WEBVTT - Tech Selloff and Affirm Earnings 0:00:02.320 --> 0:00:05.680 From the heart of where innovation, money and power collive 0:00:06.440 --> 0:00:10.959 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:11.039 --> 0:00:27.520 Emily Jay. I'm Emily Check in San Francisco and this 0:00:27.560 --> 0:00:30.240 is Bloomberg Technology coming up in the next hour. Stocks 0:00:30.320 --> 0:00:33.280 plunge after FED chair J Paul warrens there is war 0:00:33.600 --> 0:00:36.960 pain to come for the economy, the NAZAC and the 0:00:37.120 --> 0:00:39.920 SMP posting their biggest one day loss in two months. 0:00:40.200 --> 0:00:42.000 We're gonna get to read on how a hawk ish 0:00:42.000 --> 0:00:46.600 FED will impact tech, venture capital and more. Plus what 0:00:46.640 --> 0:00:48.720 does it mean for buy now, pay later? I'll ask 0:00:48.760 --> 0:00:51.560 a firm CEO max selection. With America's credit card debt 0:00:51.600 --> 0:00:56.840 nearing highs not seen since the financial crisis and flying 0:00:56.920 --> 0:01:00.160 taxis might not just be fodder for sci fi and more. 0:01:00.160 --> 0:01:01.680 We're going to show you a company with hopes to 0:01:01.720 --> 0:01:05.679 get them in the air and soon like kind of soon. 0:01:06.560 --> 0:01:08.920 Want to dig deeper into what this means for tech 0:01:08.959 --> 0:01:12.119 and investing and bringing Steve Sarah Sino, founder and general 0:01:12.120 --> 0:01:14.840 partner at Active in Capital, a growth stage from that 0:01:14.880 --> 0:01:19.960 focuses on commerce. So Steve, just what was your reaction 0:01:20.000 --> 0:01:23.640 to these comments from j Pal and how do you 0:01:23.680 --> 0:01:27.840 think it's going to impact markets more broadly. Yeah, well, 0:01:27.920 --> 0:01:31.240 if you listen to his comments, uh during his last speech, 0:01:31.280 --> 0:01:33.120 it's pretty clear that they weren't going to move off 0:01:33.200 --> 0:01:35.200 rate hikes anytime soon, even though there was a lot 0:01:35.200 --> 0:01:38.160 of wishful thinking on behalf of people like me other investors. 0:01:38.760 --> 0:01:41.360 I think this is a good desk reality that happened 0:01:41.400 --> 0:01:44.880 just as people are returning from vacation, getting kids back 0:01:44.880 --> 0:01:48.440 into school. Investors are paying attention again. And I'm not 0:01:48.480 --> 0:01:51.160 surprised by how much market was down. I think, look, 0:01:51.200 --> 0:01:54.800 the four trajectory here doesn't look great. Um. And there's 0:01:54.800 --> 0:01:57.279 some interesting things when you look at the overall public 0:01:57.280 --> 0:02:02.240 market versus private markets. You predicted there would be millions 0:02:02.280 --> 0:02:05.320 of layoffs in tech specifically the last time we spoke, 0:02:05.400 --> 0:02:06.960 that was just a couple of months ago. What do 0:02:07.000 --> 0:02:09.880 you think now? I did so that was back in May. 0:02:10.600 --> 0:02:13.200 Also at at that time of restimation was the market 0:02:13.240 --> 0:02:15.240 was going to pull back. I think the layoffs has 0:02:15.280 --> 0:02:19.200 just begun. Um. It's happening across almost everyone's portfolio and 0:02:19.320 --> 0:02:23.680 probably eating their companies. And what's interesting is even though 0:02:23.720 --> 0:02:26.560 the overall markets are down more than particularly on the 0:02:26.600 --> 0:02:29.280 growth side, growth tech stocks are down much more than 0:02:30.560 --> 0:02:33.679 what we're hearing from the bigger consultants, meaning the allocators 0:02:33.680 --> 0:02:36.880 of capital to investors. The Q two numbers are gonna 0:02:36.919 --> 0:02:39.680 come in down four to six percent. So what does 0:02:39.720 --> 0:02:43.440 that mean. That means that investors gps haven't taken their 0:02:43.480 --> 0:02:45.800 medicine and there is going to be more pain in 0:02:45.840 --> 0:02:47.959 our market. And that pain is in the form of layoffs. 