tenure, and Bitcoin below twenty thousand dollars kind of
Speaker 1: caught up in the move with equities in the risk
Speaker 1: of environment. But you know how I like to do it.
Speaker 1: Let's take a step back, Let's look at the last
Speaker 1: few days of trading and look at this in the
Speaker 1: context of what we've seen in markets recently, especially on
Speaker 1: the NAZAC one. When you think about all of the
Speaker 1: news of the last seven days, we started with that
Speaker 1: FED meeting a week ago where we got a clearer
Speaker 1: picture at the outlook for rates. We're going to be
Speaker 1: at three point two five three and a half percent
Speaker 1: on interest rates by the end of this year. We're
Speaker 1: kind of trading sideways, and then today the market not
Speaker 1: really making its mind up. Has anything materially changed, was
Speaker 1: anything actually that new in what fed pal said throughout
Speaker 1: the session, what I'm hearing the markets is that really know.
Speaker 1: But we swung between gains and losses. At one point
Speaker 1: in the session, you saw big tech up quite highly.
Speaker 1: There were some really interesting movers though that we can
Speaker 1: talk about in a minute. And the one thing I
Speaker 1: would say is that we're thinking clearly about recession risk,
Speaker 1: and the conversation is not necessarily if there's a recession,
Speaker 1: it's about when there's a recession. Indeed, and obviously there's
Speaker 1: a lot of big tech news that's having some of
Speaker 1: these moves. I'm thinking about Amazon, yeah, exactly. And you know,
Speaker 1: partly what we're looking at as well in the news
Speaker 1: flow is that all of these stocks are trying to
Speaker 1: take trading in lockstep. So you look at my board,
Speaker 1: Tesla down four tents of one percent at one point,
Speaker 1: it's been one of the biggest drivers pushing the index higher.
Speaker 1: Amazon up by a quarter of percentage point, Netflix up
Speaker 1: four point seven percent in the session, there was actual
Speaker 1: news with it when it came to Netflix, so the
Speaker 1: Wall Street Journal reporting that they are now considering a
Speaker 1: tier of subscription that is AD supportive. We know that
Speaker 1: that's something they discussed that their most recent earnings as
Speaker 1: an idea, But according to this report, they are talking
Speaker 1: to partners like Google and Comcast in partnerships on ADS.
Speaker 1: I'll Trier down nine percent very quick according to a
Speaker 1: Dow Jones report that regulators considering pulling the dual product
Speaker 1: in which our Trier has a stake completely from the
Speaker 1: US market. How long has it been since you and
Speaker 1: I discussed toll It went from the impact on children
Speaker 1: flavored products with jewels, now reports of it being pulled
Speaker 1: from the US market asgethering that having a really material
Speaker 1: impact on our Trier shares this Wednesday. All right, thank
Speaker 1: you for the round up. Well. Retail and e commerce
Speaker 1: companies have been under pressure in the midst of rising
Speaker 1: inflation and market turmoil, but Shopify shares took a leg
Speaker 1: up today after a slew of announcements targeted at the
Speaker 1: changing nature of consumers. I want to talk about all
Speaker 1: this and more with Harley Figglstein, President of Shopify. Harley,
Speaker 1: we've got a lot of news to get to, a
Speaker 1: lot of announcements that you made, and we'll talk about that,
Speaker 1: but first I want to get your your sense of
Speaker 1: what is happening with the economy. Shopify hasn't necessarily been
Speaker 1: spared here, but what's your feeling about just how bad
Speaker 1: this will get and if a recession is inevitable? Thanks
Speaker 1: for having Emily, always a great pleasure being your show.
Speaker 1: Two things. Let's first talk about the retail outlook and
Speaker 1: I think consumer sentiment. What we are seeing is that
Speaker 1: there's certainly some some retail rebounds happening in areas like
Speaker 1: in person retail UM and we are well positioned there.
Speaker 1: I mentioned on the earnings called last quarter that we
Speaker 1: saw physical retail gym V up by nearly eighty percent
Speaker 1: year on year UM and then when we add things
Speaker 1: like you know we one of the announcements today was
Speaker 1: local inventory sync on Google and tapped to pay, we
Speaker 1: really are well positioned to ensure that if physical retail
Speaker 1: is rebalancing and reopens that shopbly merchants can also use
Speaker 1: that as well. But one of the things we're seeing
Speaker 1: from a sort of a macro perspective is that consumers
Speaker 1: are very much still voting with their dollars to support
Speaker 1: independent brands. This is something we saw happen very quickly
Speaker 1: and and and intensely during the pandemic. They are looking
Speaker 1: for quality products and certainly a lot of the shop
Speaker 1: by merchants are doing well there. In terms of the
Speaker 1: economy in general, it's clear that obviously inflation is at
Speaker 1: a record level, but to the degree in which merchants
Speaker 1: wallets are stretched from higher prices. What they're beginning to
Speaker 1: do is they're looking to get more value out of
Speaker 1: every single dollar. And what we're seeing is that more
Speaker 1: merchants are coming out to shopify and they're taking more
Speaker 1: of our products, whether it's capital or payments or fulfillment.
Speaker 1: They're leveraging our mass economies of scale while still keeping
Speaker 1: an independent business. So um we we we think both
Speaker 1: those things lead to a lot of optimism on our side.
