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 Jenking, San Francisco, and this is
Speaker 1: Bloomberg Technology. Coming up in the next hour. Snap share
Speaker 1: snap back after a shortfall in late trading following its
Speaker 1: first quarterly results. Why the company is saying advertisers are
Speaker 1: pulling back. Plus Delon Musk just got a little closer
Speaker 1: to making his Twitter dream a reality, all thanks to
Speaker 1: some pretty big backers on Wall Street. Will tell you
Speaker 1: who they are. And Netflix shares keep plunging. Now CNN
Speaker 1: plus announcing it's shutting down. Is it a sign that
Speaker 1: streaming has peaked? We'll talk about that. I want to
Speaker 1: stick with snap now, the company reporting sales following short
Speaker 1: of estimate, saying advertisers pulled back on spending in the
Speaker 1: days following Russia's invasion of Ukraine. Rohan called Carni of
Speaker 1: MTM partners with us now to discuss here is that it?
Speaker 1: I think they are giving us a lot of numbers.
Speaker 1: They're saying what happened before three, what happened through March
Speaker 1: thirty one, what's happening through April, and I think what
Speaker 1: they're trying to tell us is things got a little
Speaker 1: bit worse during March, but that they are not getting
Speaker 1: more worse. They're definitely a leg down from what they
Speaker 1: expected them themselves to be. But I think you're quarter
Speaker 1: to date data seems to indicate that they are not
Speaker 1: getting more words, and the guidance for two Q they
Speaker 1: at least this is the story that they want us
Speaker 1: to hear is we are expecting more worse strength and
Speaker 1: hence we are a little bit more conservative. So that's
Speaker 1: where the stock went down twenty up five because of
Speaker 1: the this narrative that seems to be sticking with investors.
Speaker 1: So is this a story that's going to repeat itself
Speaker 1: with Twitter earnings? With Meta? Again, every company has their
Speaker 1: own flavor of advertisers that they work with. What is
Speaker 1: incrementally slightly more negative for companies that work with brand advertisers.
Speaker 1: Snap is calling that out here that brand advertisers were
Speaker 1: much slower during March and they pulled back very quickly.
Speaker 1: And if you look at um Facebook versus Twitter versus Pinterest,
Speaker 1: I think Twitter is the one that overskews towards brand advertisers.
Speaker 1: So if what Snap is telling is really applicable to
Speaker 1: everybody else, then Twitter is probably the one that is
Speaker 1: going to see more negative brands, and Facebook and p
Speaker 1: Interest may not as much. Meantime, Twitter has a lot
Speaker 1: of other drama to deal with, and I know you
Speaker 1: also cover Twitter. What do you think about Elon Musk
Speaker 1: as a buyer? Do you like this? I think there
Speaker 1: are just a lot of hurdles, logistical, financial diligions, and
Speaker 1: just the overall uh kind of how he gets the
Speaker 1: board to approve this current offer. I think I think
Speaker 1: this is going to be a drama. It's going to
Speaker 1: be a ping pong match over the next collar three, six,
Speaker 1: nine months. I don't see a very clear and very
Speaker 1: immediate resolution in my opinion. I think that there is
Speaker 1: just there are too many variables. Macro environment is weakening,
Speaker 1: so probably Elon Musk may have second thoughts as we
Speaker 1: see the earnings kind of unfold. So does that make
Speaker 1: Twitter a dangerous or risky stack to own right now?
Speaker 1: Given what we're hearing from Snap right now, if brand
Speaker 1: advertisers are pulling back because of not just Ukraine, but
Speaker 1: just the confluence of all the macro headwinds we are seeing,
Speaker 1: interest rate hikes, inflation, supply chain uncertainty. Europe may have
Speaker 1: some issues. European consumer brand advertisers may have some issues.
Speaker 1: So I think, yeah, Twitter is the one that is
Speaker 1: going to probably face more issues, and we'll learn that
Speaker 1: over the next week or so. In this STAB story,
Speaker 1: do you also see some of the problems Netflix is
Speaker 1: facing people leaving their homes, not sitting on the couch
Speaker 1: all day, getting out and not you know, sitting there
Speaker 1: on their phone watching Netflix or hanging out on Snapchat.