0:02:48.200 --> 0:02:50.200 It's going to be the form of something like twenty 0:02:50.680 --> 0:02:54.919 of all venture back companies going out of business. Of 0:02:54.960 --> 0:02:59.320 venture back companies aren't going to survive this absolutely, like 0:02:59.440 --> 0:03:01.520 we saw this in two thousand, two thousand one, two 0:03:01.520 --> 0:03:05.040 thousand two. And what happens when the market pulls back, 0:03:05.400 --> 0:03:08.200 Investors start taking their time to invest, we're more patient 0:03:08.200 --> 0:03:12.080 with capital. LPs pulled back as well, and there's just 0:03:12.160 --> 0:03:15.920 less capital go around. We're seeing it also less company creation. 0:03:16.320 --> 0:03:18.639 So the pace of company creation last year was much 0:03:18.680 --> 0:03:20.919 faster than this year. And what you're gonna have to 0:03:20.960 --> 0:03:23.839 do as an investors rationalize your companies um and every 0:03:23.840 --> 0:03:26.600 investor is going through that right now. So hang on, 0:03:26.639 --> 0:03:28.560 are you saying you think this is gonna be as 0:03:28.560 --> 0:03:32.520 bad as the dot com bust? I don't know. That's 0:03:32.520 --> 0:03:35.520 a question. I'm like, that's a question. I think this 0:03:35.560 --> 0:03:37.960 could if this is a prolonged period. What what's really 0:03:37.960 --> 0:03:43.000 painful for tech investors and growth investors generally is prolonged 0:03:43.400 --> 0:03:47.800 market malay's prolonged volatility because it's a lot easier to 0:03:47.840 --> 0:03:50.440 come in and invest behind and market that's a little 0:03:50.440 --> 0:03:52.840 bit more stable or market they were, you know, interest 0:03:52.920 --> 0:03:55.040 rates or continue to go down when they're going up 0:03:55.080 --> 0:03:56.800 like this. This hasn't happened a long time, and I 0:03:56.800 --> 0:03:59.320 think when the pace slows, you have to rationalize where 0:03:59.360 --> 0:04:01.400 you put your cap at all. So if this last 0:04:01.480 --> 0:04:03.160 for two or three years, you could see more than 0:04:03.800 --> 0:04:05.680 of the company's about a business it will last for 0:04:05.720 --> 0:04:08.520 a year or two. The market rebound much faster. And again, 0:04:09.080 --> 0:04:10.800 you know, this is tied into what Pal did today 0:04:10.840 --> 0:04:15.160 with regards to inflation. Growth stocks are very very sensitive 0:04:15.200 --> 0:04:17.640 to interest rates, and interest rates at three per cents 0:04:17.680 --> 0:04:19.800 one thing, it's going to five six percent is going 0:04:19.839 --> 0:04:21.480 to be another. And that's what we're waiting for because 0:04:21.480 --> 0:04:24.039 we can invest in these valuations if rates are going 0:04:24.160 --> 0:04:28.240 much higher. So are you estimating a one, two or 0:04:28.279 --> 0:04:30.800 a three year downturn? And how is that impacting your 0:04:30.880 --> 0:04:34.839 investment strategy. Yeah, right now, we're expecting a two to 0:04:34.920 --> 0:04:37.719 three year malays, so meaning our companies need to have 0:04:37.760 --> 0:04:40.599 capital for at least two and a half to three years. Man, i'mum, 0:04:40.640 --> 0:04:42.480 what is that like? What companies are We looking at? 0:04:42.520 --> 0:04:45.359 Two types? So one is these companies being created in 0:04:45.360 --> 0:04:48.200 this environment and this happened back in two thousand, Better 0:04:48.320 --> 0:04:53.720 DNA very strong culture around protecting capital, and they're just 0:04:53.760 --> 0:04:56.479 growing up in a different way. Those companies are rising 0:04:56.480 --> 0:04:58.800 from the ashes of this mass. They're gonna be very strong. 0:04:58.839 --> 0:05:01.240 We're very interested in the earlier stage. You also have 0:05:01.279 --> 0:05:05.120 companies at the much leader stage, meaning they've got hundred 0:05:05.320 --> 0:05:08.359 hundreds of millions of revenue. And what's happened is a 0:05:08.400 --> 0:05:10.640 lot of the late station investors have actually pulled out 0:05:10.680 --> 0:05:12.960 of the market, and there's a lot of reasons for that, 0:05:13.360 --> 0:05:15.880 but because they're not there, other investors now can step 0:05:15.920 --> 0:05:18.919 in at reasonable valuation. So it's really a barbell. Some 0:05:19.000 --> 0:05:21.440 of these very large companies with proven business models, high 0:05:21.480 --> 0:05:24.120 gross