Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Check in San Francisco, and this
Speaker 1: is Bloomberg Technology. Coming up the next hour. A judge
Speaker 1: tells Twitter to give Elon Musk the data about Box
Speaker 1: that he's been asking for, but also called Musk's requests
Speaker 1: absurdly brought on that in a moment. Plus, Peloton is
Speaker 1: going all in on content after reporting a huge loss
Speaker 1: of struggling brand leading into its digital app, adding new
Speaker 1: subscription tears Tears, including a freemium version. We'll talk about
Speaker 1: the pivot from hardware and gen Z isn't about the
Speaker 1: corporate life half of responding to a new surveys. They're
Speaker 1: trying to make money creating content for social media instead.
Speaker 1: Will it work? We'll discuss all that in a moment,
Speaker 1: but first, let's talk a little bit more about Twitter.
Speaker 1: Now that judge in Delaware telling Twitter they got a
Speaker 1: hand over more information on spam and bots to Elon Musk.
Speaker 1: Here to talk about that. Bloomberg News Alex Barrinka and
Speaker 1: Sarah Fryar. So, Alex, I'll start with you look, the
Speaker 1: judge asking Twitter to hand Musk the data that he's
Speaker 1: been asking for. This is data that uh Musk's camp
Speaker 1: has said Twitter has been hiding, not all of it,
Speaker 1: but some of it. What do we know? Yeah, it
Speaker 1: is some of it. Some of a concession in this
Speaker 1: absurdly broad ask, as the judge called it, Twitter had
Speaker 1: done a survey of nine thousand accounts basically looking to
Speaker 1: see are there humans connected to these accounts or are
Speaker 1: they bought. Initially, the company had not turned this over
Speaker 1: to Elon Musk on a number of concerns, including privacy concerns.
Speaker 1: But this specific like tronche of data is what the
Speaker 1: judge is speaking about, needs to be turned over to Musk,
Speaker 1: which frankly does fall squarely in this argument that he's
Speaker 1: making that he doesn't have enough information yet um to
Speaker 1: say really strongly that Twitter's initial kind of public um
Speaker 1: statements that about five percent of users or boughts must
Speaker 1: says he doesn't have enough data to kind of vet that.
Speaker 1: So this is one concession here that we do see
Speaker 1: the judge kind of forcing Twitter's hand to make sure
Speaker 1: Musk gets a bit more details on on what's happening
Speaker 1: on the platform more broadly. Well, and Sarah, it seems
Speaker 1: like most of the orders from the judge so far
Speaker 1: have gone in Twitter's favor. This one though not. I
Speaker 1: wonder do you make what you make of this? Is
Speaker 1: it a clear negative for Twitter? Well, she's narrowed the
Speaker 1: broad requests to just those nine thousand accounts and wild
Speaker 1: Twitter has said, you know, we can't give over that
Speaker 1: data for privacy reasons and other reasons. Um. I think
Speaker 1: that is that is limited enough that there's it's sort
Speaker 1: of a compromise her for the company. I do think
Speaker 1: it's a small win for Musk, and it shows that
Speaker 1: the judge may in some part think that it's true,
Speaker 1: though he doesn't have enough information to gauge whether that
Speaker 1: five percent number is Box. But let's let's not forget.
Speaker 1: I mean, this is not really a debate about Box,
Speaker 1: debate about whether there's been a materially adverse effect to
Speaker 1: Twitter in its time since Elon must sign that boarded
Speaker 1: four billion contracts to buy Twitter and argue what Twitter
Speaker 1: would argue or is arguing that there has not been
Speaker 1: a major change, not anything that would get Musk out
Speaker 1: of that contract. Um. And so so if the judge
Speaker 1: is asking for this data to be handed over. UM,
Speaker 1: and it could go towards answering that question. UM, but
Speaker 1: I don't know that it will be enough. All right, UM,
Speaker 1: We're gonna continue to follow that. But I also want
Speaker 1: to ask about some changes to Instagram today. Instagram alex
Speaker 1: introducing some new child safety measures. Tell us what these
Speaker 1: measures involves. Yeah, so, UM, they had some measures in
Speaker 1: place for teens think under the age of sixteen, basically
Speaker 1: so that they can have a feed that shows them
Speaker 1: less of content that might be seen as inappropriate for
Speaker 1: those younger users. Think um, sexually explicit content, violence, things
Speaker 1: that are allowed on the app that don't actually violate
Speaker 1: community guidelines but might not be right for that cohort Um.
Speaker 1: The company basically came out and said, UM, they will
Speaker 1: default users under the age of sixteen years old to
Speaker 1: get this kind of less version of the platform that
Speaker 1: excludes them from seeing some of this content. Now, if
Speaker 1: you have been watching and following UM some of Instagram
Speaker 1: and its sister companies Facebook's kind of dust ups in
Speaker 1: d C regarding child privacy, you'll know that this comes
Speaker 1: on the heels from a bit of a flurry of
Speaker 1: activity in d C there's a couple of actions in
Speaker 1: the Senate, a bill and an extension on child privacy
Speaker 1: laws and uh an action in the House basically that
Speaker 1: have taken a step back to look at these platforms
Speaker 1: and say, hey, are we really protecting miners who are
Speaker 1: using the app? Remember, Instagram allows users thirteen years old
Speaker 1: and older on the app, so there are a number
Speaker 1: of years there, um where folks are below the age
Speaker 1: of eighteen on social media and might not be the
Speaker 1: right audience for some more of the explicit content that
Speaker 1: can show up on that platform. Interesting now, Sarah, of
Speaker 1: course you wrote the book on Instagram. Last year the
Speaker 1: company announced this big plan to start Instagram for kids.