Speaker 1: And of course Shopify Editions was launched today. Right you
Speaker 1: are making this big shift from DTC to C to see,
Speaker 1: as you call it, direct to consumer to connect to consumer,
Speaker 1: What does that mean and why do you think that's
Speaker 1: the future. So this idea of shopla editions, which we
Speaker 1: announced this morning, UH burned night nine am, it introduces
Speaker 1: what we're calling the connect to consumer error of commerce,
Speaker 1: and part of it is that you know the speed
Speaker 1: of innovation and the depths and breadth of what Shopify
Speaker 1: is building. I celebrated my my twelfth year anniversary last
Speaker 1: week at Shopify, so I've been around for a third
Speaker 1: of my life. Thank you. Uh. The amount of products
Speaker 1: that we're shipping right now is is stronger than than
Speaker 1: ever before. We unveiled more than a hundred new product
Speaker 1: updates and launches today and I think we are moving
Speaker 1: faster than ever and shoplay additions is our way of
Speaker 1: sharing that momentum with the world now. I think you
Speaker 1: know if you've I've been on the show a lot
Speaker 1: of talking about direct to consumer, which really was about
Speaker 1: this one to one connection with the brand to the consumer,
Speaker 1: but it was very transactional. What we are noticing is
Speaker 1: that more and more consumers want to connect with these
Speaker 1: brands online on social media. They want to attend an
Speaker 1: a vent or their store, they want to have more
Speaker 1: of an emotional connection, whereby they can connect with brands
Speaker 1: across a whole bunch of different surface areas. And so
Speaker 1: commerce is really just not about the transaction. It's much deeper.
Speaker 1: And we think SEE two SEE really places more authenticity
Speaker 1: and loyalty and trust at the heart of every single
Speaker 1: merchant interaction. And uh, and so a lot of the
Speaker 1: products you saw today is really about us ushering in
Speaker 1: this new model for commerce. You're also striking a big
Speaker 1: partnership with Twitter to help businesses reach buyers there. And
Speaker 1: I just wonder why now on Twitter is facing all
Speaker 1: of this uncertainty about whether Elon Musks buys the company
Speaker 1: or not, and if this partnership will hold up in
Speaker 1: a new regime. We think the future of retail is
Speaker 1: going to be retail everywhere. It's going to be online
Speaker 1: and offline, on social media, it's going to be in
Speaker 1: person at at farmers markets, at events and concerts. We
Speaker 1: really are you know, I think we started as being
Speaker 1: an e commerce company, and you know, about ten percent
Speaker 1: of all e commerce in the US now flow through Shopify.
Speaker 1: If we were one single aggregated story would be the
Speaker 1: second largest online store in America. But the key here
Speaker 1: is that commerce in the future will happen everywhere, and
Speaker 1: so we we've announced I'd come on the show and
Speaker 1: talked about our integrations with Google and Facebook and Instagram
Speaker 1: and TikTok to embed commerce there. And then the newest
Speaker 1: one that we're embedding, the newest partner we're betting commerce
Speaker 1: with is Twitter. Now. Twitter is an interesting one. Of
Speaker 1: course they're in the news a lot lately. But you know,
Speaker 1: if you think about where commerce used to happen, it
Speaker 1: was always sort of around the town square where the
Speaker 1: baker sold bread and cobber so old shoes. Twitter in
Speaker 1: some ways is the modern day digital town square, and
Speaker 1: so embedding commerce right into Twitter so you can turn
Speaker 1: conversation into commerce, all powered by Shopify. We think it's
Speaker 1: a really great thing. And whether or not, you know,
Speaker 1: they have a new owner in the future or not,
Speaker 1: I think commerce will play a role in Twitter future. Okay,
Speaker 1: I recently interviewed Amazon CEO Andy Jase Harley, and I'm
Speaker 1: not sure if you caught this, but what I asked
Speaker 1: about Amazon's relationship with third party sellers and the tension
Speaker 1: that has existed there between Amazon and some third party sellers,
Speaker 1: he took kind of a dig at Shopify. Take a
Speaker 1: listen to what he had to say. Sellers don't really
Speaker 1: wrong for commerce software that exists in lots of places,
Speaker 1: and uh, and it's not very expensive. What they love
Speaker 1: about selling on Amazon is that they get access to
Speaker 1: our hundreds of millions of customers and that completely changes
Speaker 1: what their prospects can be in terms of the business
Speaker 1: as they're building. What's your response to that, I think that, uh,
Speaker 1: it is quite clear that the future of retail is
Speaker 1: going to have direct connection between brands and the consumers. Look,
Speaker 1: I mean, obviously, a place like Amazon allows third party
Speaker 1: sellers to access a very large network of consumers. But
Speaker 1: if you look at any of these marketplaces, you, as
Speaker 1: a merchant, you're not building your own business. You are
Speaker 1: effectively renting customers from the marketplace. And I think for
Speaker 1: some merchants that matters. But for a lot of merchants,
Speaker 1: you think about your favorite brands or Mine, James Purse
Speaker 1: or the Albert Shooes, I'm wearing bombas socks and wearing
Speaker 1: they want to have a direct relationship with the people
Speaker 1: that are buying their their products. And I think that
Speaker 1: more and more you see consumers again choosing to go
Speaker 1: direct whenever possible. So I think there's a place for marketplaces,
Speaker 1: and obviously Amazon has done a great, great, great thing
Speaker 1: there and and it's very valuable in that way. But
Speaker 1: I think consumers also want to have a direct relationship
Speaker 1: with the brands they're buying from. And that's the reason
Speaker 1: why you see companies like Mattel and Craola and Herman
Speaker 1: Miller and Proctor and Gamble you Shopify to go direct
Speaker 1: to consumer. These are brands that traditionally never did so,
Speaker 1: and now they're doing that now, Harley, you know, Shopify
Speaker 1: shares have taken a pretty big dive since November where
Speaker 1: they hit a hit a high point, and obviously we're
Speaker 1: in the middle of a broader market turmoil. But how
Speaker 1: concerned are you about this and going forward? You know,
Speaker 1: how are you thinking about this? What are investors missing?
Speaker 1: I think Shopify was certainly a pandemic story, and I think,
Speaker 1: obviously you know this, the stock reflected them. I think,
Speaker 1: what what a lot of people are missing? But the
Speaker 1: Shopify stories that on one hand, we're ten percent of
Speaker 1: all e commerce the ums, we have massive scale. At
Speaker 1: the same time, those economy scille that come with it.