profit, they're going to do great. Um, two of 0:05:24.120 --> 0:05:27.320 our companies, Saloonas and Triads just raised capital. And then 0:05:27.360 --> 0:05:30.240 these earlier stage businesses that are coming out rising out 0:05:30.240 --> 0:05:32.279 of the ashes are probably going to do really well. 0:05:32.320 --> 0:05:34.160 They're going to prove their business model, they're going to 0:05:34.240 --> 0:05:36.800 prove their unit economics, and that's when people like me 0:05:36.920 --> 0:05:40.560 come in and put capital onto supercharged growth. So there 0:05:40.560 --> 0:05:44.440 are opportunities, but there will be pain. Let's talk a 0:05:44.480 --> 0:05:46.279 little bit more about that pain. What does that mean 0:05:46.560 --> 0:05:50.640 from a labor market perspective. I mean, there's been some 0:05:51.000 --> 0:05:54.279 really interesting swings in the labor market. You know, you're 0:05:54.320 --> 0:06:00.360 saying layoffs while we've got unemployment at historic lows. Yeah, 0:06:00.400 --> 0:06:02.680 the data is really hard to wrap our head around 0:06:02.720 --> 0:06:05.680 because it's not what we're seeing in the market generally. 0:06:06.200 --> 0:06:09.680 So I you know, I can't vouch for the government data, 0:06:09.720 --> 0:06:12.400 but we will see layoffs in tech and there's some 0:06:12.440 --> 0:06:16.480 interesting things, um that are happening when you start laying 0:06:16.520 --> 0:06:19.919 people off. You know, we're seeing salaries and just general 0:06:20.520 --> 0:06:23.200 inflation around the cost of hiring really good people starting 0:06:23.240 --> 0:06:25.520 to slow a little bit. This is typically what you 0:06:25.520 --> 0:06:27.640 would see in a down market, but it's not being 0:06:27.680 --> 0:06:32.039 reflected in the data. The interesting thing is our companies 0:06:32.040 --> 0:06:35.200 with B two B exposure are doing very well. Some 0:06:35.279 --> 0:06:38.320 of them have re accelerated growth. Our companies with more 0:06:38.360 --> 0:06:41.240 B two C exposure. On the converse side are having 0:06:41.240 --> 0:06:43.640 a harder time, and this is more recent, and this 0:06:43.720 --> 0:06:47.599 could be because inflation is really affecting people's pocketbooks. But 0:06:47.640 --> 0:06:49.320 when you look at this, this is why this market 0:06:49.360 --> 0:06:52.760 is so difficult to parse, is that there are companies 0:06:52.760 --> 0:06:54.880 performing really well, but right now we see more on 0:06:54.920 --> 0:06:57.960 the B two B side than the B two C side. 0:06:58.440 --> 0:07:01.880 All right, Steve, thanks for giving it to a straight 0:07:01.960 --> 0:07:05.320 activate founder and general partner, Steve Saraceno, We're gonna let 0:07:05.320 --> 0:07:09.760 you get on with your weekend, hopefully put some of 0:07:09.760 --> 0:07:11.800 this doom and gloom out of your head for a while. 0:07:21.040 --> 0:07:24.119 A firm fat expectations in its latest earnings report, except 0:07:24.200 --> 0:07:28.000 for a lower than expected forecast, siting macro economic uncertainty 0:07:28.240 --> 0:07:31.920 ahead that sent shares tumbling. This as we heard from 0:07:31.920 --> 0:07:35.120 FED chair, your own pal that taming inflation will likely 0:07:35.160 --> 0:07:39.040 require restrictive monetary policy for some time. Let's talk about 0:07:39.080 --> 0:07:41.440 it all with the firm CEO and co founder, Max 0:07:41.520 --> 0:07:43.560 Option himself. Max, great to have you back with us. 0:07:43.600 --> 0:07:46.680 So listening to your call, you said, the economy is 0:07:46.720 --> 0:07:49.880 more than likely in the beginning stage of a downturn. 