Speaker 1: There was a huge public outcry. They put those plans
Speaker 1: on pause. Do you think that project is done or
Speaker 1: or or could they attempt to, um, you know, do
Speaker 1: it again. I think they're taking a lot of the
Speaker 1: ideas that they had for Instagram Kids and applying them
Speaker 1: two teams who are currently on the platform. And and
Speaker 1: let's be clear, I mean although the rule said thirteen
Speaker 1: and up is allowed on Instagram, there are plenty of
Speaker 1: nine and ten year old on on that app. Um.
Speaker 1: That's why Instagram has increased the restrictions around you know,
Speaker 1: asking you about your birthday. A lot of a lot
Speaker 1: of people recently have been asked that question us because
Speaker 1: Instagram is trying to make sure that they block it
Speaker 1: to anyone below thirteen, and they're trying to clean up
Speaker 1: their act and they're trying to improve their reputation. So
Speaker 1: I think that if they do manage to do that,
Speaker 1: you know, nothing's off the table. They will always want
Speaker 1: to expand into new markets, into new demographics and people
Speaker 1: who are are younger than thirteen. Um. Those are the
Speaker 1: kinds of users that are really obsessed with YouTube, really
Speaker 1: obsessed with TikTok, those major competitors of Instagram, that they
Speaker 1: want to figure out how to how to make a
Speaker 1: product for it. And I think social media opens up
Speaker 1: a lot more concerns than a straight entertainment product might
Speaker 1: because of the connections with strangers and the ability for
Speaker 1: your own content to be viewed by the masses um
Speaker 1: in a little bit more explicit way. So I think
Speaker 1: that that they're they're adding this around teams. They had
Speaker 1: parental controls earlier, ways to have a guardian check up
Speaker 1: on your account and know who you're connected to, who
Speaker 1: you're messaging with. All of those are in an effort
Speaker 1: to try to improve that reputation around child safety, So
Speaker 1: that may be down the line they could they could
Speaker 1: take that extra step and bring the kids product back. Meantime,
Speaker 1: you've got this new survey out that younger people gen Z,
Speaker 1: you know, ditching corporate jobs are not taking them at
Speaker 1: all because they hope to make a career creating content
Speaker 1: on social media. Alex, how realistic is it? Obviously we
Speaker 1: know that you know, social media influencers, they can make
Speaker 1: a lot of money. Um, this is obviously an evolving
Speaker 1: business that's still likely and it's very early stages. UM.
Speaker 1: Tell us more about this survey and what it tells us. Yeah,
Speaker 1: the service survey tells us basically that this younger generation
Speaker 1: gen Z does really want to, like you said, half
Speaker 1: of them, UM, think about a job outside of the
Speaker 1: kind of run of the mill job making money off
Speaker 1: of social Now. The caveat here is influencers on social
Speaker 1: from the platforms themselves aren't making a ton of money.
Speaker 1: It's about building your following, UM, connecting with sponsors, getting sponsorships,
Speaker 1: and leveraging that following to make money off the platform.
Speaker 1: The survey basically broke down some of the numbers and
Speaker 1: showed that, you know, while there might be a benefit
Speaker 1: to this flexible work environment, you are your own Boston,
Speaker 1: you need to hustle. Only twelve percent of these participants
Speaker 1: surveyed are actually making more than fifty thou dollars a year,
Speaker 1: which if you live in a place like New York,
Speaker 1: where a lot of these creators are, that's actually below
Speaker 1: the median income. So folks are hustling. Um. It's also
Speaker 1: probably why you know, some of these younger, Aden says,
Speaker 1: are looking to get on social earlier and build those
Speaker 1: followings if they have aspirations to turn this into a career.
Speaker 1: But also it's not easy. You see the big success stories,
Speaker 1: but what you don't see are the folks who are
Speaker 1: on social kind of as a side hustle or kind
Speaker 1: of really leaning in to turn it to a full
Speaker 1: time job because you know, they are their own boss.
Speaker 1: Nothing's guaranteed, and it is one of those industries you know,
Speaker 1: where you get out of it as much as you
Speaker 1: put in. UM. So you know, we'll see if gen
Speaker 1: Z can turn this into the next big economy. But
Speaker 1: there are certainly a lot of folks with aspirations to
Speaker 1: make social media their career path. Well, let's talk about
Speaker 1: that side hustle part of it, because there's this whole
Speaker 1: theme right now quiet quitting, where people are talking about
Speaker 1: just doing the bare minimum at their jobs, not going
Speaker 1: above and beyond, trying to maintain a healthy work life balance. Um, Sarah,
Speaker 1: how realistic is it that some of these folks could
Speaker 1: you know, make some extra cash if you know that
Speaker 1: time that they're not spending going above and beyond at
Speaker 1: their corporate jobs, but making really cool TikTok's listen, and
Speaker 1: I've talked to to teens gen D folks who are
Speaker 1: now in the workforce who are using Instagram and YouTube
Speaker 1: alongside their jobs. You know, they have that their personal account,
Speaker 1: and then they might have a more professional account, or
Speaker 1: they might have um one that's focused on fashion or
Speaker 1: food or their pets or home debt, or because they
Speaker 1: want to try something um as a as a you know,
Speaker 1: creative pursued a hobby that in the back of their minds,
Speaker 1: they're thinking, this could be a fallback plan if my
Speaker 1: career doesn't work out or if this becomes you know,
Speaker 1: wouldn't it be nice to be paid to travel the world.