Speaker 1: At the same time, the two million stores on Shopify
Speaker 1: have an independent business at the same time. That happens
Speaker 1: every thirty seconds or so a brand new entrepreneur gets
Speaker 1: their first sale on Shopify. That means we are not
Speaker 1: only getting a larger piece of the pie, we're growing
Speaker 1: the pie itself. And all those stores that end up
Speaker 1: in businesses that are being really successful will stay on
Speaker 1: Shopify indefinitely. And that's why you see companies like Figs
Speaker 1: and All Birds go public and and Jim Shark and
Speaker 1: all these amazing brands that were built at their mom's
Speaker 1: kitchen table that are our category leaders built on Shopify.
Speaker 1: I also want to ask about you'll go go ahead
Speaker 1: finish your I was gonna say in terms of so,
Speaker 1: I think we were a pandemic story. I think what
Speaker 1: what often people misses? Were also this reopening story again,
Speaker 1: eighty percent of our eight we had eighty percent growth
Speaker 1: in point of sale gym V. We have thousands of
Speaker 1: stores all over the world that you shop lay a
Speaker 1: power their physical store. You know, we saw social embedded
Speaker 1: commerce on services like Instagram and TikTok and now Twitter
Speaker 1: grow almost four percent year on year last quarter. So
Speaker 1: Shopify is really more than just spinnay commerce provider or
Speaker 1: or a pandemic story. We really are the world's retail
Speaker 1: operating system. And again, look at every one of your
Speaker 1: favorite brands or anyone listening look at your favorite brands.
Speaker 1: You will start seeing shop pay as the payment game.
Speaker 1: But you will start seeing Shopify power those brands. That's
Speaker 1: really important to us, and that's the reason why I
Speaker 1: think our future is very brave. I also want to
Speaker 1: ask about your evolving governance story. Shopify recently made some
Speaker 1: changes to enhance Toby lucka of the CEOs power. Some
Speaker 1: shareholders did oppose these changes. What are you hearing from
Speaker 1: from shareholders now, you know, in terms of concerns about
Speaker 1: this change, and what has been Shopify as response. I've
Speaker 1: spent the last few weeks with uh some of our
Speaker 1: our largest investors, and and and frankly a lot of
Speaker 1: investors generally, and I think um one, you know, we're
Speaker 1: grateful for their trust and coetin to run the business.
Speaker 1: But the goal here really was modernizing our government structure.
Speaker 1: We want to be a hundred your company. We're about
Speaker 1: sixteen years sixteen years into it, so we've got a
Speaker 1: lot more time. Eighty four years left to go, and
Speaker 1: we want to ensure that we can run our business
Speaker 1: and make really good long term decisions for investors, for merchants,
Speaker 1: for for every stakeholder that's involved with Shopify, and we
Speaker 1: think this monetization, particularly around the government structure, allows us
Speaker 1: to do that. I'll also tell you, having spent so
Speaker 1: much time with investors lately, that some of these investors
Speaker 1: that have been with us for the last seven years
Speaker 1: since the I p O, and they believe more in
Speaker 1: shop Plain now than ever before. And we're grateful for that.
Speaker 1: But we got a lot of room to grow and
Speaker 1: and we have a lot of new opportunities in front
Speaker 1: of us. All right, Harley Finkelston. Always appreciate you joining us,
Speaker 1: Thanks for taking a wide range of questions today. Appreciate
Speaker 1: it happening in New York right now. Slack Frontiers the
Speaker 1: company's annual conference where they've unveiled the latest innovations to
Speaker 1: a product that's become integral to the hybrid workplace. Joining
Speaker 1: us now. Stuart Butterfield, Slack co founder and CEO, joining
Speaker 1: us from our studios in New York, Stewart. Great to
Speaker 1: have you back with us, and thanks for coming in
Speaker 1: among the many announcements today, you're building out Slack huddles,
Speaker 1: adding this new video feature, and I'm curious, with video
Speaker 1: conferencing a very crowded market, what's the unique niche that
Speaker 1: you hope Slacks offering will fill. Yeah, thank you, Emily.
Speaker 1: It's um it's a little bit different than than a
Speaker 1: video call. So huddles, for those of you who are
Speaker 1: not familiar, used by tens of millions of people a
Speaker 1: week on Slack, and up till now, they've been audio only,
Speaker 1: and the intention is a little bit different than like
Speaker 1: a call that has a scheduled start time and end time.
Speaker 1: They're more for serendipitous, spontaneous conversations and they've been really
Speaker 1: valuable in that respect, fastest growing feature and Slacks history.
Speaker 1: People love it. UM. So we're adding a little bit
Speaker 1: more of a coworking space, and I think there's a
Speaker 1: difference between on the one hand meetings and the other hand,
Speaker 1: people working together and helping to use computers at the
Speaker 1: same time. We're definitely on the far left edge of
Speaker 1: that spectrum. And I think that I, like all of
Speaker 1: the people in the audience, will be on many many
Speaker 1: more video calls years. Show now but I think there's
Speaker 1: also like a whole set of tools that kind of
Speaker 1: became obvious that they're desirable during the pandemic. But we're
Speaker 1: just starting to see some of them now. Some of
Speaker 1: them will come from Slack, some of them will come
Speaker 1: from others. It's actually a pretty exciting time and enterprise software,
Speaker 1: insofar as enterprise software can be exciting at all. Indeed,
Speaker 1: of course, you know there's competition here from Zoom and
Speaker 1: Google Meet and Microsoft Teams and just go WebEx And
Speaker 1: in the same way that you're kind of moving on
Speaker 1: to let's say, zooms turf a little bit, you've got
Speaker 1: Zoom announcing some chat features. Are you at all concerned
Speaker 1: about them taking Slack market share? No, not at all.
Speaker 1: And to be clear, we at Black are a happy
Speaker 1: Zoom customer, and I don't expect that to go anywhere.
Speaker 1: There just is a lot of use cases that that
Speaker 1: aren't covered by the thirty minute video call. There's also
Speaker 1: a huge amount of stuff that Zoom does that I
Speaker 1: don't think Slack will ever do, and also vice versa.