0:07:50.040 --> 0:07:52.840 Now that we see and hear what j Pal has 0:07:52.880 --> 0:07:56.280 to say. The FED is going to stay hawkish. Do 0:07:56.320 --> 0:08:01.080 you think a recession is inevitable? You know, I'm no 0:08:01.160 --> 0:08:04.720 macro economists, so I'm glad uh. You know Mr Powell 0:08:04.880 --> 0:08:08.160 is uh is in charge, not me. UM. I do 0:08:08.320 --> 0:08:13.000 think that the need for by out pay leader goes up. 0:08:13.040 --> 0:08:15.440 Both in a case of recession, we go folks are 0:08:15.560 --> 0:08:17.679 trying to make sure that their cash flow is impacted 0:08:17.680 --> 0:08:20.600 a little as possible, and in the inflation, which is 0:08:20.720 --> 0:08:23.240 where we are right now, the pocketbook is hit harder 0:08:23.240 --> 0:08:25.160 because everything is a little bit more expensive, so we 0:08:25.200 --> 0:08:28.880 are seeing more demand for the product. But because of 0:08:28.920 --> 0:08:34.040 the uncertainty in the macroeconomic events ahead, it seems very 0:08:34.120 --> 0:08:36.640 pertinent to be very very focused on credit outcomes and 0:08:36.679 --> 0:08:39.440 that that's reflecting our guide. Can you give us some 0:08:39.480 --> 0:08:42.040 color on what you're seeing in consumer spending habits. You know, 0:08:42.160 --> 0:08:46.439 obviously consumers are under pressure. Everything is more expensive, from 0:08:46.480 --> 0:08:52.520 gas to groceries. How is that reflected in your data? 0:08:53.640 --> 0:08:56.440 So there's definitely the great rotation. We've talked about this before, 0:08:56.640 --> 0:09:02.440 but the you know, sometimes it may a tremendous number 0:09:02.520 --> 0:09:06.280 of goods were replaced with services, and I think It 0:09:06.320 --> 0:09:09.240 corresponds more than anything to this idea that we've all 0:09:09.280 --> 0:09:11.120 been cooped up for a long time because of the pandemic. 0:09:11.559 --> 0:09:14.439 But over the fourth of July weekend, we saw unbelievable 0:09:14.520 --> 0:09:20.800 growth in travel, um experiences, tickets, all the sort of 0:09:20.880 --> 0:09:22.960 standard things that you would expect people sort of jump 0:09:23.000 --> 0:09:25.800 back onto after COVID. They're all still doing really really well, 0:09:25.840 --> 0:09:28.680 and the demand is very very strong. There's definitely real 0:09:28.720 --> 0:09:31.760 weakness relative to last year and even the year before, 0:09:31.920 --> 0:09:36.880 and things like homewears, um and uh, quite a lot 0:09:36.920 --> 0:09:38.920 of other things that just what we pre purchased during 0:09:38.920 --> 0:09:41.920 the pandemic, if you will. Now our point of view 0:09:41.920 --> 0:09:44.240 is actually a little bit skewed because we're still growing 0:09:44.440 --> 0:09:49.440 really really quickly. We saw, you know, over growth in 0:09:49.480 --> 0:09:52.200 general merchandise, which is just the growth we're seeing within 0:09:52.440 --> 0:09:55.480 our partners like Walmart and Target and Amazon. Folks are 0:09:55.520 --> 0:09:57.600 buying commodities because that you know, that's something that you 0:09:57.600 --> 0:09:59.880 buy all the time anyway, and so we're seeing short 0:09:59.920 --> 0:10:01.800 and growth within the merchants that we have. But I 0:10:01.800 --> 0:10:05.480 think very broadly, e commerce grew only seven percent last year, 0:10:05.520 --> 0:10:07.199 which is probably the lowest number in a very long 0:10:07.240 --> 0:10:10.640 time for comparison, Affirm grew eleven fold that much, but 0:10:11.640 --> 0:10:14.040 perhaps in a better year would have growing an investor. 0:10:15.240 --> 0:10:19.840 So we're seeing credit Americans, credit at you know, has 0:10:19.920 --> 0:10:23.600 not seen since the financial crisis. I'm wondering if the 0:10:23.600 --> 0:10:25.840 economy is in a more difficult position and consumers are 0:10:25.920 --> 0:10:28.360 under pressure, does that mean more business for by now 0:10:28.440 --> 0:10:32.040 pay later and Affirm? But is that not good for 0:10:32.080 --> 0:10:37.520 the economy. You know, it's a careful balance. Um, it 0:10:37.720 --> 0:10:40.320 is definitely good for us so long as we're good 0:10:40.320 --> 0:10:42.920 at our job, which is managing risk and underwriting, and 0:10:42.960 --> 0:10:45.280 we are. We are very confident in our ability, and 0:10:45.559 --> 0:10:48.560 our latest numbers proved that pretty decisively. So you know, 0:10:48.800 --> 0:10:53.000 I think that that's we continue to deliver on that promise. Obviously, 0:10:53.200 --> 0:10:57.160 over extending the consumer is a terrible idea. Nothing stays 0:10:57.240 --> 0:10:59.400 more than looking at something you purchased