Speaker 1: Wouldn't it be nice to be paid to go to restaurants?
Speaker 1: Only a select few people end up getting the level
Speaker 1: of income that you would need to to really be
Speaker 1: micro famous. And then then, like Alex said, you really
Speaker 1: got to keep it up. There's a lot of consistency involved.
Speaker 1: There's a lot of reinventing yourself involved. If you're on Instagram,
Speaker 1: for example, and you've been post posting great photography, now
Speaker 1: they want you to make short form video, so you
Speaker 1: have to be really consistent and and um, you can't
Speaker 1: quiet quit if you're working for yourself. So so I do.
Speaker 1: I do see it as a side hustle thing, something
Speaker 1: that kids are doing in college, or I should say
Speaker 1: adults are doing in college alongside their other work and
Speaker 1: hoping that it can help pay the bills. Um if
Speaker 1: they if they get the block of the draw. But
Speaker 1: I think that that's pretty rare. Um. It's just a
Speaker 1: general aspiration that people have, all Right, well, we're gonna
Speaker 1: let you go uh and uh do some other things
Speaker 1: with your time. Gloober Sarah Bryar and Alex Barenka, thank
Speaker 1: you both. We'll be right back. This is a little
Speaker 1: bit peloton shares are reeling from a one point to
Speaker 1: billion dollar loss, but CEO Barry McCarthy says naysayers are
Speaker 1: looking at it all wrong. Shares jump this week when
Speaker 1: Peloton announced its new partnership with Amazon, that game all
Speaker 1: but wiped out today McCarthy that was optimistic. He says,
Speaker 1: what I see is significant progress driving our comeback and
Speaker 1: Peloton's long term resilience. For more on that, I want
Speaker 1: to bring in row Hit called Carney, managing director at
Speaker 1: MKM Partners, the worst stock plunge in seven months? Uh
Speaker 1: is it warranted again? Thanks for having me, Emily. Not
Speaker 1: many things to cheer about in today's filing is and
Speaker 1: they have consistently underperformed the guidance. They have consistently underperformed
Speaker 1: that expectations. I think fourth quarter in a row we
Speaker 1: are seeing them coming low below our expectations and lowering
Speaker 1: the guidance. So we don't know yet where the demand
Speaker 1: is going to essentially stabilize, So I think, yeah, to
Speaker 1: CEO's credit, they are moving fast. They're showing a lot
Speaker 1: of velocity of execution, but the market is moving against them.
Speaker 1: The demand curve is slipping very very quickly, very far
Speaker 1: away from them. So how hopeful are you about Barry
Speaker 1: McCarthy and the possibility of a turnaround. Um in terms
Speaker 1: of the what they're doing, whether they can get the
Speaker 1: results that they hope to get is still probably six
Speaker 1: maybe twelve months out, so there needs to be some
Speaker 1: patients while during that time, we hope to have some
Speaker 1: stability of how in a post pandemic world, in a
Speaker 1: post procession world, in a high inflation world, how people
Speaker 1: view a high end product like Peloton and its place
Speaker 1: in the consumer discretion he spent. So that's the big unknown.
Speaker 1: But what they can control is are a lot of things,
Speaker 1: and they're loading prices that they're playing around with some
Speaker 1: consumer options like renting fitness as a service. They're going
Speaker 1: to am is on and more retailers to try to
Speaker 1: get a broader audience. So they're doing a lot of things.
Speaker 1: But as as you know, we are in a very
Speaker 1: very unusual point in macro cycle, so that is hurting
Speaker 1: them a lot more than what Barry McCarthy and his
Speaker 1: team hopes to achieve in a short time. What do
Speaker 1: you think of this pivot away from hardware to you know,
Speaker 1: offering some premium classes for example, how much could that help. Um,
Speaker 1: that is helping, but again, as I said, that is
Speaker 1: that is opening up their kind of user base to
Speaker 1: people who are extremely price sensitive. As if you were
Speaker 1: not willing to buy a bite which is worth two
Speaker 1: dollars or fifteen dollars right now, probably you could rent
Speaker 1: it for a few months and uh and see how
Speaker 1: things go, and then of three to four months, if
Speaker 1: you feel like using it more, you could bite or
Speaker 1: you could continue to pay per month. So there is
Speaker 1: a certain cohort of users who may be willing to
Speaker 1: try that out. And that's still very early days. So
Speaker 1: there needs to be a full kind of two directional
Speaker 1: logistics network they need to set up, They need to
Speaker 1: have inventory to be able to fulfill such a demand.
Speaker 1: So it is a good experiment. There is good success
Speaker 1: so far, but that's exactly it's an experiment. It's still
Speaker 1: very early days and those experiments, they are doing a
Speaker 1: lot of those, and I feel encouraged by that. But
Speaker 1: as as I said, like the broader ship, the cargo
Speaker 1: ship that Barry McCarthy talks about in the letter, it's
Speaker 1: very slow to turn around, and still we are not
Speaker 1: seeing that from the outside. The effort that they're putting
Speaker 1: in all right, lots to continue to follow. Hit called
Speaker 1: Carney MKM partners managing director Row Hit, thanks for stopping by.
