Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From Mahart where Innovation, money and power Collie in Silicon Valley, Nbon.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: And Caroline Heinder Bloomberg's world headquarters in New York. This
Speaker 3: is Bloomberg Technology coming up in Vidio. It tops two
Speaker 3: trillion dollars in market value, becoming the world's fourth most
Speaker 3: valuable company. For coverage, Ahead Plus will break down reddits
Speaker 3: filing to go public, from its AI ambitions to its
Speaker 3: largest shareholders, and Sam Altman.
Speaker 4: Here's Omni present.
Speaker 3: We've got you covered and Calvana shares pop by the
Speaker 3: most of seven months after the used car retailer defied
Speaker 3: challenges of higher interest rates and inflation to actually post
Speaker 3: we kind of solid end to twenty twenty three.
Speaker 4: We sit down with the company's CEO. I mean, while
Speaker 4: not all.
Speaker 3: Earnings are glorious, and Mircado Libre manages to underperformer off
Speaker 3: by thirteen percent, one of the worst performers on the day.
Speaker 3: Not to mention Warner Brothers, which will be digging into
Speaker 3: a little bit later, But first, let's just peel back
Speaker 3: all of these narratives. When it comes to earnings, when
Speaker 3: it comes to the AI boom, and really decide whether
Speaker 3: there's more legs to run on In terms of this market,
Speaker 3: Erica claren Places says, well, that's what folio manager of
Speaker 3: a PGM Jennison Technology Fund her read on tech on
Speaker 3: markets on and video. Of course, I mean, we look
Speaker 3: at the one point nine at seven trillion dollar market capitalization,
Speaker 3: we're clawing our way to the two trillion mark, Erica,
Speaker 3: And I'm interested as to whether you think the hype
Speaker 3: has reality underneath it and ultimately whether we will see
Speaker 3: a leg higher or well we'll see a broadening at
Speaker 3: last in terms of the AI love.
Speaker 5: Well, to answer your question, I think yes to both.
Speaker 5: Jennison has always had a very long term outlook on
Speaker 5: trying to dimension what these opportunities are. We've always been
Speaker 5: very very positive. We were very early in investing in
Speaker 5: Nvidia back in twenty sixteen, and all of our expectations,
Speaker 5: even as ambitious as they were, have been absolutely blown
Speaker 5: out of the water.
Speaker 4: To the upside. I mean, Jensen is an operator.
Speaker 3: He manages to guide and then beat and guide and
Speaker 3: beat each time and still managed to be a global business.
Speaker 3: And I think that's sort of what's been extraordinary that
Speaker 3: this is a company that is finding working with China
Speaker 3: more difficult, largely because of US Chinese geopolitics. How much
Speaker 3: do you have to factor that into some of these
Speaker 3: big tech names.
Speaker 5: Well, certainly the political landscape right now is much more
Speaker 5: challenging for companies as they have restrictions in terms of
Speaker 5: where they can sell what they can sell into China.
Speaker 5: China had risen to about twenty percent of in Nvidia's
Speaker 5: data center revenue. That contracted down to five percent in
Speaker 5: the most recent quarter. But what we're seeing is for
Speaker 5: companies like in Vidia, they've been very nimble, very innovative
Speaker 5: in terms of coming out with products that comply with
Speaker 5: all the export laws. Those will start to ship later
Speaker 5: this year. We believe at Jennison that there's a lot
Speaker 5: of pent up demand from those Chinese customers that will
Speaker 5: contribute to the company's overall performance in the second half.
Speaker 4: Let's broaden out from Nvidia.
Speaker 3: Therefore, is there room market share ability and capability for
Speaker 3: the likes of MD and some of the other rivals
Speaker 3: in the space.
Speaker 4: Should we look to other chip makers?
Speaker 5: Our view is yes, at Jennison, we see that in
Speaker 5: Nvidia in its own process of innovation has opened up
Speaker 5: the doors of opportunity for many other companies, from compute
Speaker 5: companies as you mentioned, like Advanced micro Devices and Broadcom
Speaker 5: which we own in size, to storage companies, to networking companies,
Speaker 5: and of course to software companies that are able to
Speaker 5: harness this incredible compute.
Speaker 4: Power to deliver software.
Speaker 5: That enables tremendous games and productivity and innovation.
Speaker 3: When just going back to Nvidia for a moment, is
Speaker 3: there anything that makes you give pause a two trillion
Speaker 3: dollar market valuation an issue of China or indeed of
Speaker 3: just like running out of road of exuberance, or really
Speaker 3: you have to go back to well forward pe ratios
Speaker 3: that still make the company look really rather attractive and
Speaker 3: not that expensive.
Speaker 5: Well, what we try to do at Jennison is really
Speaker 5: take a longer term view. We've actually written some white
Speaker 5: papers that are on our website about this. But looking
Speaker 5: out over the entire TAM of the installed base of infrastructure,
Speaker 5: we see that as a one trillion dollar opportunity today.
Speaker 5: But the very innovation that Nvidia and others are bringing
Speaker 5: to the table is expanding that TAM and will really
Speaker 5: only maybe ten to fifteen percent penetrated at this point,
Speaker 5: so we see years of opportunity ahead for further penetration
Speaker 5: of those markets, further updating to this brand new way
Speaker 5: of compute, which is known as parallel processism.
Speaker 4: Where else is the slack then, because there is.
Speaker 3: If you talk to the VC community, yes they're looking
Speaker 3: at the underlying compute and the large language models, but
Speaker 3: they're also looking at the applications and the.
Speaker 4: App layer to AI.
Speaker 3: But where are you looking from an industry perspective where
Speaker 3: ultificient intelligence can bring real opportunities for productivity.