Speaker 1: But um, we're at this moment where it really feels
Speaker 1: like I'm personally as optimistic as I ever have been
Speaker 1: in the last twenty years. It really feels like there's
Speaker 1: an opportunity to create a couple of brand new categories.
Speaker 1: In the same way that everyone has the standard set
Speaker 1: of email and calendar and word processor and spreadsheet, there's
Speaker 1: a couple more slots there that the pandemic made clear.
Speaker 1: We're really important, and so we're excited to spend a
Speaker 1: lot of time experimenting there and uh and releasing new stuff.
Speaker 1: Now you don't have to worry about this as much
Speaker 1: now that slack is part of salesforce. And I wonder,
Speaker 1: actually if there's some relief that you actually don't have
Speaker 1: to worry about the market meltdown. But you've been building
Speaker 1: companies for more than twenty years, you live through the
Speaker 1: dot com boom and bust. What's your take on what's
Speaker 1: happening with the economy right now? If Elon Musk has
Speaker 1: a super bad feeling about it, how does Stupent Butterfield feel? Well? Uh, So,
Speaker 1: I'm from pretty old at this point. I graduated from
Speaker 1: post school in ninety one, so I worked through the recession,
Speaker 1: right through the dot com crash, that whole roller coaster
Speaker 1: two thousand and eight of course as well, and a
Speaker 1: couple of other littler ones. UM. I don't want to
Speaker 1: suggest that there's no dislocation and there's no like immediate
Speaker 1: negative impact for a lot of people, um in the
Speaker 1: short term. But at the market level, I see this
Speaker 1: um kind of working itself out over. Maybe it's six
Speaker 1: months if we're super super lucky, maybe if it's eighteen months. Um,
Speaker 1: if it's a little bit more realistic. But we do
Speaker 1: come up the other side, and so many great companies,
Speaker 1: including it slock. We're started. You know, there's company that
Speaker 1: became slock started at two thousand and nine, kind of
Speaker 1: right in the in the absolute bottom part of the trough. UM.
Speaker 1: So I think there's also a lot more opportunity now. Interesting. UM,
Speaker 1: So how do you think Silicon valid looks different after this?
Speaker 1: I mean, if it's not a major dislocation, is it
Speaker 1: just a sort of evolution. Yeah, I mean, so if
Speaker 1: we're talking about like just stock prices and big multiples
Speaker 1: have come down to a pretty realistic level now, and
Speaker 1: so now we'll see if people can deliver the earnings
Speaker 1: that are expected, will kind of stay in the same
Speaker 1: box for a while. UM. The bigger question is whether
Speaker 1: that whether you imagine a recession that would really impact this.
Speaker 1: But I think something else is going on at the
Speaker 1: same time, which is we've really realized, uh, the importance
Speaker 1: of all the digital infrastructure that supports productivity and collaboration,
Speaker 1: and just to make that like a little bit more
Speaker 1: tangible for people. If you go back to March and
Speaker 1: imagine that a parallel universe where you could keep traveling
Speaker 1: for work and use conference rooms and commune, go to
Speaker 1: the office, all of that stuff, but you took away
Speaker 1: the software, all of these companies would have just disintegrated
Speaker 1: in like twenty four hours. So at some point in
Speaker 1: the last twenty years, we switched from a world where
Speaker 1: the physical HQ is more important than the digital to
Speaker 1: the other way around. And yes, we use digital h
Speaker 1: Q as a marketing term, but I just mean obviously
Speaker 1: all of these companies continue to exist, and when that happens,
Speaker 1: I think there's a lot more interest in investment. You know.
Speaker 1: The worst case scenario is a is a chief information
Speaker 1: officer who've used technology as like HVACT for the building,
Speaker 1: like you're just trying to get it as cheap as
Speaker 1: possible as opposed to an investment in the organization's overall
Speaker 1: effectiveness and the ladder case is really what we're seeing
Speaker 1: with customers now. Flat is becoming more and more integral
Speaker 1: to all kinds of workforces and has been in the
Speaker 1: news recently because the January six Committee has asked Twitter
Speaker 1: for Slack messages tied to their decision to ban former
Speaker 1: President Trump, etcetera. I'm so curious for your thoughts on this.
Speaker 1: If Slack has been subpoena and I know Twitter has
Speaker 1: refused to hand this misinformation over, and if you were subpoena,
Speaker 1: if Slack would comply, UM, I gotta be honest now
Speaker 1: at this point, I have no idea if we've been subpoena.
Speaker 1: I don't think so. UM. You know, obviously we have
Speaker 1: a range of customers. In fact that when I'm a
Speaker 1: softball opportunity to mention. We also announced gov Slack today,
Speaker 1: the fed ramp high version of Slack used by like
Speaker 1: Lockheed Martin and the U. S. Army software factory. Um.
Speaker 1: But there's a lot of different compliance requirements and message
Speaker 1: retention rules and stuff like that, and I think that
Speaker 1: the investigations are generally gonna be of Slacks customers, not
Speaker 1: of Slack that was gonna be my next question. Your
Speaker 1: effort to attract more government agency. How exactly do you
Speaker 1: intend to do that? How do you plan to handle
Speaker 1: some of these very sticky issues like privacy. Yeah, well,
Speaker 1: we have government customers in twenty different countries, and some
Speaker 1: of those have been long established. I think there's about
Speaker 1: thirteen US federal agencies using slack, but there's also state, local,
Speaker 1: municipal usage. There's usage in UM in Australia and the UK,
Speaker 1: in Japan and France, in Germany and UM. The kind
Speaker 1: of benefit that slack brings to petty organization that uses
Speaker 1: it are are obviously there for the government as well,
Speaker 1: and I think we would be an opportunity to create
Speaker 1: a little bit more of a fabric that goes through
Speaker 1: the whole federal government because those agencies are pretty autonomous
Speaker 1: UM and it's much much harder, kind of notoriously harder
Speaker 1: for them to coordinate that it should be, all right, Uh,
Speaker 1: Slack CEO Stewart Butterfield. Always good to have you on
Speaker 1: the show. Thanks for checking out to our New York studios.