Speaker 1: I think so, isn't that there is obviously a consumer
Speaker 1: behavior shift. We we did, the pendulum of consumer behavior
Speaker 1: did shift extremely to all these internet stocks and all
Speaker 1: these Internet companies, and now we're seeing the pendulum swing
Speaker 1: way far away. People are sitting on flights, sitting on cruises,
Speaker 1: and just sitting away from their iPads and iPhones. So
Speaker 1: I feel at some point, once we get back to
Speaker 1: the new normal, we should see resumption of consumer behavior.
Speaker 1: But until then, I think all these UH companies that
Speaker 1: rely on engagement in front of your iPad, engagement in
Speaker 1: front of your iPhone are going to see pockets of weakness.
Speaker 1: UH in Netflix again is also probably at the mercy
Speaker 1: of this vertical video shift that we are seeing across Internet. TikTok,
Speaker 1: Snapped has its spotlight, Instagram has its reels, YouTube has
Speaker 1: its short So there is this shift towards short form
Speaker 1: video ad supported video, and plus there's the pendulum shifting
Speaker 1: away from out of home kind of consumption. So they
Speaker 1: are in a slight air pocket. Hopefully they recover. I
Speaker 1: wonder how much competition you think snapas seeing from TikTok
Speaker 1: in particular, given you know similar audiences and that we
Speaker 1: don't have as much visibility into TikTok's results. Um, like,
Speaker 1: how much is it? Is it really TikTok alone that's
Speaker 1: taking a bite here? Um, TikTok is definitely taking a
Speaker 1: bite from across the overall advertising ecosystem. It's not it's
Speaker 1: not too small to be ignored right now. It is
Speaker 1: it is a much bigger force to reckon with both
Speaker 1: from engagement and time spent on TikTok, as well as
Speaker 1: advertiser kind of share of wallet perspective. I feel when
Speaker 1: we talk to a lot of ad agencies, TikTok is
Speaker 1: probably positioning itself as a linear TV sort of brand
Speaker 1: advertiser friend lee um advertising engagement platform, so it is
Speaker 1: more closer to you, Pube and a little bit further
Speaker 1: away from Snap is what they're currently positioning. But again
Speaker 1: I think TikTok is definitely something that is going to
Speaker 1: start to mount it as they scale up. Still very
Speaker 1: early days, all right, Rod called Carney MK M partners,
Speaker 1: Thank you so much. Lots to digest. Another story we
Speaker 1: continue to watch meantime, Florida's Republican controlled legislator later has
Speaker 1: passed a measure to strip Disney of special privileges in
Speaker 1: the state. This escalates a feud between Governor Ronda Santis
Speaker 1: and the entertainment giant. The legislation could lead to the
Speaker 1: dissolution of the Really Creek Improvement District, where Disney has
Speaker 1: been allowed to carry out its own municipal functions on
Speaker 1: its own. It was already approved by the Senate, now
Speaker 1: goes to the Santis for his signature. Elon Musk appears
Speaker 1: to be getting closer to making his attempt to own
Speaker 1: Twitter a reality. Bloomberg has learned Musk is now vetting
Speaker 1: potential investors. For more on it all, I'm joined by
Speaker 1: bloombergs Michelle Davis, who reports on M and A for
Speaker 1: US and David Kirpatrick, founder of Teconomy. So, Michelle, what's
Speaker 1: the latest on how much funding Musk has actually pulled
Speaker 1: together at this point. Yeah, so, I mean you said it,
Speaker 1: it seems like he is serious about this. Today he
Speaker 1: issued a filing that said he has raised forty six
Speaker 1: point five billion dollars of financing. Five billion dollars of
Speaker 1: that is debt um some of its lb O debt,
Speaker 1: you know, from banks that's going to be in the
Speaker 1: form of junk bonds and loans, and then uh, part
Speaker 1: of that is also a margin loan that basically is
Speaker 1: you know alone secured by his own Tesla shares. And
Speaker 1: then the other half was twenty one billion of equity financing.