Speaker 5: Basic Well, you know, there are, of course the obvious
Speaker 5: places that people talk about, the big hyperscalers being able
Speaker 5: to recommend with much more accuracy and targets companies like
Speaker 5: Amazon Google using these tools to improve their recommenders. However,
Speaker 5: one of the I guess two big new opportunities that
Speaker 5: have emerged in the market unexpectedly in twenty twenty three
Speaker 5: and are accelerating into twenty twenty four. One would be
Speaker 5: the healthcare industry, where companies are using this technology for
Speaker 5: much faster drug development times. And then also we've seen
Speaker 5: an extraordinary interest in sovereigns country's coming in saying we
Speaker 5: want our own version of Chatchibt and our own native language.
Speaker 5: They have their own sets of concerns with regards to
Speaker 5: oversight that they can then control, and they are looking
Speaker 5: for US counterparts to enable them to bring these technologies
Speaker 5: to the market.
Speaker 3: How about the cyber iml of all of this, because
Speaker 3: it felt like that was a real tailwind for syvestalks
Speaker 3: as well. And then you get the awnings of Palo
Speaker 3: outs on networks and everyone's worried and then not going
Speaker 3: to factor in as quickly as people at anticipate. Is
Speaker 3: are there any parts of the technology space that you
Speaker 3: think is overdone? All the valuation's on attractive right now?
Speaker 5: Well, you know, what we're seeing at Jennison is a
Speaker 5: real tale of haves and have not those companies that
Speaker 5: are bringing technologies to the table that are truly disrupting
Speaker 5: the industries that they are in, and those companies that
Speaker 5: may be facing challenges over the longer period, particularly with
Speaker 5: regards to pricing. People talk about, for example, as you mentioned, cybersecurity,
Speaker 5: there's so many different flavors of where cybersecurity exists, whether
Speaker 5: it's in the end market, in your phone or your computer,
Speaker 5: whether it's in your enterprise or even whether it's within
Speaker 5: the internet. So one really has to be very careful
Speaker 5: in looking at the various players where they exist, whether
Speaker 5: or not they have pricing power, and the sustainability of
Speaker 5: that pricing power over a longer period of time.
Speaker 3: Is your focus about the US paying the output FORMERHA
Speaker 3: when it comes. There's been a lot of ongoing narrativists
Speaker 3: whether China is ahead with AI or US, and it
Speaker 3: feels as in the US still is. But where is
Speaker 3: the global opportunity because as we reference at the top
Speaker 3: of the show, European stocks are a record high. On
Speaker 3: the back of this, Japanese docks managed to go on
Speaker 3: the record high, and all of US are factoring in
Speaker 3: AI because of that.
Speaker 5: I think that the answer to this question is that
Speaker 5: the predominance of the opportunities that we see are in
Speaker 5: the United States. However, there are incredible opportunities overseas as well.
Speaker 5: For example, ASM Lithography has a dominating position in the
Speaker 5: area of lithography. This is an essential you cannot get
Speaker 5: around it in using this tool to make the next
Speaker 5: generation of semiconductors as well as the older generation of semiconductors.
Speaker 5: This company is an incredibly innovative company, which is reflected
Speaker 5: in its margin profile, grows profit margins, operating margins, free
Speaker 5: cash flow margins, and so we do find opportunities overseas
Speaker 5: as well, but the majority of the innovation that we're
Speaker 5: and is in the United States today.
Speaker 3: It's just been fantastic having your voice, your expertise on
Speaker 3: the show. Thank You, you will come back, have a
Speaker 3: wonderful weekend. Erika Klaarr, she's portfolio manager for the p
Speaker 3: Jim Jennison Technology Fund, really taking us through all the
Speaker 3: big hitters.
Speaker 4: Of the week.
Speaker 3: Mean while coming up WI another big hitter which eventually
Speaker 3: might become public. Reddit it's filing for its IPO. All
Speaker 3: the details on this company that's long been waiting to
Speaker 3: get into the public markets. Meanwhile, let's go to those
Speaker 3: public markets check in on what's happening with Walmart.
Speaker 4: Up sixtens of percent. We're basically seeing flat.
Speaker 3: Though on the company that it's looking to be acquiring
Speaker 3: a ten spot ninety nine Viseo holdings.
Speaker 4: Of course, Walmart's.
Speaker 3: Acquisition of Video is a warning bell, according to Massachusetts
Speaker 3: Democrat Elizabeth Warren.
Speaker 4: She's putting this in a post on.
Speaker 3: Social media platform x In fact, regulators should scrutinize this
Speaker 3: merger and they will potentially be looking as to whether
Speaker 3: it will extend Walmart's dominance, especially threatened competition.
Speaker 4: She says.
Speaker 3: Remember Walmart also gained on some strong results earlier in
Speaker 3: the week.
Speaker 4: This is Roommate Technology.
Speaker 3: Let's talk about potential IPOs San Francisco, BA social media
Speaker 3: company read it and has publicly filed for that IPO.
Speaker 4: Long waited, and.
Speaker 3: Of course it's going to be a big test for
Speaker 3: VC backtech IPOs for the year. Here to break down
Speaker 3: what we now know from the S one filing for
Speaker 3: New Meg's Katie Rufe, who you've been tracking this closely,
Speaker 3: waiting with baited breath, and we have ultimately got to
Speaker 3: group to the fact that this company is not yet profitable.
Speaker 6: That's true, that's right. They reported they have over eight
Speaker 6: hundred million in annual revenue, but they are not profitable.
Speaker 6: They lost less than one hundred million last year. Their
Speaker 6: losses are shrinking and their revenue is growing, but not profitable.
Speaker 6: They are hoping that this new AI partnership is going
Speaker 6: to be what excites Wall Street, the partnership with Google,
Speaker 6: and they're thinking that this is the time to announce that,
Speaker 6: you know, the Google partnership that's going to scrape some
Speaker 6: of their data from Reddit will excite.
Speaker 3: And we'll see whether, of course that extends to other
Speaker 3: large language models, most notably open Ai, where we understand
Speaker 3: now that sal Maltman, who is a temporary CEO for
Speaker 3: the company, is of course a big shareholder. But Katie
Speaker 3: remind us who is going.