Speaker 1: Appreciate stuff. Elon Musk says Tesla's new plans in Germany
Speaker 1: and Texas are losing billions of dollars as the ev
Speaker 1: maker tries to ramp up production. In a video just
Speaker 1: posted online that was taped three weeks ago, the Tesla's
Speaker 1: CEOs comments offer new insight into the day's leading up
Speaker 1: to his decision to cut costs by laying off employees.
Speaker 1: The staff reductions will affect about ten percent of Tesla's
Speaker 1: salaried workforce over the next three months. Coming up, we
Speaker 1: are going to head to Toronto for a conversation with
Speaker 1: Jeffrey Katzenberg fresh off a panel at the Collision conference
Speaker 1: about disrupting legacy industry, something he knows a thing or
Speaker 1: two about. Plus will get his thoughts on the current
Speaker 1: economic climate and where he's putting his money these days
Speaker 1: and a company he's invested in. That's all coming up next.
Speaker 1: This is Bloomberg. Welcome back to Bloomber Technology and Emily
Speaker 1: Chain in San Francisco. It was a choppy day for
Speaker 1: tech stocks as the market tried to make up its
Speaker 1: mind on the fed and risks of recession. Where do
Speaker 1: we land bloom Brooks lad Low back to unwind it all. Yeah,
Speaker 1: so we're like modestly lower right across multiple industries, especially
Speaker 1: tech indusseries look at then as that one hundred off
Speaker 1: by around two tents and one percent outside selling and
Speaker 1: semi conductors chip stock some of the worst performers and
Speaker 1: biggest tracks and drags on both the SMP five hundred,
Speaker 1: and then as that one hundred yours cd MC fan
Speaker 1: PUSS Index, which is made up of those mega cats
Speaker 1: and some US listed shares of Chinese tech companies modestly lower,
Speaker 1: but they've been higher during the session. We kind of
Speaker 1: swung between games and losses. The market trying to make
Speaker 1: up its mind about the Fed's ability to fight in
Speaker 1: relation without causing recession. Don't take my word for it.
Speaker 1: Have a listen to FED chair j Power. It is
Speaker 1: our goal. It is going to be very challenging. It
Speaker 1: has been made significantly more challenging by the events of
Speaker 1: the last few months, thinking they're of the war and
Speaker 1: you know, command of these prices and further problems with
Speaker 1: supply chains, and the question whether we're able to to
Speaker 1: to accomplish that is going to depend to some extent
Speaker 1: on factors that we don't control. So the market kind
Speaker 1: of sees you on the idea this is the biggest
Speaker 1: admission so far that there's a real risk of hard
Speaker 1: landing or recession. We had a lot of other things
Speaker 1: to say, right the labor market still incredibly tight, the
Speaker 1: economy still incredibly robust. You because some of the tech
Speaker 1: movers really interesting, especially in regards to news CYD. We
Speaker 1: look at Amazon and up a quarter of a percent
Speaker 1: news out of a leaked memo where Amazon is talking
Speaker 1: about the turnover in its workforce, for example, being very
Speaker 1: high relative to other industries, it being a real concern. Well,
Speaker 1: what happens to that labor market as we moved towards
Speaker 1: a FED that's fighting inflation, not just with interest rates,
Speaker 1: with the shrinking of its balancy and the other name
Speaker 1: that just catches my eye with regards to the demand story,
Speaker 1: because according to fed Pale, the demand is still their
Speaker 1: Netflix up four point according to reports from Wall Street
Speaker 1: Journal considering an ad tear for one of its subscription models,
Speaker 1: basically add support in conjunction with names like Google comcasts.
Speaker 1: You have some interesting guests coming up, but kind of
Speaker 1: be interested in their take about Netflix. One of the
Speaker 1: worst performers year today wasn't really participating in the rally
Speaker 1: of recent days, but having a great day on Wednesday,
Speaker 1: all right, interesting to say the least. Thank you, and well.
Speaker 1: Despite fears that the US is heading towards a recession
Speaker 1: as inflation drives up costs and some companies start layoffs,
Speaker 1: there was a more up ink tone at this year's
Speaker 1: Collision conference, where thirty five thousand people showed up to
Speaker 1: hear about the future of technology. Joining me out from Toronto,
Speaker 1: Jeffrey Katzenberg, founding partner at Wonder COO and former chair
Speaker 1: of Disney, also see of dream Works of course, along
Speaker 1: with Harry rabat Chande, and he is the founder and
Speaker 1: CEO of our and online cybersecurity firm and one of
Speaker 1: Katzenberg's investments. UM, Jeffrey, Harry, thank you both for joining us.
Speaker 1: I know you've just been on stage talking about disrupting
Speaker 1: legacy industries, and Jeffrey, this is of course something you
Speaker 1: know a thing or two about. So tapping you as
Speaker 1: an investor first, given everything you've seen, everything you've tried
Speaker 1: to do, what industries do you see right now that
Speaker 1: are most right for disruption? Well, whether it's right for
Speaker 1: disruption or not, I think that the place of opportunity
Speaker 1: today that we're quite focused on continue to be is
Speaker 1: on cyber security, both for enterprise and for the consumer. UM.
Speaker 1: I think it will UH have faced less headwinds and
Speaker 1: a UH down recession economy than many industries. UM also
Speaker 1: think that future of work continues to be a place
Speaker 1: of great opportunity. The disruption out of uh COVID has
Speaker 1: been extreme in terms of the workforce and the tools
Speaker 1: that it needs today in terms of productivity of collaborating, sharing,
Speaker 1: the moving of information and people, I think is going
Speaker 1: to be a place of tremendous innovation over these next
Speaker 1: couple of years. So there are bright slots, but no
Speaker 1: question we're in for choppy times. Interesting, Harry, you know
Speaker 1: there's an actually huge number of cybersecurity unicorns out there
Speaker 1: right now, and especially you know many companies with which
Speaker 1: raised at HAFT evaluations when times were good. How do
Speaker 1: you think Aura stands out on that list? Look away,
Speaker 1: So this is my second go around building a business UH.