Speaker 1: Amazon is getting greener and leaner the e commerce and
Speaker 1: Claude John announcing a partnership with the electronic equipment maker
Speaker 1: plug Power to cut fossil fuel use. Amazon is aiming
Speaker 1: to hitting at zero carbon emissions. And earlier this week,
Speaker 1: Amazon announced it'll wind down its telehealth service just weeks
Speaker 1: after buying One Medical for three and a half billion dollars.
Speaker 1: Let's bring in Bloombox Spencer Soaper who covers Amazon for us.
Speaker 1: So what do you make of this latest twist in
Speaker 1: the Amazon health story. What does it mean in the
Speaker 1: context of the One Medical acquisition. Yeah, it does look
Speaker 1: like there's a there's a lot of overlap between what
Speaker 1: One Medical provides and what Amazon Care was doing. And
Speaker 1: One Medical is just, you know, significantly ahead of Amazon
Speaker 1: Care in terms of its footprint and its customer base.
Speaker 1: And that's so uh. And then but the only brick
Speaker 1: froms Amazon really dropped about why it is shuddering Amazon
Speaker 1: Care is they said that it's not robust enough that
Speaker 1: as they as they tried to get this service out,
Speaker 1: this primary care medical service that they're trying to target
Speaker 1: other business is you know, to buy it on behalf
Speaker 1: of their own employees for um that they basically couldn't
Speaker 1: sell it, you know that that it didn't have a
Speaker 1: robust enough offering. So it sounds like Amazon's coming back
Speaker 1: to the drawing board and whatever it does with one
Speaker 1: medical that's going to have to go above them beyond this,
Speaker 1: uh this Amazon care service which is fairly limited. Okay,
Speaker 1: so talk to us about this development in Amazon's push
Speaker 1: too e green or how significant is it? I mean,
Speaker 1: it's a it's a big deal and a big commitment
Speaker 1: in in to the extent of the amount of energy
Speaker 1: that they'll be purchasing. You know, there's eleven thousand uh
Speaker 1: tons a year beginning in is basically the entire production
Speaker 1: of one plant of plug power. Plug power uses wind
Speaker 1: and solar energy to create hydrogen which will then be
Speaker 1: used as a fuel. So it's it's it's a very
Speaker 1: streamline green process trying to have no emissions throughout, and
Speaker 1: then that amount of fuel will run tens of thousands
Speaker 1: of forklifts and amas on operation, hundreds of trucks, So
Speaker 1: it's A. It's a it's a significant step and a
Speaker 1: big boost for for hydrogen is a clean power source. Um,
Speaker 1: but it's still you know, Amazon's carbon emissions have still
Speaker 1: been going the wrong way, especially after the pandemic. It
Speaker 1: made this big pledge, but then all the pandemic demand,
Speaker 1: It's It's carbon emissions still went up significantly by like,
Speaker 1: so it's it's got a lot of work left to
Speaker 1: do yet, granted it's got till to do it. How
Speaker 1: optimistic are you that Amazon hits that goal? I don't know.
Speaker 1: I mean, there's so much there's so much time between
Speaker 1: between now and then, and who knows you know, what
Speaker 1: form uh e commerce will will be at that time
Speaker 1: and delivery and that sort of thing. But there's there's
Speaker 1: certainly a lot of time left for them to uh
Speaker 1: develop alternatives. Okay, bloowork Spencer soaper update from Seattle. Thank
Speaker 1: you Spencer for joining us. The iPhone fourteen is only
Speaker 1: a couple of weeks away. Apples planning to announce the
Speaker 1: new device on September seven and put it on sale
Speaker 1: on September sixteen. The new phone will continue to come
Speaker 1: in four models, two pro versions and two standard versions,
Speaker 1: but Apple's replacing the iPhone thirteen Mini with the new
Speaker 1: iPhone fourteen Max that will give Apple a standard iPhone
Speaker 1: with a big six point seven inch display for the
Speaker 1: first time. The new pro phones will have a forty
Speaker 1: a megapixel camera on the back for the wide angle lens,
Speaker 1: thinner bezels around the display, and a faster A sixteen processor.
Speaker 1: The biggest design change will be to the front camera.
Speaker 1: The notch will be replaced with a whole punch sized
Speaker 1: cutout for FaceTime and selfies, and a pill shaped cutout
Speaker 1: will come in for face I D. The Pro models
Speaker 1: will also have enhanced finer recording and better battery life.
Speaker 1: The new phones are launching about a week earlier than usual,
Speaker 1: giving Apple an extra chunk of sale for its fourth quarter.
Speaker 1: Beyond the iPhone fourteen, Apples planning to announce an update
Speaker 1: to the Apple Watch sc with a faster processor, an
Speaker 1: Apple Watch Series eight with a body temperature sensor, and
Speaker 1: its first Apple Watch Pro that will have a more
Speaker 1: rugged design in a larger display. Later this year, Apple's
Speaker 1: aiming to announce revamps to the iPad Pro and the
Speaker 1: entry level iPad in addition to new Max with M
Speaker 1: two Pro and M two max based chips. I'm Mark Erman.