Speaker 4: To be winning, who is whether or not they win.
Speaker 3: Remember, this is kind of a down round compared to
Speaker 3: its last money in from vcs at a ten billion valuation.
Speaker 3: But are we anticipating some good liquidity events for some
Speaker 3: KEYVC names out there.
Speaker 6: Well, so Bloomberg has reported that they might just be
Speaker 6: valued about five billion when they go public, although it
Speaker 6: remains to be seen because a lot of this just
Speaker 6: gets socided the night before based on how the market
Speaker 6: is trading. They have. You know, it's interesting because they've
Speaker 6: been around since two thousand and five, so some of
Speaker 6: their early shareholders are no longer major in vesters, you know,
Speaker 6: Conde Nasts actually they've been a major shareholder and Reddit
Speaker 6: and so this has been a long time coming for
Speaker 6: their investment. But you look at some of the early names,
Speaker 6: like a founder Alexis o'hanian. He wasn't even on the prospectus.
Speaker 6: He did not make the cuite for a five percent shareholder,
Speaker 6: which is what it's required to see in the filing.
Speaker 6: So you know, at this point, since Reddit's been around
Speaker 6: nineteen years, I would imagine a lot of the original
Speaker 6: shareholders actually sold shares on the secondary markets and got
Speaker 6: some early liquidity before the actual liquidity event.
Speaker 3: Advanced Magazine publishes, as you say, the new house family
Speaker 3: behind Conye Nast, and plenty of other publishing set to
Speaker 3: be a Kia and or in this particular event.
Speaker 4: We thank you, Katie.
Speaker 3: We've just breaking down the intricacies of what's going on.
Speaker 3: Let's get into well that secondary market, how active it is,
Speaker 3: how positive is on Reddit getting to any sort of
Speaker 3: whipne it anywhere near a five billion dollar evaluation. We've
Speaker 3: got Brian Lynch with us of Market inside of Equityzen
Speaker 3: which connects to a holders of private companies with invested
Speaker 3: seeking alternative investments, and just how active has read it
Speaker 3: been in the secondary market.
Speaker 7: Redda has definitely been a popular name in the secondary
Speaker 7: market over the years since Katie said, this is a
Speaker 7: nineteen year old company, So there has been a lot
Speaker 7: of demand foreign liquidity from early shareholders over time.
Speaker 8: You know. We know they did a tender offer in
Speaker 8: twenty twenty one, so I think that.
Speaker 7: Helped alleviate maybe some of that liquidity need. But I
Speaker 7: think there's still a lot of demand for a liquidity
Speaker 7: that will come you know, via the IPO. For what
Speaker 7: we've seen from you know, trades that have been reported
Speaker 7: recently in the secondary market is about a four and
Speaker 7: a half for four point eight billion dollar valuation. So
Speaker 7: the fact that they're eyeing a five billion dollar valuation
Speaker 7: kind of makes sense since companies tend to trade at
Speaker 7: a discount in the private markets where you don't have that.
Speaker 8: Same liquidity that you do in the public markets.
Speaker 3: Who if you can on and it's a tool from
Speaker 3: the activity in the secondary market.
Speaker 4: Is this going to be a retail name?
Speaker 3: Given well ready it became synonymous with means stock investing
Speaker 3: because the wool Street bets is it more likely to
Speaker 3: be bought by retail investment? Will institutional players be interested
Speaker 3: in a company that isn't yet posting profits.
Speaker 7: I think they're really betting on there being retail interest
Speaker 7: in this name or you know, in their s one
Speaker 7: they even say as a risk factor, the fact that
Speaker 7: there is retail interest, or they expect retail interest, is
Speaker 7: going to cause.
Speaker 8: Volatility in the stock.
Speaker 7: The fact that they are issuing shares to seventy five
Speaker 7: thousand power users, or allowing those users to buy into
Speaker 7: the IPO, will also create some volatility. Since there's no
Speaker 7: lock up to those shares, they're going to allow those
Speaker 7: shares to trade freely.
Speaker 8: So I think they're expecting a lot of.
Speaker 7: Retail activity, which isn't likely to increase the volatility of
Speaker 7: the stock, especially in its early days. From an institutional
Speaker 7: investor perspective, I think you're right. You know, we've seen
Speaker 7: over time that institutions are less interested in these unprofitable companies.
Speaker 8: And Reddit is interesting because while they are.
Speaker 7: A nineteen year old business, they really didn't start monetizing
Speaker 7: until twenty so their.
Speaker 8: Monetization engine is relatively.
Speaker 7: Young and unproven, and advertising is ninety eight percent of
Speaker 7: that engine now. And there are opportunities for them on
Speaker 7: the data license in front, as Katie mentioned the Google
Speaker 7: partnership they talked about this week, but a lot of
Speaker 7: that is very forward looking and unproven, so I'm curious
Speaker 7: to see how institutions.
Speaker 8: You take that into account.
Speaker 3: And Steve Hoffman, having been there at its birth in
Speaker 3: two thousand and five, still driving that new iteration of Reddit.
Speaker 4: And where is the risk factor in cozying.
Speaker 3: Up with large language model makers, with the big tech
Speaker 3: firms that want to scrape the data?
Speaker 8: Yeah, I think.
Speaker 7: I mean, we've heard this from the Reddit community that
Speaker 7: there has been some pushback about this and concern, but
Speaker 7: it really is these human conversations that are needed to
Speaker 7: train these models. And Reddit has, you know, billions of
Speaker 7: posts and comments on its platform that are the exact
Speaker 7: types of posts and comments that will help.
Speaker 8: Train those models.
Speaker 7: So I think there could be a little backlash from
Speaker 7: users on the platform, but it is a huge monetization opportunity.