Speaker 1: That's just him basically promising that he's going to contribute
Speaker 1: equity to the to the offer um. And so right
Speaker 1: now he's can be canvassing investors. You know, he doesn't
Speaker 1: have one billion dollars, but he at the ready he
Speaker 1: has about three billion. And so over the coming days
Speaker 1: what he's gonna be doing is talking to equity investors
Speaker 1: and kind of you know, vetting them to figure out
Speaker 1: who he wants to participate in the bid with him.
Speaker 1: David The fact that we're even talking about whether or
Speaker 1: not Elon Musk is serious about a forty three billion
Speaker 1: dollar bid he already said he planned to make is
Speaker 1: so ironic. I mean, the numbers here are just huge.
Speaker 1: How do you expect this all to continue to unfold? Well?
Speaker 1: If I knew how it was going to continue to unfold, uh,
Speaker 1: I would be unusual, because I don't think anybody, even
Speaker 1: Elon Musk, really knows how it's likely to unfold. In fact,
Speaker 1: I was talking today to a very very veteran investor
Speaker 1: and I asked him what he thought, and he said, well,
Speaker 1: it depends on how Musk feels that day. If he
Speaker 1: feels good, he'll do it. If he doesn't feel good,
Speaker 1: he probably won't do it. I mean, that's pretty the
Speaker 1: much of the world we're in, where the world's richest
Speaker 1: man is incredibly whimsical and unpredictable and and silly, and
Speaker 1: I sort of revel in that, but it's not easy
Speaker 1: to protect what comes next. So, Michelle, who are these
Speaker 1: investors who are willing to get into bed with somebody
Speaker 1: who is unpredictable on any given day. So there's still
Speaker 1: a lot that we don't know. But what we do
Speaker 1: know is that there are twelve banks that have agreed
Speaker 1: to contribute the debt financing. We're in Stanley, you know,
Speaker 1: has the biggest share of that. I think they're agreeing
Speaker 1: to put up four five point five billion dollars of debt.
Speaker 1: And then you know it's the City Groups, Well, Bank
Speaker 1: of America, Barclay's, those kinds of big international banks. On
Speaker 1: the equity side, we know that Apollo is thinking about
Speaker 1: helping him. It's unclear what form that would take, but
Speaker 1: up until you know, right now, we still don't know
Speaker 1: who else it's. It's gonna it's gonna materialize over the
Speaker 1: coming days, is what we're told. So, David, what do
Speaker 1: you imagine Jack Dorsey is thinking here? He's been rather
Speaker 1: crick picked, like initially supportive than he himself, um tweeting
Speaker 1: about the dysfunction of Twitter's own board where you know
Speaker 1: who side is Jack on? Well, he voted for the
Speaker 1: poison pill. The company confirmed that. So we know that
Speaker 1: he's cautious about this deal. As a manager and as
Speaker 1: a steward of his own shares and the company that
Speaker 1: he co founded. My guess is that he's generally sympathetic
Speaker 1: to Musk and a lot of the things that Musk
Speaker 1: says he would love to see happen if they were
Speaker 1: really possible, although not to completely abandon moderation, which is
Speaker 1: one of the things that Musk seems to be implying
Speaker 1: or saying that he might do. He doesn't say that
Speaker 1: straight out, but it sounds like he's interested in reducing moderation.
Speaker 1: But one thing that Jack did last week was he
Speaker 1: tweeted cryptically everybody stop and hug Now what does that mean?