Speaker 1: This is power On. You can subscribe to Mark's weekly
Speaker 1: power On newsletter at Bloomberg dot com. Let's get back
Speaker 1: to the markets and take a temperature of the private
Speaker 1: markets ahead of FET Chair J. Pal's big speech this week.
Speaker 1: Lots of questions about how much further the government will
Speaker 1: go to tamp down inflation. How are vcs watching it all?
Speaker 1: Let's discuss with Andrea Walney, general partner at Manhattan Venture Partners. Andrea,
Speaker 1: great to have you back with us. So curious what
Speaker 1: Chair J. Powe could say that would change things for
Speaker 1: venture capitalists. Well, thanks, Emily. So I would say overall,
Speaker 1: what we're all really eager to see is what the
Speaker 1: impact on the soaring inflation is going to do for
Speaker 1: all of us. And generally, I think we're all looking
Speaker 1: at the outlook of unemployment reaching absolutely five decade lows
Speaker 1: and generally what does this mean for interest rates when
Speaker 1: they've really just been hovering it near zero for so long?
Speaker 1: And I think we're all just taking a pulse on
Speaker 1: what this employment environment is going to look like going forward.
Speaker 1: So startups are trying to hire, well exactly, So let's
Speaker 1: say you know, the FED says we're going to take
Speaker 1: more steps to tamp down inflation. Would would you do
Speaker 1: anything differently? Would you advise your portfolio companies differently? I
Speaker 1: think everyone's just trying to reduce spend continuously emily so
Speaker 1: that they end the year really strong. I know, we
Speaker 1: really just kicked off the second half of the year
Speaker 1: going into Q three, and so generally, I every startup
Speaker 1: in the market right now is still got that hiring
Speaker 1: freeze going on, and really they're kind of eyeing the
Speaker 1: end of the year and saying, well, how do we
Speaker 1: keep retaining talent? How do we keep ensharing that everyone's
Speaker 1: incentivized while really you know, increasing the workload on everyone,
Speaker 1: while hiring is still more or less still at a standstill. So,
Speaker 1: you know, are are your portfolio companies then thinking about
Speaker 1: doing more layoffs? Is this environment continues? Some of them are,
Speaker 1: some of them are. I think generally, going into the
Speaker 1: start of this past year, a lot of the late
Speaker 1: stage startups at least had big aspirations for big hiring plans,
Speaker 1: and so generally they are still looking to keep reducing
Speaker 1: spend across the board. With that said, I think the
Speaker 1: hiring is still at a standstill. They're not really targeting
Speaker 1: an increase in budgeting and keeping things really tight, and
Speaker 1: I think a lot of startups are changing course around
Speaker 1: their narrative, around their forecast going into the second half
Speaker 1: of this season. Is it changing your investment strategy at all?
Speaker 1: I mean, are you pushing for lower valuations? Are you
Speaker 1: reducing the amount that you would put into a single company?
Speaker 1: Do you as an investor have more power because uh,
Speaker 1: you know, times are tough for some of these companies.
Speaker 1: We really are seeing a big shift, and our investment
Speaker 1: strategy remains the same. So a man hand venture Partners,
Speaker 1: we are looking at late stage companies that are in
Speaker 1: the top decile of their sector. They are a category leader,
Speaker 1: they have strong financial backing. What we're saying is that
Speaker 1: from a reflective standpoint of the public comparables, right the
Speaker 1: publicly traded companies company to the private startups, we're saying, listen,
Speaker 1: the valuations of these late stage companies are still really high. Overall,
Speaker 1: A lot of the companies were still raising at twenty
Speaker 1: to forty, if not fifty times revenue alongside other fundamentals,
Speaker 1: and with that set, a lot of them really just
Speaker 1: don't want to take that valuation cuts. So what we're
Speaker 1: seeing is companies really leveraging debt structures as well as
Speaker 1: different types of uh anti dilution rights that we're kind
Speaker 1: of putting in place, as well as many other venture
Speaker 1: capitalists to say, we don't want to see you raise
Speaker 1: a down round. We'd rather come something really creative as
Speaker 1: an alternative. All right. I know you're an investor in
Speaker 1: Insta Card, and Insta Car is planning to go public
Speaker 1: later this year. They've also, you know, done a big
Speaker 1: you know, quote unquote down round, which you know they
Speaker 1: chose to do of their own solution given the change
Speaker 1: in the market. Curious what you're expecting for their planned
Speaker 1: I p O at a time when it seems like
Speaker 1: the I p O window is pretty much sealed shut. Yeah, well,
Speaker 1: so from what I can share, really, I think generally
Speaker 1: Insta Car is one of many companies who are really
Speaker 1: still eyeing the market volatility to determine whether to go
Speaker 1: out this year, if at all. Right, I know that
Speaker 1: that's what we're all discussing. Generally, I think that there
Speaker 1: are a company that really opened up the ambiguity to
Speaker 1: say maybe they'll go a traditional IPO. Maybe they'll do
Speaker 1: a direct listing, maybe another function of an exit. I
Speaker 1: think at this point in time, based on what we
Speaker 1: all know publicly, it seems that a traditional IPO path
Speaker 1: is probably the safest course of action. UM, if they
Speaker 1: were to go out this season, I think really we
Speaker 1: all expect that that window that I p O window
Speaker 1: is between the third week of September and more or
Speaker 1: less the absolute latest being the second week of December,
Speaker 1: before the big holiday season, so they have some more
Speaker 1: time to get ready. I do think that they could
Speaker 1: be the blockbuster I PO to end the year, but
Speaker 1: generally I think it's still a little bit shaky and
Speaker 1: we aren't seeing a course correct in the public market
Speaker 1: yet to say whether or not for certain they will
Speaker 1: go out. There's been a lot of controversy over the
Speaker 1: very big check that Andrews and Harrowitz wrote to Adam Newman,
Speaker 1: the co founder of Rework, for his new real estate venture.