and realizing that 0:10:59.440 --> 0:11:01.920 you can't pay off over time, and so we are 0:11:02.120 --> 0:11:04.680 very careful not to extend credit where we think the 0:11:04.720 --> 0:11:08.160 consumer will not be able to carry the burden. Um. 0:11:08.200 --> 0:11:09.880 It does help that we don't charge late fees, we 0:11:09.920 --> 0:11:11.720 don't have compounding interest. All the things that we build 0:11:11.760 --> 0:11:14.200 in the product from the very beginning to fully align 0:11:14.240 --> 0:11:17.600 ourselves with our end consumer help us be motivated to 0:11:17.640 --> 0:11:20.559 make the right decisions, and so we feel good about 0:11:20.640 --> 0:11:24.439 our position, our ability to help consumers. UM. I think 0:11:26.080 --> 0:11:29.160 America will have to borrow more because the prices are 0:11:29.200 --> 0:11:31.400 going up, and we're here to do our part, but 0:11:32.000 --> 0:11:33.840 world also gonna have to be careful with how we 0:11:33.920 --> 0:11:38.560 use credits. The delinquency rate rose more than two for 0:11:38.600 --> 0:11:41.960 the first time this year in July and August. Is 0:11:42.000 --> 0:11:44.040 that an alarming sign for you? I think it was 0:11:44.040 --> 0:11:47.680 more like one percent about a year ago. And how 0:11:47.760 --> 0:11:50.559 are you addressing that beyond beyond you know, changing or 0:11:50.600 --> 0:11:56.480 tightening the criteria for underwriting a great question. UM. Credit 0:11:56.520 --> 0:11:58.880 performance is generally very, very seasonal. So if you sort 0:11:58.880 --> 0:12:01.000 of look at the charts that we put in our 0:12:01.040 --> 0:12:04.320 supplement as we file all of our filings, you'll see 0:12:04.360 --> 0:12:08.400 that it really is mimicking the patterns of annual performance. 0:12:08.440 --> 0:12:14.080 Going back to for example, twenty and twenty one, we're 0:12:14.120 --> 0:12:16.120 just very, very weird years. On the one hand, there 0:12:16.200 --> 0:12:17.480 was tons of buying. On the other hand, of the 0:12:17.520 --> 0:12:21.120 government was literally handing out money to consumers. Delinquencies were 0:12:22.160 --> 0:12:26.320 repressed artificially, if you will. The Guard rails we use 0:12:26.360 --> 0:12:28.600 when you run our business is return on assets, which 0:12:28.720 --> 0:12:32.839 is basically gargon for yield. What are investors are capital 0:12:32.880 --> 0:12:37.360 partners get from the loans that we generate and absolute 0:12:37.600 --> 0:12:40.520 adjusted charge offs or basically losses that we're willing to 0:12:40.520 --> 0:12:43.240 take on. Obviously, our capital partners would worry if those 0:12:43.280 --> 0:12:46.599 losses ticked up more than various covenants and groups that 0:12:46.640 --> 0:12:49.360 we have. And if you look at all of our metrics, 0:12:50.080 --> 0:12:51.880 certainly the metrics I look at and the metrics that 0:12:51.880 --> 0:12:54.679 we filed publicly, we have managed to both of those 0:12:54.679 --> 0:12:57.600 guard rails exceedingly well. If you look at our for example, 0:12:57.840 --> 0:13:02.160 allowance for loss provision, and it's been taking down every 0:13:02.240 --> 0:13:05.240 quarter for the last three So we are managing credit 0:13:05.440 --> 0:13:09.200 better than we have given any much more benign credit climate. 0:13:09.800 --> 0:13:13.000 Now what it actually means practically, the cool thing about 0:13:13.000 --> 0:13:16.000 a firm is because we're integrated so deeply into the 0:13:16.040 --> 0:13:20.000 Emergen ecosystem, we have a lot more interactive tools beyond 0:13:20.080 --> 0:13:22.280 just your basic We're so sorry your card has been declined. 