Speaker 1: Does that mean the people the board of Twitter should
Speaker 1: hug Elon Musk or or vice versa, or you know,
Speaker 1: that does suggest that probably he thinks a negotiated resolution
Speaker 1: as possible. But again we are reading tea leaves here
Speaker 1: is Michelle, is there a potential for some sort of
Speaker 1: negotiated resolution? What might that look like? Yeah? Definitely. You know,
Speaker 1: when I've been talking to lawyers and bankers who are
Speaker 1: experts in this matter, they have been saying that every
Speaker 1: hostile bid always ends up as a friendly bid if
Speaker 1: it does turn into an actual deal. And so, you know,
Speaker 1: for this to work for Elon Musk, he needs the
Speaker 1: board to remove the poison pill, because even if he
Speaker 1: gets a tunder offer done like it's a deal would
Speaker 1: be contingent on them removing that. So I do think
Speaker 1: for this to work, And and now he's shown that,
Speaker 1: you know, he is serious about this, this offer, it
Speaker 1: is going to have to turn into something friendly. One
Speaker 1: other thing that I thought was interesting about today's amended
Speaker 1: filing was that he said his offer is no longer
Speaker 1: contingent on a due diligence. So that means basically, we
Speaker 1: don't need to look you know, we don't need to
Speaker 1: look into your books. Um, we could do a deal tomorrow.
Speaker 1: We have the financing here, let's let's just do it. Um.
Speaker 1: So yeah, David, you know, having covered social networking for
Speaker 1: so long, including the earliest days of Facebook, do you
Speaker 1: think that I mean that Twitter could could change in
Speaker 1: a good way under Elon Musk's leadership, you know, like,
Speaker 1: do you like the idea of open sourcing the algorithm
Speaker 1: for example? That I do think is a good idea,
Speaker 1: probably depending on how it was implemented. I think the
Speaker 1: idea of giving users more control over how they experience
Speaker 1: these social networks is a good idea. Um. But even
Speaker 1: you know your either boss or a longtime colleague, Matt
Speaker 1: Winkler today or just week, wrote a piece about how
Speaker 1: what a brilliant manager Elon Musk is. He was talking
Speaker 1: primarily about Tesla, but look, you can't really bet against
Speaker 1: Elon Musk as a business decision maker. That would be
Speaker 1: very risky. Uh. It could be that he's willing with
Speaker 1: his own money to invest even more in algorithms, AI
Speaker 1: other technology that might make managing Twitter better or easier.
Speaker 1: I like his tweet today that he could get rid
Speaker 1: of the bots and um and authenticate all users. I
Speaker 1: think that's a very good idea that would actually make
Speaker 1: Twitter more like Facebook, because Facebook was always intended to
Speaker 1: be an authenticated social network. You use your real name.
Speaker 1: Now we know that isn't in fact what has happened entirely,
Speaker 1: but it's still the general design. I would like to
Speaker 1: see Twitter go in that direction. Uh, Michelle, he's personally
Speaker 1: pledged twenty one billion of his own equity. How much
Speaker 1: of that do you think if a deal happens he'd
Speaker 1: actually spend it? All probably comes down to who he
Speaker 1: is able to convince to, you know, sign on to
Speaker 1: provide equity. So at this point, if he needed to
Speaker 1: do it tomorrow, he could do three billion, unless he
Speaker 1: sold a bunch of his his Tesla stock Um and
Speaker 1: so yeah, it really depends on you know, who decides
Speaker 1: to come on and what their conditions are for for
Speaker 1: joining him. I think another thing that's notable about this
Speaker 1: whole situation is, up until today, you know, there are
Speaker 1: some people who I don't think took this very seriously
Speaker 1: because there was a question around, you know, how he
Speaker 1: didn't have the financing. Now that he does. I think
Speaker 1: one thing that we're definitely keeping an eye on is
Speaker 1: does a sudden in motion, you know, chain of events,
Speaker 1: where as we've talked about before, you know, a potential
Speaker 1: White Knight comes in to try to make an offer
Speaker 1: for Twitter, you know, to kind of save them from
Speaker 1: Elon Musk. Me there could have been you know, some
Speaker 1: on the sidelines who weren't taking it seriously. But now
Speaker 1: that they see that Musk has the money, we might
Speaker 1: see them emerge. Michelle Davis, Bloomberg, David Kirkpatrick of Teconomy.