Speaker 1: Some don't like it, some people do. What do you think?
Speaker 1: So it is the largest single investment that in dreason
Speaker 1: Horrows has ever written, and I think it's fascinating that
Speaker 1: they both supported Adam Newman for Flow as well as
Speaker 1: Clow Carbon and everything that he's doing on the blockchain side.
Speaker 1: I think the strategy here is that obviously Adam Newman,
Speaker 1: whether we love him or hate him, is a proven
Speaker 1: founder and he could do it again. He already tried
Speaker 1: it with We Live, right, and that didn't really pan out.
Speaker 1: Obviously there were other things to focus on when he
Speaker 1: was building We Work. But overall, I think where it's
Speaker 1: really fascinating for in Reason is that they obviously have
Speaker 1: such a strong focus in cryptocurrency and the future of
Speaker 1: digital assets. And I think where the narrative really is
Speaker 1: interesting here is how Adam Newman says that it flow um.
Speaker 1: They planned to offer a crypto wallet as part of
Speaker 1: the entire offering here and say that users could um
Speaker 1: pay to earn and rent to own as well. And
Speaker 1: so with that being said, I think the overall strategy
Speaker 1: for in Reason is that the is not only a
Speaker 1: category defining way to change how we all live and
Speaker 1: where the biggest asset class being real estate, could change
Speaker 1: to democratize that ownership. But it really goes to the
Speaker 1: Theso the thesis that and Reason has around crypto going
Speaker 1: forward and how digital infrastructure is going to change. So
Speaker 1: I think it makes a complete large amount of sense
Speaker 1: that they coupled this together and said, we've got a
Speaker 1: proven founder. Uh, and we're going to take this forward
Speaker 1: and see that he changes of the world again. Um,
Speaker 1: and this time in a different asset class. Interesting take. Um,
Speaker 1: you know the controversy side. What do you make of
Speaker 1: the size of this check in general? To write a
Speaker 1: check that big in this very uncertain economic environment. Yeah, well,
Speaker 1: and Reason's funds just keep getting larger, so they do
Speaker 1: have to start deploying check sizes that are quite sizeable
Speaker 1: across the board. So I do expect to see more
Speaker 1: of that from them as a fund. But with flow specifically,
Speaker 1: I would say that this is a company that's going
Speaker 1: to need a lot of capital to keep acquiring the
Speaker 1: units that they have. I mean, that's right now, they
Speaker 1: have three thousand apartment units under their mandate, and going forward,
Speaker 1: it's going to require an increasingly large amount of capital
Speaker 1: and doing it at a velocity that's really high. So
Speaker 1: it doesn't necessarily surprise me. But I would say with
Speaker 1: this capital, I would expect that they're probably well off
Speaker 1: for the next two years when it comes to their runway.
Speaker 1: All right. Andrea Wellly, general partner at Manhattan Venture Partner
Speaker 1: is good to have you back with us. Thank you
Speaker 1: for sharing your thoughts. Coming up, the Daring merge is
Speaker 1: fast approaching. We're going to talk about what it all
Speaker 1: means for the rest of the ecosystem with all the
Speaker 1: Labs President John Blue. Next, this is Bloomberg. We've seen
Speaker 1: a number of other proof of steak networks already be
Speaker 1: successfully launched Salanta near Avalanche. I mean essentially Bitcoin and
Speaker 1: Ether are the only proof of work networks still alive,
Speaker 1: and we haven't seen any issue on the other proof
Speaker 1: of steak networks, and I think proof of steak will
Speaker 1: be just fine. Time now for our crypto report, and
Speaker 1: as Bitcoin maybe poise for another downward move, let's talk
Speaker 1: about what that means in the general ecosystem with our
Speaker 1: next guest, John Wu, president of Oval Labs, the lead
Speaker 1: developer of the Avalanche blockchain, and of course our crypto
Speaker 1: contributor Sali Boss John. We're all bracing for whatever j
Speaker 1: Powell has to say coming up on Friday. Curious what
Speaker 1: you're watching for and how whatever he says could mean
Speaker 1: for the crypto ecosystem. Well, Bitcoin and Ethereum now are
Speaker 1: at point seven five in terms of correlation with the NASTAC.
Speaker 1: So what the market is saying is it's all high
Speaker 1: risk assets are correlated UM and Jay is going to
Speaker 1: raise rates. You know, I think uh sale sided yes,
Speaker 1: say uh damn Moore head from Pantera on you from
Speaker 1: TI are saying that we need rates go a lot higher.
Speaker 1: And I agree it will go a lot higher. But
Speaker 1: why I think the market needs to understand is that
Speaker 1: there will be alpha in the crypto asset space and
Speaker 1: there's very good reasons for that. The fundamentals are absolutely
Speaker 1: increasing and improving. The technicals. I mean there's if you
Speaker 1: think about the the crypto market caps, they've gone down,
Speaker 1: the stable coins have not, and that tells you a
Speaker 1: lot of people are just hiding and they're ready to deploy.