0:13:22.320 --> 0:13:24.680 That's an awful experience. Somebody wants to have that. In fact, 0:13:24.679 --> 0:13:27.880 if you actually look at our approvals quoted on quarter, 0:13:28.520 --> 0:13:32.280 I think we added three points of incremental approvals across 0:13:32.280 --> 0:13:35.959 the hire portfolio. Doesn't mean that everybody on average gets 0:13:36.000 --> 0:13:38.080 three percent more likely to say yes. Is that we 0:13:38.080 --> 0:13:40.640 figured out ways to say yes even when we think 0:13:40.679 --> 0:13:42.679 the consumer is seeking on too much risk for them. 0:13:42.720 --> 0:13:45.080 For example, we can say, hey, we need to verify 0:13:45.120 --> 0:13:47.719 your income because we think you're overburdening yourself. Now, if 0:13:47.720 --> 0:13:51.000 we're convinced that your income is different from what we 0:13:51.080 --> 0:13:53.240 estimated it to be, it would be wonderful to extend 0:13:53.240 --> 0:13:55.880 the credit to you. Or for example, we can say, hey, 0:13:56.320 --> 0:13:58.240 we think you should make it down payment on this 0:13:58.280 --> 0:14:00.640 couch or on this bicycle, because once you do that, 0:14:00.720 --> 0:14:02.280 it's a lot easier for you to carry the burden 0:14:02.320 --> 0:14:04.600 of this particular So we've really been deploying a lot 0:14:04.600 --> 0:14:07.960 of those tools all across the last six nine months, 0:14:08.320 --> 0:14:11.400 and we would see increased demand, increase approvals, and better 0:14:11.400 --> 0:14:15.360 credit outcomes. You know, our firm shares obviously had a 0:14:15.360 --> 0:14:18.920 pretty big downward move today. There is a broader market 0:14:18.960 --> 0:14:22.280 sell off. Your CFO said, you're approaching the next fiscal 0:14:22.400 --> 0:14:26.880 year prudently. I mean, what's your reaction to the affirm 0:14:27.280 --> 0:14:31.400 stack drop, the broader tech sell off and you know, 0:14:31.560 --> 0:14:35.240 the possibility weren't for this kind of volatility for the 0:14:35.320 --> 0:14:41.720 foreseeable future. You know, I think, I think, and I 0:14:41.760 --> 0:14:43.600 don't even have to try. I definitely think of a 0:14:43.600 --> 0:14:50.240 firm in measures of years and quarters is not a 0:14:51.840 --> 0:14:55.000 it's an artificial marker that I think, Uh, we have 0:14:55.040 --> 0:14:58.760 messed for ourselves. It is far better to worry about 0:14:58.960 --> 0:15:01.400 how we'll do next year and the year after in 0:15:01.440 --> 0:15:03.640 a decade from now than what the stock price will 0:15:03.640 --> 0:15:06.440 do for us tomorrow afternoon. Certainly, in a day like today, 0:15:06.560 --> 0:15:08.440 I think we are a footnote to a footnotes to 0:15:08.440 --> 0:15:11.400 a broader sell up thanks to the Hawkers policy statements 0:15:11.400 --> 0:15:14.880 that we just heard. Um, that's it. You know, I've 0:15:14.920 --> 0:15:17.080 never been more excited to show up to work as 0:15:17.120 --> 0:15:19.200 I am today. We have a ton of stuff to build. 0:15:19.240 --> 0:15:22.200 We bragged a lot about really amazing engagement metrics and 0:15:22.280 --> 0:15:23.960 debit plus the card that we've been working on for 0:15:24.000 --> 0:15:28.520 so long. You know, it's definitely and you know, my 0:15:28.560 --> 0:15:31.880 heart goes out for our team. And obviously the investors 0:15:31.960 --> 0:15:34.400 that look at the stock price always want to see 0:15:34.440 --> 0:15:38.080 it go up. I would encourage them to look to 0:15:38.120 --> 0:15:40.880 the future. The product that we're building really makes a difference. 0:15:41.480 --> 0:15:44.400 We see so much positive consumer sentiment. We know what 0:15:44.440 --> 0:15:46.520 we're doing managing credit. We've done really well and we'll 0:15:46.520 --> 0:15:48.840 continue to do so. Over time, the market will catch 0:15:48.920 --> 0:15:51.200 up and the share price will do what it always does. 0:15:51.840 --> 0:15:54.240 I am very, very focused to leading the company to 0:15:54.640 --> 0:15:59.360 a long term, successful business of permanent value. So let's 0:15:59.360 --> 0:16:01.120 talk about the lot term. On the call, you talked 0:16:01.120 --> 0:16:04.600 about the pursuit of growth, the possibility of buying up 0:16:04.720 --> 0:16:07.640 other players, given you know that the you know, the 0:16:07.680 --> 0:16:11.600 broader macro environment, some of these other players may be struggling. 