Speaker 1: The first time we went through the down cycle in
Speaker 1: two thousand, two thousand one. Again to know seven a
Speaker 1: week and you learn a lot of usins having been
Speaker 1: through the cycles. So this time around, we're very focused
Speaker 1: on keeping the fixed for the fixed cost of our
Speaker 1: business low, looking for opportunities where there's availability for asymmetric
Speaker 1: risk reward payouts, whether it's M and A, organic growth vectors, etcetera.
Speaker 1: But keeping the core of our business quite tight and
Speaker 1: making sure that we're mindful of cost of burn and
Speaker 1: having raised a lot of capital last year, we're well
Speaker 1: set up. So it's it's it's really something that we
Speaker 1: have to stay focused to make sure we're creating a
Speaker 1: lot of runway and continue to keep focusing on our product. Yeah.
Speaker 1: And the other thing, Emily, is is it or is
Speaker 1: a mature business. It's got two million customers, almost three
Speaker 1: million of revenue, It's a profitable business um and um,
Speaker 1: and a fair amount of wind in its sales right
Speaker 1: now in terms of its growth. So this is growth,
Speaker 1: but it's profitable growth. I think that sort of makes it,
Speaker 1: you know, in a slightly unique category right now. So, Jeffrey,
Speaker 1: I mean, given that you've also seen a number of downturns,
Speaker 1: run companies through downturns, how pronounced do you think this
Speaker 1: one in particular is going to be? Is this a
Speaker 1: recession with a big R or a little R? Is
Speaker 1: it inevitable? You know what? I'm you just went way
Speaker 1: above my pay grade family, and uh, you know, I
Speaker 1: just have to say, you know, I think and this
Speaker 1: is what I admire so much about Harri and how
Speaker 1: he's running his business. You plan for the worst and
Speaker 1: you hope for the best. And what I mean by
Speaker 1: that is is that you know, he really has buttoned
Speaker 1: down his business. He's running it, you know, on a
Speaker 1: smart basis, on a profitable basis. But this is also
Speaker 1: a time of great opportunity and there are going to
Speaker 1: be things for us to do, whether it's an M
Speaker 1: and a um uh, you know, direct to consumer. You know,
Speaker 1: the ad markets probably going to become more favorable, so
Speaker 1: there there are You've got to be able to play
Speaker 1: offense and defense, you know, at this at the same time,
Speaker 1: you need an offensive team and a defensive team. And
Speaker 1: that's what I think Harris built well for this for
Speaker 1: this company. Well, speaking of offense and defense, in part
Speaker 1: the promise of cybersecurity is you know, the the the
Speaker 1: ability to play really good defense. And we've been warned
Speaker 1: so many times about the threat from Russia in the
Speaker 1: midst of this ongoing war on Ukraine. Are how big
Speaker 1: are the threats out there on the cyber landscape and
Speaker 1: how do you see that threat evolving as we go
Speaker 1: through this, you know, potentially pronounced economic crisis for six
Speaker 1: eighteen months or longer. I mean, I think it started
Speaker 1: with COVID. As people are moving more and more online,
Speaker 1: a lot more data started moving online as well. And
Speaker 1: you know, whether you're looking at should nation state and
Speaker 1: nation state attacks or you're looking at attack on enterprises.
Speaker 1: The interesting thing we see is some of those who
Speaker 1: are prevalent, they're getting a lot more sophisticated. But the
Speaker 1: new thing that we're starting to see is there's an
Speaker 1: acceleration of the sophistication of attacks on families and consumers.
Speaker 1: So it's going all the way from nation to nation
Speaker 1: to enterprise and consumers and family. Um. You know, I
Speaker 1: do think that over the next come twelve to eighteen months,
Speaker 1: the trend doesn't seem to be slowing down. From what
Speaker 1: we can see, there's some new variant of a different
Speaker 1: kind of an attack happening every week. UM, and you know,
Speaker 1: UH criminals seem to be enjoying their work and UH
Speaker 1: showing showing that. An interesting statistic is is that in
Speaker 1: the last twelve months, the amount of theft UH digital
Speaker 1: theft versus burglary has actually now surpassed it. So there's
Speaker 1: actually more criminal activity theft going on against all of
Speaker 1: us as consumers on our digital footprint, then in our
Speaker 1: homes and our apartments and around our physical goods, and
Speaker 1: that trend is actually accelerating. So that value right now
Speaker 1: is I think in terms of what or is solving for?
Speaker 1: Is you know, really really strong and only going to
Speaker 1: get stronger? Jeffrey, I have to ask, given of course,
Speaker 1: what you saw with Quimby and your long history and
Speaker 1: the entertainment business, what is your thought on the collapse?
Speaker 1: And I'm like, can I congratulate you? Sure? Can I
Speaker 1: congratulate you on that. It took you, It took you
Speaker 1: eight and a half minutes to say the word Quimby
Speaker 1: out loud. So thank you. You you got you got
Speaker 1: the over. You got the over, not the under. But
Speaker 1: go for it. Yes, I'm sorry, it is not the
Speaker 1: only thing you're going to be remembered for if I
Speaker 1: have anything to say about it. But I do want
Speaker 1: to know what you think about what's happening in streaming
Speaker 1: right now. The collapse in Netflix is stopped, you know,
Speaker 1: have we hit a peak? And is it all downhill
Speaker 1: from here? No? Here's what I would say. You know, truly,
Speaker 1: one of the great entrepreneurs of our time is Read Hastings.