Speaker 1: We will continue to watch how this all continues to unfold.
Speaker 1: Thank you. Let's get back to this week's top story,
Speaker 1: and that of course, is Netflix. Three days after losing
Speaker 1: subscribers for the first time in a decade, shares falling
Speaker 1: even further down almost four on the day, extending a
Speaker 1: massive sell off. I want to bring in Bloomberg Jerry
Speaker 1: Smith for more on this, and Jerry, the big question
Speaker 1: is is this just a blip, is this a netfli
Speaker 1: X thing, or is this the streaming business at its peak? Yeah?
Speaker 1: I think that's what all the investors and media companies
Speaker 1: want to know right now. Um. You know, not only
Speaker 1: did Netflix is stock the client after this, but um,
Speaker 1: you know, Warner Brothers, Discovery and other media companies that
Speaker 1: have made big, big bets on streaming also saw their
Speaker 1: shares fall. And I think investors are wondering if Netflix
Speaker 1: is now starting to hit its head on the ceiling
Speaker 1: of how many subscribers there are in the streaming business,
Speaker 1: So what does that mean for Disney? Plus what does
Speaker 1: that mean for HBO Max? Um, you know, these are
Speaker 1: the entire media industry really transformed its business and went
Speaker 1: all in on streaming because Netflix was so successful. If
Speaker 1: Netflix is starting to hit a wall, um, you know,
Speaker 1: that's bad news for everybody. Bill Ackman, one of the
Speaker 1: largest shareholders Pershing Square, dumped their entire stake three point
Speaker 1: one million shares. I mean, is there any relief in
Speaker 1: sight here. Well, Netflix says that the you know, COVID
Speaker 1: sort of obscured their business. Um, they did really well
Speaker 1: during COVID. Everyone was stuck at home and and now
Speaker 1: that COVID is starting to end, they're saying there's other
Speaker 1: factors that are causing the subscriber decline. They point to
Speaker 1: things like a hundred million people who are sharing other
Speaker 1: passwords and if they can get more of those people
Speaker 1: to start paying, Um, you know, there's a lot of
Speaker 1: things that Netflix says it could do. And they're also
Speaker 1: introducing a lower cost ad supported service, which is very interesting.
Speaker 1: Netflix had long said they would never have advertising, and
Speaker 1: now they're talking about a cheaper service interned with ads,
Speaker 1: and that's really an acknowledgement that they can't just keep
Speaker 1: raising prices, but if they want to keep growing, there's
Speaker 1: a part of the market that wants a cheaper service. Now,
Speaker 1: on the other side, they're CNN Plus abruptly getting shut
Speaker 1: down less than a month after launch. I actually had
Speaker 1: a chance to shoot down with Andrew Morris, who really
Speaker 1: launched this service s VP at CNN, and here's what
Speaker 1: he had to say to me. Just a few weeks ago.
Speaker 1: The beauty of a subscription service is if you create
Speaker 1: something of value, people will paying. We are so confident
Speaker 1: that we're building something of such value that that people
Speaker 1: are going to be willing to give a give up
Speaker 1: one cup of coffee a month to pay for this service. So, Jerry,
Speaker 1: what happened? Why didn't Discovery give it more of a chance? Well,
Speaker 1: I think this is largely a story about two media
Speaker 1: companies that had different strategies and streaming CNN's parents. Up
Speaker 1: until a couple weeks ago, Warner Media felt that CNN
Speaker 1: could exist as a standalone streaming service. David Zaslav, who's
Speaker 1: going to who is the CEO now of Warner Brothers Discovery,
Speaker 1: the combined company, has been saying for several weeks that
Speaker 1: the you know, their strategy is going to be one
Speaker 1: big streaming service that competes around the world with Netflix,
Speaker 1: And that really was a sign that CNN Plus did
Speaker 1: not fit into David Zaslov's vision. Now, streaming news is
Speaker 1: something that no one's really cracked. I've heard a couple
Speaker 1: of analysts say over the last couple of days that
Speaker 1: Flix needs streaming news and sports. Is that something that
Speaker 1: CNN and other streaming services are still going to need
Speaker 1: if they really want to rack up more subscribers. Well,
Speaker 1: I mean that was really what was so interesting about
Speaker 1: CNN Plus. Nobody had really tried to have a streaming
Speaker 1: service that people have to pay for, um, for news.