Speaker 7: At the sixty million dollar contract they're talking about with Google,
Speaker 7: that only makes up about seven and a half percent
Speaker 7: of their current revenue, But if this is something that
Speaker 7: they can replicate with others, it could become a much
Speaker 7: more sizeable part of their business. But an interesting thing
Speaker 7: that they do note is that these language learning models.
Speaker 8: Could also hinder their business.
Speaker 7: So if people go to chat GBT instead of Reddit
Speaker 7: to ask whatever question they'd ask on Reddit, Reddit may
Speaker 7: lose daily active users and that's really going to hurt
Speaker 7: their ad revenue in the end.
Speaker 8: So it's a double edged sword.
Speaker 3: Well said, I'm interested in that advertising focus. Ultimately, when
Speaker 3: analysts go out there and try to decide whose reddits
Speaker 3: competitors are, are they immediately going to be looking to alphabet,
Speaker 3: to meta to other social media platforms.
Speaker 7: I think those are the obvious, you know, competitors in
Speaker 7: the space, and this market has gotten a lot more
Speaker 7: competitive as ad dollars have been pulled back. What Reddit
Speaker 7: is really trying to sell investors on is the fact
Speaker 7: that they can allow advertisers to reach a much more
Speaker 7: niche target audience. So, you know, you're a sleeping bag manufacturer,
Speaker 7: you want to talk to people who are camping. We
Speaker 7: have a conversation of thousands of people who are specifically
Speaker 7: talking about this and their ability to actually convert people.
Speaker 7: From their own research, they've shown that sixty one percent
Speaker 7: of their users say they're more likely to trust an
Speaker 7: ad that comes from Reddit.
Speaker 8: So if that can.
Speaker 7: Be proven in the clicks and the impressions that these
Speaker 7: ads get, they may have a bit of an edge,
Speaker 7: even though their audience is much smaller than these other platforms,
Speaker 7: but I think we're still early improving now.
Speaker 3: Trying to be proving out the niche factor and whether
Speaker 3: that's a drawer. Brian Lynch really great to catch up
Speaker 3: with you.
Speaker 4: Thank you.
Speaker 3: Time now for talking tech. First up, GM's autonomous driving unit, Cruise,
Speaker 3: is nearing the resumption of its robotaxi testing after the
Speaker 3: grounding of its fleet last year. Now, according to sources,
Speaker 3: Cruises in talks as several metro areas Houston Dallas, for example,
Speaker 3: about test driving on public roads with safety drivers, and
Speaker 3: before the suspension of the operations, company had hundreds of
Speaker 3: cars in San Francisco and smaller numbers across Austin, Houston,
Speaker 3: and Phoenix. Meanwhile, the investment firm that manages part of
Speaker 3: the fortune of Ali Baba chairman Joe Zai Bluepool, It's
Speaker 3: called It's all Over thirty four million Blue Owl shares
Speaker 3: for eighty three percent of its remaining holdings in that
Speaker 3: alternative asset Giant.
Speaker 4: Now, the shares would have been worth about.
Speaker 3: One or sixty million dollars in weighted average price at
Speaker 3: the stock over the last three months. Now, let's turn
Speaker 3: our attention to some other shares that are being hit
Speaker 3: at the moment. Warner Brothers Discovery. We were just looking
Speaker 3: at it before the break media company reporting its fourth
Speaker 3: quarter revenue profits. They fell short of estimates, and we're
Speaker 3: seeing the stock at a record low.
Speaker 4: Chris pal Mary joins us.
Speaker 3: Now on basically like weakness in linear television, weakness and
Speaker 3: the advertising spend. I mean, was there any area that
Speaker 3: was good?
Speaker 9: Yeah, I guess you could say if things weren't that bad.
Speaker 9: In their direct to consumer the streaming business, it was unprofitable,
Speaker 9: but for the full year it was profitable, and the
Speaker 9: losses were much lower in the fourth quarter, and subscribers
Speaker 9: were a little bit better than they hoped, but not
Speaker 9: dramatic growth. Actually lost subscribers in domestically instilled way behind
Speaker 9: Netflix and Disney in that department.
Speaker 3: And all of this just highlights the dia straits that
Speaker 3: basically the entire ecosystem finds itself in. We are understanding
Speaker 3: there's going to be M and A that's going to
Speaker 3: be consolid because a lot of these companies are struggling
Speaker 3: with the same sort of headwinds.
Speaker 9: Ran Yeah, And one of Brothers CEO, David Savo, is
Speaker 9: pretty candid on the call. He said, this really does
Speaker 9: illustrate all the challenges we're facing. I mean TV, traditional
Speaker 9: TV advertising down at double digits.
Speaker 10: And you know, the strikes really hurt them.
Speaker 9: It turns out hoots last year, actors and writers being
Speaker 9: out of not working, and so that studio business was down.
Speaker 9: You know, Warner Brothers had a big push in December,
Speaker 9: releasing three big movies at once. It was kind of
Speaker 9: bold where revenue theatrically we're up, where profits were down, Aquaman.
Speaker 8: Being the biggest disappointment there.
Speaker 9: So there's a lot of they talked about on the call,
Speaker 9: the superhero fatigue sort of. So there's a lot of
Speaker 9: work to be done in these traditional media companies.
Speaker 3: Sure is. And I know you'll be across at Chris Palmary.
Speaker 3: We really appreciate it. Welcome back to being that technology
Speaker 3: im caindin High in New York. Let's focus in on
Speaker 3: a company that eventually will have its market capitalization for
Speaker 3: all to see on the public markets Reddit. Of course,
Speaker 3: company filing publicly for its IPO just yesterday after the Bell.
Speaker 4: One name in the filing stood out.
Speaker 3: He's everywhere Open AI CEO Sam Altman was listed to
Speaker 3: one of the company's major shareholders, joining us now is
Speaker 3: Bloomgg's Ryan Gould, and.
Speaker 4: We shouldn't be surprised.