0:16:11.680 --> 0:16:14.400 We've seen some other players go through you know, other 0:16:14.440 --> 0:16:17.800 BNPL players go through some pretty big layoffs. What are 0:16:17.840 --> 0:16:20.800 you looking at? What kind of companies are you looking at? 0:16:20.960 --> 0:16:23.640 And could we see you know, a big deal or 0:16:23.640 --> 0:16:29.080 an acquisition spree um. Definitely nothing to report today. I 0:16:29.160 --> 0:16:31.800 want to make sure that there's no no speculation in 0:16:32.120 --> 0:16:36.080 embedded in my answers here. But you're totally right. The 0:16:36.120 --> 0:16:38.280 thing that the way I think about potential targets, and 0:16:38.320 --> 0:16:42.840 we're definitely looking quite actively now. We have shown to 0:16:42.960 --> 0:16:46.080 be really really good at credit management, and obviously the 0:16:46.120 --> 0:16:49.720 economic realities uncertain will continue. Having book hands and the 0:16:49.720 --> 0:16:52.400 wheel will continue to need credits and approvals and all that, 0:16:52.480 --> 0:16:54.200 but we know what we're doing. We we've shown this 0:16:54.240 --> 0:16:57.440 to ourselves and much more importantly frankly, to our credit 0:16:57.480 --> 0:17:00.680 investors capital market partners. There are companies that have had 0:17:00.720 --> 0:17:03.480 amazing ideas, They built great products, so the beginnings of 0:17:03.520 --> 0:17:05.960 something really wonderful, but they're just not good at underwriting. 0:17:06.000 --> 0:17:08.480 And you get better at it with scale and time. 0:17:08.520 --> 0:17:10.280 We've been at it for eleven years, with a lot 0:17:10.280 --> 0:17:11.920 of data, with a lot of experience. We know how 0:17:11.920 --> 0:17:14.879 to manage it. It would be great to find some 0:17:14.920 --> 0:17:17.359 of these ideas and teams. Really, really, the most important 0:17:17.359 --> 0:17:20.359 thing about any company is the people running it. And 0:17:20.480 --> 0:17:23.600 when you find these teams and they're missing that credit 0:17:23.640 --> 0:17:27.080 management muscle or actually capital markets which we've also built 0:17:27.160 --> 0:17:30.439 up over the years, you know that those kind of 0:17:30.440 --> 0:17:33.560 acquisitions are fantastic because you know, you you love what 0:17:33.600 --> 0:17:35.399 they've built and you want to make it go faster 0:17:35.520 --> 0:17:37.400 and get bigger, and so that that is what we're 0:17:37.400 --> 0:17:40.160 looking for. The filter for me, I learned I didn't 0:17:40.160 --> 0:17:41.920 invent this one. This was something one of my investors 0:17:41.960 --> 0:17:45.240 told me. You know, is this acid better off owned 0:17:45.320 --> 0:17:47.080 by a firm and if the answer is yes, you 0:17:47.080 --> 0:17:48.800 should look. And if the answer is I'm not sure, 0:17:48.960 --> 0:17:53.199 stop looking now. So we apply that filter judiciously. All right, 0:17:53.320 --> 0:17:57.639 appreciate that little nugget of advice. Max Lapchin, co founder 0:17:57.640 --> 0:17:59.680 and CEO of from Great to have you back, Max 0:18:00.040 --> 0:18:12.160 is appreciate the time. Thank you. Some other stories we're watching, 0:18:12.160 --> 0:18:14.720 Apple facing a potential anti trust suit from the Department 0:18:14.840 --> 0:18:18.439 of Justice. Shares dropped after Political reported the lawyers are 0:18:18.440 --> 0:18:21.359 in the early stages of drafting a complaint against Apple. 0:18:21.440 --> 0:18:24.120 The DJ hopes to file it by the end of 0:18:24.240 --> 0:18:28.160 the year. California is the first government in the world 0:18:28.200 --> 0:18:33.280 to effectively ban gas powered car sales. By California Air 0:18:33.320 --> 0:18:37.080 Resources Board voted unanimously to adopt a plan that mandates 0:18:38.520 --> 0:18:42.000 zero mission and hybrid plug in vehicle sales. The rule 0:18:42.040 --> 0:18:45.840 will likely be adopted by fifteen other states currently signed 0:18:45.840 --> 0:18:50.640 on to California's existing zero mission vehicle program. And Mark 0:18:50.720 --> 0:18:55.080 Zuckerberg vented to Joe Rogan about the pains of content moderation. 