Speaker 1: You know, everybody were naysayers a decade ago when he
Speaker 1: came along with this idea streaming. They were all nay
Speaker 1: sayers when he came along with this idea for you know,
Speaker 1: binging of content. You know, there's so many things that
Speaker 1: you know, popular opinion were contrary to him and his
Speaker 1: vision for that company. He's built a great company. There's
Speaker 1: no question that you know it is actually you know,
Speaker 1: hit some rough patch for sure. But the last thing
Speaker 1: I would do right now today is bet on Reid
Speaker 1: Hassin's being down, let alone out. So you asked me,
Speaker 1: do I think, you know, what is the future of streaming.
Speaker 1: The future streaming is going to be strong, likely more consolidation.
Speaker 1: So there's a lot more competition today. There's a lot
Speaker 1: more offerings out there today, more than all of us
Speaker 1: can consume. And so with that they're going to be
Speaker 1: winners and losers. Do I think Netflix is going to
Speaker 1: be in the winter column for sure? Is it going
Speaker 1: to see seven dollars a share? Soon? Probably? Not. I
Speaker 1: wonder if you think Disney and CEO Bob J. Pecker
Speaker 1: and the winner column. You I mean, obviously the long
Speaker 1: history there. Um, you know we've seen, you know, some
Speaker 1: some tumult in the executive suite. You know what a
Speaker 1: succession look like there, and how does Disney fit into
Speaker 1: the future of the entertainment business. Disney will also be
Speaker 1: in that wind column. You know, if you had to
Speaker 1: pick today, you would say Apple, Amazon, Netflix, Disney, Warner Discovery.
Speaker 1: They're all going to in some fashion, shape or form
Speaker 1: being the wind column. You know, once again, you know
Speaker 1: Shapik has a complicated hand to play. Um. You know, uh,
Speaker 1: probably no company had more of its businesses adversely affected
Speaker 1: by COVID. I mean literally Broadway shutdown, theaters shut down,
Speaker 1: theme park shutdown, cruise ship shutdown. Do I have to
Speaker 1: keep going? And you know he's trying to navigate now,
Speaker 1: you know, sort of the next renaissance of Disney. It's
Speaker 1: a bar, it's a big challenge. My guess is he's
Speaker 1: up to it. Jeffrey, I appreciate you humoring us and
Speaker 1: putting on your entertainment legend hat uh as well as
Speaker 1: your investor hat. Jeffrey Katzenberg. Wonderco Ari Rabit Chondren of
Speaker 1: our coming to us from the Collision conference in Toronto.
Speaker 1: Thank you both. Time now for our crypto report. Bitcoin
Speaker 1: trading once again around the twenty dollar level, moving in
Speaker 1: tandem with falling stocks. This is concerns about a global
Speaker 1: recession grow and while some crypto companies are laying people off,
Speaker 1: others are more optimistic even about the near future. I
Speaker 1: want to talk about all this and more with Bloomberg's
Speaker 1: own Hannah Miller Hannah falcon X raising a big round today.
Speaker 1: How in the midst of a very are you called
Speaker 1: the crypto winter? Yeah, I know. It's an exciting company
Speaker 1: that's now valued at eight billion dollars, up from a
Speaker 1: three point seven five billion dollar valuation from its last fundraise.
Speaker 1: And this is a company that is has a lot
Speaker 1: of interesting stuff about it. Its founder Um has a
Speaker 1: really impressive background. It was formed was formerly at Google
Speaker 1: um and this funding round came together in the past
Speaker 1: few weeks even as market conditions were changing. Uh So
Speaker 1: it's super exciting, especially when you see other companies like
Speaker 1: block By looking to raise a down valuations. Well, we're
Speaker 1: back to twenty dollars for bitcoin, But the CEO of
Speaker 1: Binance says the worst part is probably over, is he right?
Speaker 1: I think cz is being a bit optimistic here. Um,
Speaker 1: there's still a lot of fragility in the market. We
Speaker 1: could see trouble for other lending platforms. We've already seen
Speaker 1: Celsius and Babble hit um, and there's still a lot
Speaker 1: of uncertainty revolving around regulation and also purity. You know,
Speaker 1: hacks and scams have just been a lingering problem for
Speaker 1: the crypto industry. We've seen layoffs at coin Base, layoffs
Speaker 1: at robin Hood. You know, when you're talking to your sources,
Speaker 1: talking to your companies, just how bit bad is it
Speaker 1: or how bad does it feel on the inside of
Speaker 1: some of these organizations. Yeah. So I've been told by
Speaker 1: multiple people to expect more layoffs in the future, that
Speaker 1: this is going to be a trend after a rash
Speaker 1: of over hiring last year. And basically people believe that
Speaker 1: this crypto winter is going to last for another six
Speaker 1: months to hear, but that it will be shorter than
Speaker 1: the previous one because we have clearer uses for blockchain now.
Speaker 1: I'm thinking decentralized finance, gaming and n f T s
Speaker 1: that will help people stay interested in crypto and blockchain.
Speaker 1: All right, well, Hannah will continue to follow your reporting
Speaker 1: on all of this. Bloomberg's Hannah Miller, thanks so much.
Speaker 1: Coming up Apple's first union and what it means for
Speaker 1: a potential wave of tech unions across the country. Talk
Speaker 1: about that next. This is Bloomberg. Big tech has long
Speaker 1: been hostile to organize labor, but as of late, there
Speaker 1: have been some serious moves to change that. This past weekend,
Speaker 1: employees at a Maryland Apple store voted to thirty three
Speaker 1: to unionize. The move creates the first union of Apple
Speaker 1: retail employees in the United States. And running the campaign
Speaker 1: and Towson was the International Association of Machinists. David Telivian
Speaker 1: Eastern Territory General vice president, joins us now to talk
Speaker 1: about this big win. And David, the votes we've seen
Speaker 1: at some of the Amazon warehouses have been a lot closer.
Speaker 1: Why do you think Apple employees voted here almost two
Speaker 1: to one. We're we're very pleased with the outcome of this.