Speaker 3: He was a for eight whole days the interim CEO
Speaker 3: of this company. He of course was there at the
Speaker 3: there at the y Combinator alongside the founders of Reddit
Speaker 3: back in two thousands, early two thousands. But why does
Speaker 3: he hold so much in the stock, Like who else
Speaker 3: is also holding a lot of the stock here?
Speaker 11: Well, I mean, you know, he let their series be
Speaker 11: fifty million dollars in twenty fourteen. You know, he's sitting
Speaker 11: alongside the advanced magazine publishers entity that is sort of
Speaker 11: the new House family, the big Conde lost family that
Speaker 11: owns around thirty four percent of the stock there.
Speaker 10: You know, the new House family.
Speaker 11: Sort of bought read it in two thousand and six
Speaker 11: then spun it out in twenty eleven. So you know,
Speaker 11: there's still a lot of Kerry. But I think, Caroline,
Speaker 11: what's interesting is that this is kind of an ipio
Speaker 11: for the moment. It has everything. It has, Ai has
Speaker 11: sam Altman, it has advertising. It's reckoning with you know,
Speaker 11: large language models and what it means for partnerships and
Speaker 11: suddenly with Google and such. So yeah, I mean it's really,
Speaker 11: it's really an ipio for the moment, I would.
Speaker 3: Say, and ipeo that comes at time where markets are
Speaker 3: at record or near record highs. We've had just smp
Speaker 3: A clips a new one we've just had, you know,
Speaker 3: Europeans stock markets are a record high, Japanese stock markets
Speaker 3: are record high. What do you think the narrative has
Speaker 3: to be to ensure that we don't question the market
Speaker 3: cap too much. We're hearing from sources what about a
Speaker 3: five billion dollar level for Reddit.
Speaker 4: But that's a huge.
Speaker 3: Markdown from where it recently, well not recently but a
Speaker 3: few years ago, raised money.
Speaker 4: It is.
Speaker 11: It's a good point, and I think much of the
Speaker 11: sort of talk so far, you know, on the testing, testing,
Speaker 11: the waters meetings has been around. You know, let's not
Speaker 11: get too ahead of ourselves here. Let's be realistic. This
Speaker 11: is probably, you know, the first large venture capital back
Speaker 11: tech alperiod we've had in a while. Obviously Clavier happened
Speaker 11: last year, but this is kind of a different breed.
Speaker 11: It's had a very story journey, and so I think,
Speaker 11: you know, the banks investors are sort of coming together
Speaker 11: and saying, well, you know, let's not really push this
Speaker 11: too hard. Let's not end up in a situation where
Speaker 11: we feel like, you know, we've been of more, we
Speaker 11: can more than we can chew. And I think that
Speaker 11: kind of reflects and how Reddit thinking about it as well.
Speaker 11: It kind of wants to get past this history that
Speaker 11: it's had for the past two years of being a
Speaker 11: company that's just waiting and waiting and waiting to go public,
Speaker 11: and it wants to get on with being a public company.
Speaker 4: Steve Harfman himself wants to get on when.
Speaker 3: Being a public CEO, having helped birst It back in
Speaker 3: two thousand and five and still now he is the
Speaker 3: current CEO. Rangled great to catch up with him as
Speaker 3: IPO markets get a little bit more exciting now. Turning
Speaker 3: from IPOs to the Moon to space more broadly, American
Speaker 3: made lander It touched down on the Moon for the
Speaker 3: first time since the Apollo era, and it happened last night.
Speaker 3: I think a string of what have been pretty obvious
Speaker 3: failures and making it the first prime at spacecraft to
Speaker 3: ever reach the lunar surface. Intact Nalanda, built by Houston
Speaker 3: based Intuitive Machines, reach the Moon at six twenty three
Speaker 3: pm New York time on Thursday is what NASA Administrator
Speaker 3: Bill Nelson had to say about.
Speaker 12: The feet a commercial lander name Odysseus, powered by a
Speaker 12: company called Intuitive Machines, launched upon a SpaceX rocket, carrying
Speaker 12: a bounty of NASA scientific instruments and bearing the dream
Speaker 12: of a new adventure.
Speaker 3: Here to talk us through that dream of a new adventures,
Speaker 3: Bloomberg's Lauren Grush and Lauren this shows us not just
Speaker 3: a dream, but the reality of the way in which
Speaker 3: NASA is now working. It is turning to private companies,
Speaker 3: and not just SpaceX anymore, but more start ups, more
Speaker 3: other companies to help it basically make space a bit cheaper, right.
Speaker 1: It's it's you know, NASA does want to go back
Speaker 1: to the Moon, but they want to go back to
Speaker 1: your moon in a very different way where they bring
Speaker 1: many plenty of companies with them. And this was such
Speaker 1: a great example of kind of this new paradigm shift
Speaker 1: that NASA is working with. This was a private company,
Speaker 1: I mean as a publicly traded company, but a private
Speaker 1: sector entity landing on the Moon. They did receive some
Speaker 1: development funding from NASA a little less than one hundred
Speaker 1: and eighteen million dollars. They also had to raise their
Speaker 1: own capital in order to get the rest of the
Speaker 1: funding they needed to make this mission work.
Speaker 3: We now see a market cap of more than a
Speaker 3: billion for intuitive machines, and we've seen it rise about
Speaker 3: two hundred and twenty six million dollars in the day.
Speaker 4: We're twenty eight percent. Where does this all point us next?
Speaker 3: What are we anticipating that is achieved after this? We
Speaker 3: understand about well, south pole, more of the moon, but
Speaker 3: what are the next situations of the space economy?
Speaker 4: Right?
Speaker 1: So there are really two goals with this mission. One
Speaker 1: you mentioned this was the first mission to land closest
Speaker 1: to the south pole of the Moon. India also landing
Speaker 1: near the south pole but an enticing place for NASA
Speaker 1: because it's thought to have water ice, and so they
Speaker 1: are curious to see if we can go there to
Speaker 1: mine that water ice. It's where NASA hopes to land
Speaker 1: future astronauts.