Speaker 1: And finally, I know you guys ultimately want to talk
Speaker 1: about the merge with Ethereum, and that's a huge catalyst.
Speaker 1: So I think what's going to surprise people is UM
Speaker 1: that point seven or five correlation, no matter where the
Speaker 1: market goes, will go down. And you're gonna ask some
Speaker 1: alpha in the space, John, some major investors in the
Speaker 1: crypto space. You said you worked at Tiger Dan Moore
Speaker 1: had also worked at Tiger before Mike Nevergrat's previously at Fortress.
Speaker 1: How much do you need to be in touch with
Speaker 1: the macro to get the fundamentals right in crypto? Is
Speaker 1: it more about the protocols or is it more about
Speaker 1: what's happening around the ecosystem. Well, I've had the benefit
Speaker 1: now being of an opera an operator for five years
Speaker 1: and being an investor in technology for longer than that.
Speaker 1: Um So I think having a macro perspective is always
Speaker 1: very important. Um you know, when you wake up in
Speaker 1: the morning, you need to know what season is, you
Speaker 1: know what clothes you put on, But then what clothes
Speaker 1: you put on is dictated by your personal tastes and
Speaker 1: exactly how warm it is. So as an operator now
Speaker 1: I'm really focused on getting more users in getting the
Speaker 1: masses into the space, getting more developers. There's a few
Speaker 1: hundred thousand developers in the space. There's thirty million plus
Speaker 1: web developers. All these Layer one should be working on
Speaker 1: getting more of those developers and more applications and more
Speaker 1: use cases uh into the space. And by the way,
Speaker 1: those use cases they are really happening. So there's a
Speaker 1: lot of operating momentum. Speaking of developers. You're seeing people
Speaker 1: in the industry get paid to how kind of fix
Speaker 1: up any issues that might be pertaining to the Ethereum
Speaker 1: urge that is so highly anticipated, So a lot of
Speaker 1: people hard at work. How might the merge affect other
Speaker 1: assets outside of Ethereum. This is great because I know
Speaker 1: it makes great headline to say Ethereum killer and market share.
Speaker 1: Here again, I'm in the belief that the space is
Speaker 1: so small that the space your work together to help
Speaker 1: the masses come over and bridge that gap. Um. I'm
Speaker 1: rooting as an operator for Ethereum merge to be smooth
Speaker 1: and to happen in September fift very well. I mean,
Speaker 1: Avalanche is e v M compatible assets moved back and forth.
Speaker 1: There's a bridge where over fifty billion dollars of assets
Speaker 1: and move back and forth between Ethereum and Avalanche. So
Speaker 1: the more people that come into the ecosystem, to more
Speaker 1: applications get developed, it's good for many layer ones. In
Speaker 1: my opinion, UM, I think what you're I think that
Speaker 1: your users UM should also be hopeful that the merge
Speaker 1: goes well. I mean, you know your viewers loved to
Speaker 1: invest in companies like coin Base, one of the best
Speaker 1: companies out there, and that's a listed company, And if
Speaker 1: the merge goes well, basically that's going to allow the
Speaker 1: concept of staking happen and in individuals institutions can earn
Speaker 1: eight nine. Now, the way coin Base works is that's
Speaker 1: a whole new revenue stream. If using their current you know,
Speaker 1: um formula of take rates and stuff, that potentially could
Speaker 1: mean six million dollars of revenue for coin base. And
Speaker 1: that's off of the base of this year probably around
Speaker 1: three point eight billions. So that's significant and it's very
Speaker 1: good for coin bay stocks. So I think your viewers
Speaker 1: should be rooting for a successful merge as well. You know,
Speaker 1: it's it's clearly been a volatile year and it could
Speaker 1: continue to be volatile through the rest of the year.
Speaker 1: What is your outlook on how long this quote unquote
Speaker 1: winter lasts and you know where we are at this time,
Speaker 1: let's say next year, um it is, so I personally think, um,
Speaker 1: the winter will be here for a little bit longer.
Speaker 1: But what I'm really looking forward to is these new applications,
Speaker 1: these new protocols that literally redefine the way businesses operator
Speaker 1: operate and businesses will be built. I mean um if
Speaker 1: you what you can do when tokenization is here in
Speaker 1: full swing is you're going to encode the business logic
Speaker 1: into a smart contract and then the platform is the business.
Speaker 1: So that what does that mean? That means like right
Speaker 1: now we're talking about coin base, and the coin Base
Speaker 1: has about five thousand employees, market cap of sixteen billion,
Speaker 1: has about two point four two point five billion dollars
Speaker 1: a daily volume. A company like unit swap also an
Speaker 1: exchange in the DeFi ecosystem, it has a billion dollars
Speaker 1: of volume a day and that's about a hundred employees
Speaker 1: only there. So if you do the token cap and
Speaker 1: the market cap to employees at coin Base, it's about
Speaker 1: three million dollar is a value created by and by employee.
Speaker 1: Roughly at unite slap, we're talking about like forty fifty
Speaker 1: million dollars dollars worth of value creative by each individual.