Speaker 1: The workers in Maryland were are very excited. They were
Speaker 1: very involved in this whole process. They came to us
Speaker 1: because of our presence in the community, and uh we
Speaker 1: spent a lot of time with them over the long
Speaker 1: period of time talking to them who we are, what
Speaker 1: we do, and they were just very very excited about
Speaker 1: having the opportunity, uh to organize and have a say
Speaker 1: in the future. Now, Apple hasn't responded to this union
Speaker 1: vote directly, but in the past, as as news about
Speaker 1: the forming of a possible union broke, they did tout
Speaker 1: their benefits. They've touted, uh, what these workers are paid.
Speaker 1: Do you think this vote in Maryland will result in
Speaker 1: more unions being formed at Apple across the United States?
Speaker 1: I do. We've received many, many phone calls from across
Speaker 1: the country from coast to coast right now, and uh,
Speaker 1: it's the out The outpour has been very good. It's
Speaker 1: it's definitely a wave and we're we're very pleased with that.
Speaker 1: Workers had to put a lot on the line down
Speaker 1: in Maryland to stand up and and have a say
Speaker 1: in the future. And we're hoping that other workers in
Speaker 1: Apple see that they were able to do it. They
Speaker 1: didn't buy into some of the anti union rhetoric that
Speaker 1: was out there that the machines union we do a
Speaker 1: lot of good things. These are very highly skilled employees
Speaker 1: and uh, we're a very highly skilled union. So We're
Speaker 1: very pleased that they were able to hold tight, hold strong.
Speaker 1: And when they walked out that door and you heard
Speaker 1: the screams, that was the sound we want to hear
Speaker 1: across this entire state, I mean country. How Apple have
Speaker 1: to deal with the unions, like what kind of discussions
Speaker 1: and agreements will have to be had. Um. Typically, what
Speaker 1: we'll do is we'll try to do a meeting Greek,
Speaker 1: we will send the letter. We're gonna be certified. Hopefully
Speaker 1: at the end of the week. Uh, it's usually about
Speaker 1: a seven day process. We should be certified without any issues.
Speaker 1: Once we're certified, I'll send a letter to Apple, to
Speaker 1: the CEO and request to meet with them, and then
Speaker 1: we'll start the process to collectively bargain a contract for
Speaker 1: the employees. And what will change for workers at unionized stores, everything,
Speaker 1: their whole world's gonna change. They'll have the ability to
Speaker 1: have a say in their future. Uh, they'll have a
Speaker 1: voice on the job. Scheduling is a big thing for them.
Speaker 1: They love their job. They do a lot of great
Speaker 1: stuff and you know, they connect people to these products
Speaker 1: that you know, we can't figure them out. We go
Speaker 1: to these stores, we meet with them, highly technical highly skilled.
Speaker 1: They help us get our stuff together. You know, it's
Speaker 1: for them. I think that because they do love their job,
Speaker 1: they want to have more, saying like their schedule, just
Speaker 1: anything to do with their future working conditions, safety on
Speaker 1: the job, they'll have, they'll have the ability to do that. Um.
Speaker 1: We're seeing a similar conversation happening at Amazon, and I
Speaker 1: actually spoke to Amazon CEO Andy Jassy about union efforts
Speaker 1: at Amazon warehouses. Take a quick listen to what he
Speaker 1: had to say. We happen to think they're better off
Speaker 1: without a union for a number of reasons, including the
Speaker 1: fact that you know, it's it's much harder when you
Speaker 1: have a union to have a direct relationship with your
Speaker 1: manager and to get things done quickly. How would you
Speaker 1: respond to that, David, Yeah, I think that's silly, to
Speaker 1: be honest with you, just to be frank. Uh, for us,
Speaker 1: that the union is, it's the people there, the people
Speaker 1: on site, the employees at that store, they are the union.
Speaker 1: They keep trying to say it's a third party coming
Speaker 1: in and they're gonna not be able to be personal
Speaker 1: and have friendships. That's absolutely false, not true. Uh, the
Speaker 1: union is the people you know on site, there and
Speaker 1: the relationships can continue. We have great relationships with many
Speaker 1: many companies that we work with, so I wouldn't expect
Speaker 1: anything different from a CEO from Amazon. How long does
Speaker 1: a union last for? Will this have to be renewed?
Speaker 1: And is this going to be an ongoing fight even
Speaker 1: in in tosin whether or not it happens beyond no.
Speaker 1: What we'll do is we usually negotiate a contract, typically
Speaker 1: the three year contracts, but once once we're um officially,
Speaker 1: once it's officially certified, will be the bargaining agent for
Speaker 1: them and hopefully it goes forever. And last quick question.
Speaker 1: You know tech has so far been you know, fairly
Speaker 1: immune to these kind of union negotiations. How do you
Speaker 1: imagine this could change the tech industry. We've got about
Speaker 1: thirty seconds left. I think it's gonna be a great change.
Speaker 1: I think that these are kind of the workforce that
Speaker 1: needs a union. They've been typically they're not a traditional
Speaker 1: you know what we would call a traditional union, so
Speaker 1: they've been kind of left behind on that. And now
Speaker 1: they're standing up saying they want more. Uh, they want
Speaker 1: to be able to negotiate over hours of work, working conditions,
Speaker 1: all the things that a union does. So. I think
Speaker 1: it's gonna when when workers around the country, US and
Speaker 1: Canada see what we're doing, I think they're they're gonna
Speaker 1: step up and want to be part of this. I'm
Speaker 1: very excited. I don't I don't think it's going to
Speaker 1: slow down. I think it's gonna keep keep moving forward.
Speaker 1: All right, David Selivian, General vice president at the International
Speaker 1: Association of Machinists and Aerospace s Workers, thank you for
Speaker 1: joining us. That does it for this edition of Bloomberg Technology.
Speaker 1: We're back tomorrow with cloud Flair CEO Matthew Prince Proton
Speaker 1: Mail CEO Andy En to talk big tech privacy. You
Speaker 1: don't want to miss it. This is Bloomberg