Speaker 8: When they do return to the Moon.
Speaker 10: But the goal is also.
Speaker 1: To spur a commercial lunar economy. So the idea is
Speaker 1: that NASA wanted to trigger the development of this commercial
Speaker 1: lander so that the company could have a way to
Speaker 1: transport NASA payloads, but then also in turn use that
Speaker 1: lander to create and note their own business transporting experiments
Speaker 1: and payloads to the Moon. So that lander had NASA
Speaker 1: payloads on it, but it also had commercial customer payloads
Speaker 1: on it. So the idea is to see, you know,
Speaker 1: can that be a sustainable business moving forward?
Speaker 3: And who knows what Jeff Coon's piece is going to
Speaker 3: be doing rolling around on the Moon.
Speaker 4: After this Lord?
Speaker 3: But who are the other names out there? We put
Speaker 3: so much of our exuberance around the space economy on
Speaker 3: SpaceX call still a private company. We now look at
Speaker 3: Intuitive Machines entering on Lexican, but who else has been
Speaker 3: now them making moves and sometimes failing at that?
Speaker 1: Right, So another company kind of considered Intuitive Machines's rival.
Speaker 1: It was a company called Astrobotic. They actually launch launched
Speaker 1: their lander first. They were another partner with NASA's through
Speaker 1: the same program that Intuitive Machines was a partner with.
Speaker 1: They launched in January, but unfortunately they suffered an engine
Speaker 1: failure right after getting to space and ultimately precluded their
Speaker 1: chances of actually attempting to touch down.
Speaker 8: On the Moon, and they ended up bringing back that.
Speaker 1: Lander to Earth and disposing it in the atmosphere. But
Speaker 1: they're going to try again. They have another mission lined up.
Speaker 1: Intuitive Machines has more missions lined up. There's another company,
Speaker 1: Firefly Aerospace, that is also partnering with NASA. So NASA
Speaker 1: is looking to you know, dole out funding to those
Speaker 1: that really do want to make a business going to
Speaker 1: the Moon. There are plenty of companies that are interested.
Speaker 1: And you know, as this return to the Moon gets
Speaker 1: more mature, I feel like there's going to be even
Speaker 1: more opportunities for companies.
Speaker 4: To get into the game. And long Golash going to
Speaker 4: turn to you in those moments.
Speaker 3: We thank you so much for talking us through well
Speaker 3: really what it was meant by yesterday's landing. Meanwhile, coming
Speaker 3: up we'll have all the details into how disputes within Klana.
Speaker 3: That's of course, the fintech over in Europe has spilled
Speaker 3: over into a high profile VC drama. It's coming up
Speaker 3: next meanwhile, talking a drama. Unfortunately, there is some among
Speaker 3: Rivian shares. Check this out in terms of a long
Speaker 3: term share price chart of Rivian down almost ninety percent.
Speaker 3: Of course, this on the back of some lackluster earnings
Speaker 3: that were just posted after the bell on Wednesday, and
Speaker 3: yesterday the stock fell hard as they said they were
Speaker 3: going to be and letting go of.
Speaker 4: Some staff as well. From New York.
Speaker 3: This will be med technology. We're going to get into
Speaker 3: a bit of a VC drama brewing at the moment.
Speaker 3: Sequoia Capital has named a new board member for fintech Klana. Now,
Speaker 3: this is an effort to a conflict between Well the
Speaker 3: VC firm is from a partner Michael Moritz and Ashley
Speaker 3: Well issues between two of the founders of Klana too,
Speaker 3: Hitch help break it all down. Kind of extraordinary story
Speaker 3: bringing baxst to Sarah McBride. So what's going on? What
Speaker 3: was the spark of the issue that's occurred with Klana?
Speaker 2: Oh, Caroline, it is such a mess. So what happened
Speaker 2: is a little bit unclear, but it seems that there
Speaker 2: was some sort of dispute at Klarna about a governance
Speaker 2: or control issue and Sequoia Capital's partner, who was on
Speaker 2: the board, Matt Miller, saw things one way and Michael Moritz,
Speaker 2: a legendary VC who was until very recently a partner
Speaker 2: at Sequoia, side another way. And the upshot is that
Speaker 2: Michael Morritz still has his board seat. He now represents
Speaker 2: a related firm called Sequoia Heritage and Matthew Miller, the
Speaker 2: board member from Sequoia Capital, is out. I know that's
Speaker 2: a little head spinning, but hopefully it makes a bit
Speaker 2: of sense.
Speaker 3: And so the drama seems to have unfolded between Sebastian Victor,
Speaker 3: the two co founders, people sort of taking side. How
Speaker 3: often or not does sort of drama accursor. It feels
Speaker 3: like it's relatively rare, but of course the money's involved,
Speaker 3: things do get dramatic, right.
Speaker 2: So Klarna is doing very well. It had some hiccups,
Speaker 2: as many companies did over the past couple of years,
Speaker 2: but basically it's a very richly valued company that should
Speaker 2: be headed for an IPO at some point. And when
Speaker 2: this type of drama unfolds, it's usually behind the scenes.
Speaker 2: Whatever disagreements happen at the board level rarely make it
Speaker 2: beyond those doors.
Speaker 4: And then when they do.
Speaker 2: To have two partners affiliated so closely with one firm
Speaker 2: have a dispute like this is almost unheard of. So
Speaker 2: people are surprised it happened, but more than anything, they're
Speaker 2: surprised at how word of it became so public and
Speaker 2: the CEO ended up having to fly to Silicon Valley
Speaker 2: to make amends and smooth things over with Sequoia. Sequoias
Speaker 2: has had to appoint a new board member. It's all
Speaker 2: gotten unusually messy.