0:18:55.240 --> 0:18:59.120 The medicineo says it's simply quote sucks, but he's more 0:18:59.160 --> 0:19:04.080 pleased with his company methodology then rival twitters. Here's what 0:19:04.119 --> 0:19:07.480 he had to say on the Joe Rogan experience. One 0:19:07.560 --> 0:19:09.639 theme in my world view around this stuff, and when 0:19:09.640 --> 0:19:10.880 it gets to some of the stuff that we talked 0:19:10.880 --> 0:19:12.879 about before, is like, I don't think that this stuff 0:19:12.920 --> 0:19:14.560 is black and white, or that you're ever going to 0:19:14.640 --> 0:19:18.080 have like a perfect AI system. UM. I think it's 0:19:18.080 --> 0:19:20.200 all trade offs all the way down, because this whole 0:19:20.240 --> 0:19:22.720 thing that's like arbitrating what is okay and what is not. 0:19:23.480 --> 0:19:25.600 I obviously have to be involved in that because this 0:19:25.680 --> 0:19:27.720 is at some levels, you know, I run the company 0:19:27.760 --> 0:19:32.679 and um, and I can't just abdicate that. But but 0:19:32.880 --> 0:19:36.399 I also don't think that as a matter of governance, 0:19:36.640 --> 0:19:41.440 you want all of that decision making vested in one individual. 0:19:51.520 --> 0:19:54.359 Welcome back to Bloomberg Technology. I'm emily changing san from Cisco. 0:19:54.440 --> 0:19:56.760 Let's get back to the markets and the Texel off. 0:19:56.880 --> 0:19:58.959 I want to bring in four Runner managing partner Ury 0:19:59.119 --> 0:20:03.000 Kim for more on this uh eerie. Obviously, there are 0:20:03.040 --> 0:20:05.679 big questions about what a more hawk ish FED and 0:20:05.800 --> 0:20:10.240 high interest rates means for venture capital. What's your reaction 0:20:10.320 --> 0:20:13.720 to what j Powell had to say? Well, I don't 0:20:13.760 --> 0:20:16.160 know that anyone's really surprised, because we've all been we've 0:20:16.200 --> 0:20:18.000 all been thinking about how things were going to pan 0:20:18.040 --> 0:20:20.280 out with inflation and how to manage it. It's just 0:20:20.359 --> 0:20:23.159 been a very volatile few years, a total roller coaster 0:20:23.359 --> 0:20:26.919 from pre COVID, post COVID being a run up and 0:20:26.960 --> 0:20:30.040 now a huge market corrections. So, you know, I think 0:20:30.040 --> 0:20:33.199 that never before of private markets then as connected to 0:20:33.440 --> 0:20:36.960 public markets. Um, usually we'd say, hey, these companies are young, 0:20:37.359 --> 0:20:39.280 they've got time. We don't need to worry about what's 0:20:39.280 --> 0:20:43.240 happening out there. I think ultimately investors see what's happening 0:20:43.240 --> 0:20:46.560 to private to public companies and they say, hey, if 0:20:46.680 --> 0:20:48.520 this is how the valuation is going to look, then 0:20:48.520 --> 0:20:51.640 I need to moderate my entry point and the valuation 0:20:51.640 --> 0:20:53.400 that I'm going to pay right now because there might 0:20:53.400 --> 0:20:56.399 not be a uh a top end of the market 0:20:56.520 --> 0:20:59.080 when we go public. So I think there are a 0:20:59.119 --> 0:21:02.480 lot of open questions about that. And you know, today 0:21:02.880 --> 0:21:06.200 no one wants to price a deal. That's the that's 0:21:06.240 --> 0:21:09.080 the sort of freezing of the market, and everyone's trying 0:21:09.080 --> 0:21:11.280 to figure out what's happening in the market to see 0:21:11.320 --> 0:21:14.080 if that means that they can start, you know, investing 0:21:14.280 --> 0:21:17.560 in a cautious way. Um, But what it does mean 0:21:17.600 --> 0:21:20.200 is that companies have to get back to unit economics, 0:21:20.240 --> 0:21:23.840 good business fundamentals, um, and just realize if you want 0:21:23.840 --> 0:21:26.520 to build a business that's gonna last, it's gonna make sense, 0:21:26.880 --> 0:21:29.000 and the valuations will come and go as they do 0:21:29.119 --> 0:21:32.400 in the public markets. You know, we heard from an 0:21:32.400 --> 0:21:34.480 investor earlier in the show, so you sirs, you know 0:21:34.520 --> 0:21:37.240 of Active in Capital. He had some pretty gloomy things 0:21:37.280 --> 0:21:39.680 to say. He said he thinks there's gonna be millions 0:21:39.720 --> 0:21:42.879 of layoffs in tech and that they've only just begun, 0:21:43.400 --> 0:21:48.040 that potentially more than twenty of venture backed companies will fold, 0:21:48.480 --> 0:21:50.520