Speaker 1: So what we're doing is we're going to redefine what
Speaker 1: businesses are. And the best part of this is the
Speaker 1: network effects that happened crew back to the users, not
Speaker 1: to I need to really get your opinion here on
Speaker 1: something because you're talking about staking and you know really
Speaker 1: quickly here what is staking? Most like in traditional financial services.
Speaker 1: The reason I ask is because if it's going to
Speaker 1: be a bigger part of the ecosystem, coin based might
Speaker 1: start making it a bigger part of its product suite.
Speaker 1: Is it subject to regulation in a way that a
Speaker 1: traditional lending product would be or a clearinghouse would face. Well, philosophically,
Speaker 1: what it is. It doesn't exist in the traditional world.
Speaker 1: You know, the way value is distributed in the traditional
Speaker 1: world is really and created and distributed is really two ways, right,
Speaker 1: is labor and then there is using your capital to
Speaker 1: make more money. What labor you get paid for the
Speaker 1: value you create. Capital, you take your existing money, you
Speaker 1: put it to work, and hopefully you get a return
Speaker 1: on it. Staking is a combination of the two. You
Speaker 1: are actually taking your existing capital helping validated secure a
Speaker 1: blockchain and therefore getting a reward as well as a
Speaker 1: yield for it. So it's a hybrid. And when you
Speaker 1: talk about how do you regulate that, that's a really
Speaker 1: good question because is a labor or is it actually
Speaker 1: dividends and yields? It's not clear. Um, I kind of
Speaker 1: think you're putting things to work, and that's the spirit
Speaker 1: of permission lists get being part of the community, helping
Speaker 1: make decisions and getting rewarded for your efforts, not necessarily
Speaker 1: just getting putting your collateral down and getting a yield.
Speaker 1: All right, lots to think about. John Wou of Labs,
Speaker 1: good to have you back as always, and our own
Speaker 1: thank you. Some thing else we're following Sony raising the
Speaker 1: price of its PlayStation five console and major markets outside
Speaker 1: the US by as much as the move is in
Speaker 1: response to global inflation rates and currency trans impacting consumers
Speaker 1: and creating pressure on multiple industries. I sat down with
Speaker 1: Microsoft Gaming CEO Phil Spencer to talk about its relationship
Speaker 1: with other platforms like Sony. I first asked him why
Speaker 1: he's such a big proponent of cross platform gaming. Take
Speaker 1: a listen to what he had to say. Maybe you
Speaker 1: happen in your household to buy an Xbox and I
Speaker 1: buy a PlayStation, and our kids want to play together
Speaker 1: and they can't because we bought the wrong piece of
Speaker 1: plastic to plug into our television. It just seems that
Speaker 1: these artificial constraints that the industry might put up for
Speaker 1: near term kind of business dynamics in the long run,
Speaker 1: if you take a business that is at three billion
Speaker 1: people growing to four billion people over the next decade
Speaker 1: and saying how do we continue to grow this business?
Speaker 1: Reducing friction for our customers has as an industry has
Speaker 1: to be at the top. So how far does this go?
Speaker 1: Does this mean that activision games that Call of Duty
Speaker 1: you'll be able to play on any platform and perpetuity.
Speaker 1: I don't know what that means and forever, like when
Speaker 1: you think about how long, and it's not for any
Speaker 1: kind of nefarious business reason. It's just like, what do
Speaker 1: we even platforms mean ten years ago? Like, I think
Speaker 1: the definition of some of these things might change over time,
Speaker 1: but our expectation is we want more people to play.
Speaker 1: So I know you're working with Sony on some things
Speaker 1: for the benefit of gamers. Can you talk to us
Speaker 1: about that a little bit. We have a pretty big
Speaker 1: publishing footprint on PlayStation as well as Nintendo, which means
Speaker 1: we have good relationships with those platforms because we're they're
Speaker 1: a big part of our business and we're a big
Speaker 1: part of their business. I think our long term ambition
Speaker 1: of where we see this industry growing is also shared.
Speaker 1: I think the area where things get stuck a little bit,
Speaker 1: it's in the kind of near mid term competition. If
Speaker 1: somebody walks into a store and they have one bill,
Speaker 1: they're either going to walk out with the switch, which
Speaker 1: is most people buy, or they're gonna walk out over
Speaker 1: the PlayStation five, or they're gonna walk out with an Xbox,
Speaker 1: or maybe somebody will go buy gaming a Windows PC.
Speaker 1: But in that world of somebody's got to make a
Speaker 1: decision for one platform over another in the beginning, UM,
Speaker 1: that is where I think we we get stuck in
Speaker 1: some of the kind of near term competition. I don't
Speaker 1: think that's bad, right, It's just the dynamic of each
Speaker 1: of us pushing each other, um to build the best
Speaker 1: product for our customers. You can watch a full edition
Speaker 1: of Bloomberg Studio at one point oh with Microsoft Gaming
Speaker 1: cel Phil Spencer at Bloomberg dot com, or check out
Speaker 1: the podcast and that does it For this edition of
Speaker 1: Bloomberg Technology coming up Friday, A firm CEO, Max left
Speaker 1: Chin joins me to talk about the company's revenue forecast
Speaker 1: for three it's earnings just now shares under pressure, as
Speaker 1: well as the future of buy now, pay later, And
Speaker 1: don't forget to check out our Bloomberg Tech podcast anywhere
Speaker 1: you get your podcast for your daily tech round up.
Speaker 1: I'm Emily Changing in San Francisco. This is Bloomberg