Speaker 3: And all of the time, where Sequoia itself is transitioning
Speaker 3: and having new leadership and splitting from its China division,
Speaker 3: there was a whole host of stories going on on
Speaker 3: your side of the world right now, Sarah McBride, we're
Speaker 3: so pleasy you're able to bring it to us, the
Speaker 3: inside trank you. Now, let's stick with VC maybe a
Speaker 3: slightly calmer part of it at the moment, and we're
Speaker 3: pleased to welcome Jet Fine onto the show for VC Spotlight.
Speaker 3: Let's actually talk about the investments being made at the moment.
Speaker 3: Let's talk about the bread and butter of what you
Speaker 3: up to a headline benches. It is wonderful to have
Speaker 3: you with us, Jet, and one I've had time and
Speaker 3: time again, an interestingly quite a lot this week at
Speaker 3: a conference was that consumer tech is dead, don't go
Speaker 3: anywhere near it. That was all twenty ten and onwards.
Speaker 3: And for now we've all got to be in healthcare
Speaker 3: and climate tech and AI of course, but you don't
Speaker 3: think that's the.
Speaker 10: Case, Well, thanks Caroline.
Speaker 13: Yeah, it's a pleasure to be with you this morning.
Speaker 13: Thank you for having me. Yeah, as you mentioned, I'm
Speaker 13: a partner at Headline, and we are a tech enabled
Speaker 13: global mentor capital firm where I focus on consumer oriented investments,
Speaker 13: among other things, and we've had the good fortune over
Speaker 13: the years to lead consumer investments like Go Puff Bumble, Axios,
Speaker 13: The Real Real, Farfetch among others. And listen, you're exactly right,
Speaker 13: you know. To answer your question, I think you have
Speaker 13: to look behind the front page here, a little past
Speaker 13: the rumor mill. You know, if you look at Fang
Speaker 13: for example, Fang is all consumer. In fact, the most
Speaker 13: valuable companies in.
Speaker 4: The world are our.
Speaker 13: Consumer companies, Apple, Amazon, Tesla, Snap, Facebook of course, right,
Speaker 13: and you know, going forward, we think at Headline that
Speaker 13: that will continue to be the case, particularly given this
Speaker 13: generational technology shift with with AI.
Speaker 3: Let's get more specific then, because you mentioned Tesla and Snap,
Speaker 3: but both have faced significant headwinds their own share prices
Speaker 3: and headwinds to ultimately consumer demand for some of their
Speaker 3: products at the moment and stimying growth. When you're looking
Speaker 3: at some of the exits that you've had, I mean,
Speaker 3: really notable companies but Farfetch has had a terrible time
Speaker 3: of it and ultimately sort of big bought out of bankruptcy.
Speaker 4: E commerce may be a hard place to be.
Speaker 3: Where is the place to be when you want to
Speaker 3: have exposure to a consumer that is still out there
Speaker 3: and is still buying some stuff.
Speaker 13: Absolutely, Yeah, it's a great point. Listen, consumer companies that
Speaker 13: have historically relied on paid customer acquisition are facing real headwinds,
Speaker 13: and so you know, what we're quite excited about at
Speaker 13: headline is the opportunity to partner with companies that have
Speaker 13: real distribution advantages. And what I mean by that are
Speaker 13: companies that leverage the benefits of community content, celebrity or creators.
Speaker 13: And we're seeing more and more of those companies come up,
Speaker 13: of course in the world of of TikTok, Timu Shean
Speaker 13: and other companies that leverage those distribution advantages beyond beyond
Speaker 13: solely paid acquisitions.
Speaker 3: So am I anticipating more celebrity beauty brands?
Speaker 9: Is that?
Speaker 3: Is that the way that we're going to be sort
Speaker 3: of seeing this come to life?
Speaker 13: Well, certainly, certainly there will be more. Absolutely, I think
Speaker 13: that's one way that companies can find real distribution is
Speaker 13: utilizing celebrity creators and content and community.
Speaker 3: Well, Jet, we'll see what companies you're backing, watch ones
Speaker 3: manage to find that consumer fit and what celebrities are
Speaker 3: currently bringing things to market headline ventures general partner, Jet
Speaker 3: Fine really great to catch up with you.
Speaker 4: Truly global perspective.
Speaker 3: This company is everywhere in Latin America, Asia, around Europe.
Speaker 3: Let's checking on other earnings today. Carvana shares absolutely rocketing.
Speaker 3: Company reported profits are some past estimates. Managing to avoid
Speaker 3: headwinds from well somewhat circumvent and reduce some of those
Speaker 3: headwinds from high interest rates from inflation. Joining us now
Speaker 3: for more on that earnings report, CEO founder Annie Garcia
Speaker 3: and thirty one percent higher. And you have had to,
Speaker 3: like many in the private market and the public market,
Speaker 3: suddenly shift gears from growth at all costs to profits
Speaker 3: at all costs. What have you been doing to be
Speaker 3: able to prove yourself in this recent report?
Speaker 14: So I think you know it's one of those things
Speaker 14: where you start see results come through pretty quickly, but
Speaker 14: there's a lot of work that goes in for a
Speaker 14: long time before. And so I think you know twenty
Speaker 14: twenty two like it was for so many companies. Was
Speaker 14: a time where the winds shifted pretty quickly for us
Speaker 14: and for everyone else. And I think the team came together,
Speaker 14: we came up with the plan that we thought really
Speaker 14: kind of made sense in that moment with the new
Speaker 14: pressures that were out there in the world. And I
Speaker 14: think the team has just executed incredibly well over the
Speaker 14: last two years, and we're starting to see that now.
Speaker 10: I think the results that we just reported and the results.
Speaker 14: That we see coming in the future are something that
Speaker 14: we're extremely excited about. And it is the result of
Speaker 14: the team coming together and doing incredible work. And so
Speaker 14: thank you to the team. Just cannot thank you enough
Speaker 14: for everything you've done.
Speaker 3: And some of the analysts like William Blair, analysts Sharon
Speaker 3: really talking about the steep increases and profits.
Speaker 4: And the return to unit growth.
Speaker 3: But some more cynical people out there would say, look,
Speaker 3: this thirty percent optic in the stare price is because
Speaker 3: it's just squeezing out some of the shorts and you
Speaker 3: wear a heavily shortened name. What do you say to
Speaker 3: those people who are still standing by betting against your company?
Speaker 14: Oh, well, I think there's room in the world for shorts,
Speaker 14: and I think, you know, it's okay. Skepticism is helpful,
Speaker 14: it creates pressure. I think there was a one of
Speaker 14: the ancient I believe Greek philosophers said, hater's going to
Speaker 14: hate players going to play, But me, I'm just gonna shake, shake, shake.
Speaker 10: Shake it off, shake it off.
Speaker 14: I believe that may have been Aristotle, that may have
Speaker 14: been it could have been Plato too.
Speaker 10: I could be wrong.
Speaker 4: Well, she has a way with words. I will give
Speaker 4: her that.
Speaker 3: I'm interested there and eerie in more seriously, like the
Speaker 3: debt market, that's been a tough space, and we are,
Speaker 3: of course as Bluemberg focused on equity markets.
Speaker 4: We're all focused on bonds in particular.
Speaker 3: How are you thinking about well not having to restructure
Speaker 3: once again, how are you thinking about paying down debt?
Speaker 14: I think, you know, listen, the most important thing that
Speaker 14: we do as companies we deliver great experiences to customers,
Speaker 14: and we grow into this huge opportunity that we have.
Speaker 14: I think it was really hard from the perspective of
Speaker 14: a year ago to see the incredible gains that the
Speaker 14: team has made over the last year. And I think
Speaker 14: that those games were possible because the offering that we
Speaker 14: give to customers is unique. The business that we've built
Speaker 14: is very hard to replicate, and the team that we've
Speaker 14: assembled is incredible. And so I think our job now
Speaker 14: is to take advantage of those things and just keep
Speaker 14: moving forward.
Speaker 10: And I think the rest take care of itself.
Speaker 3: You talk about that team, and I know as a
Speaker 3: business leader, it's incredibly hard to have to think about
Speaker 3: how you scale back or reduce headcount. Is that something
Speaker 3: you're having to think about into the future.
Speaker 4: Is the team where you want it?
Speaker 10: The team's in a great spot.
Speaker 14: I think you know, we, like I said, twenty twenty
Speaker 14: two is a tough time for us, like it was
Speaker 14: for so many companies. We had to make adjustments. The
Speaker 14: team's in a great spot. I think you know. One
Speaker 14: of the things that we did a really I would
Speaker 14: like to say, did a really good job with going
Speaker 14: through that period is we were able to make tough
Speaker 14: decisions and to move forward and to do the hard
Speaker 14: work that had to be done to put ourselves in
Speaker 14: a position to really succeed. And I think this is
Speaker 14: now a team that is battle tested and battle hardened,
Speaker 14: and it's a team that, as I said, I every
Speaker 14: time you bring it up I'm going to just say
Speaker 14: thank you because I could not be more grateful.
Speaker 3: And let's look at ultimately where the consumer is at
Speaker 3: from your perspective, because you have been able to take
Speaker 3: more of a cart for each car that you're shifting,
Speaker 3: but consumers have bought a lot of second hand vehicles
Speaker 3: that we are seeing a more competitive space. How do
Speaker 3: you outperform bill competitors?
Speaker 14: So I think you know, this is a big, mature
Speaker 14: industry right Every year, roughly speaking, there's about forty million
Speaker 14: used cars that are transacted in the US. And that's
Speaker 14: because there's two hundred and seventy million cars out there
Speaker 14: driving around. And as a consumer, all of us, you know,
Speaker 14: we get tired of the car we're driving and we're
Speaker 14: insted in driving a new one.
Speaker 10: And so that pushs us to go do a swap.
Speaker 14: And I think what the entire automotive industry is all
Speaker 14: about is it's about finding those moments where one customer
Speaker 14: wants to switch into the next car and making it
Speaker 14: as simple as possible and is cost efficient as possible
Speaker 14: to get that car from one customer to the next.
Speaker 14: And I think that's what our whole business is designed
Speaker 14: to do. We've built an entirely new supply chain. We've
Speaker 14: built an entirely new transaction capability. It's supported by all
Speaker 14: this technology that we've built to weave it together, so
Speaker 14: it's simple for a customer. And I think as long
Speaker 14: as we keep delivering that experience that gives them the
Speaker 14: best price, the best selection, the best experience, I think
Speaker 14: we're in a really good spot. We grew, you know,
Speaker 14: from a seat of an idea in twenty thirteen to
Speaker 14: where we are today by doing that in a market
Speaker 14: that was relatively flat.
Speaker 10: I think today there.
Speaker 14: Are actually, you know, there have been some tailwinds that
Speaker 14: have been nice, and those tailwinds have been lowering car
Speaker 14: prices which were very high for several year period. That
Speaker 14: was tough for a lot of consumers and made it
Speaker 14: hard for them to switch to that next car they
Speaker 14: may have been excited about. So I think, you know, overall,
Speaker 14: our goal is just to keep executing, keep delivering great
Speaker 14: experiences and take market share. And we think secondarily that
Speaker 14: we think secondarily the market will do its thing.
Speaker 4: Market's going to do its thing.
Speaker 3: Caw Vana CEO, you do your thing on TV with us,
Speaker 3: we can so much. Founder Ernie Garcia. We appreciate you
Speaker 3: being with us. We've got some breaking news Jamie Diamond.
Speaker 3: He's been letting go of some shares, one hundred and
Speaker 3: fifty million dollars worth of JP Morgan shares and what.
Speaker 4: Is a first sale.
Speaker 3: His family is selling that amount of the bank stock
Speaker 3: from New York, from San Francisco. That does it for
Speaker 3: this edition of Blue Meg Technology Don't Forget About Podcast