Speaker 1: And now you know the fact that uh, you know,
Speaker 1: Warner Brothers Discovery has pulled the plug on this so quickly.
Speaker 1: I think we still don't know what the market is,
Speaker 1: what the appetite is for streaming service that you have
Speaker 1: to pay for, a lot of TV networks have streaming services,
Speaker 1: but they're all free. Um. You know, there were some
Speaker 1: numbers that came out about CNN Plus as early subscribers,
Speaker 1: but it was still early. It was only a few
Speaker 1: weeks into the launch. And you know, for now we
Speaker 1: are left wondering just how popular kind of streaming service
Speaker 1: for news really be. All Right, A story will continue
Speaker 1: to follow Bloomberg's Jerry Smith thank you. Meantime, another news,
Speaker 1: Cheryl Sandberg, meta CEO, reportedly pressured a British newspaper and
Speaker 1: not to publish a story about her then boyfriend. According
Speaker 1: to The Wall Street Journal, on two occasions, Samberg contacted
Speaker 1: the digital edition of the daily mail regarding reporting on
Speaker 1: Activision CEO Bobby Kodek and a restraining order taken out
Speaker 1: by his former girlfriend. Samberg and Kdek reportedly worked with
Speaker 1: Facebook and Activision employees on this matter. Facebook is said
Speaker 1: to have begun a review of her actions. Octa has
Speaker 1: concluded its investigation of a security breach, saying the impact
Speaker 1: was far smaller than it could have been. The January
Speaker 1: hack lasted for just twenty five minutes, according to the
Speaker 1: company and the hackers, which Bloomberg learned included a sixteen
Speaker 1: year old in England, had control of a single workstation
Speaker 1: from a third party vendor. Just two customer systems were breached,
Speaker 1: far fewer than the three hundred sixty six they initially thought.
Speaker 1: I'm joined out by Frederick Karsti is the co founder
Speaker 1: and c o O of Octa, also out with a
Speaker 1: brand new book Zero to I p o over one
Speaker 1: trillion dollars of actionable advice from the world's most successful entrepreneurs. Frederick,
Speaker 1: thank you so much for joining us. Thanks. So, we're
Speaker 1: gonna get to the hack, but I'll talk about the
Speaker 1: book first. Um, there are a lot of books out
Speaker 1: there about entrepreneurship. You say, they don't give you what
Speaker 1: you need when you're really in the trenches. What do
Speaker 1: they not have that your book does well? I think
Speaker 1: one of the things for an entrepreneur is these books
Speaker 1: that are out there today, they just try and lionize
Speaker 1: what happened to other folks, and they walk through their
Speaker 1: lives and what happened and how they build their businesses
Speaker 1: and personally. What we're trying to do is demystify what
Speaker 1: happens in entrepreneurship. We're trying to get advice from the
Speaker 1: best entrepreneurs in the world, gathering all that advice in
Speaker 1: one place, and it's basically the field guide that I
Speaker 1: wish I had had when we started Actor thirteen years ago.
Speaker 1: You open with a story about Octor revenue flatlining. You're
Speaker 1: going into a board meeting, you think you're going to
Speaker 1: get fired and that the company is done. Instead, Ben Horowitz,
Speaker 1: one of your investors, calls you and instead of firing you,
Speaker 1: he gives you some advice. What did he tell you
Speaker 1: that enables you to turn the company around. That's a
Speaker 1: great example of some of the actionable advice that I
Speaker 1: think too often doesn't get shared with entrepreneurs. Entrepreneurs think
Speaker 1: that everything is a perfect journey, and when they look
Speaker 1: from the outside, all these companies are destined for glory.
Speaker 1: As you said in octr, revenue basically flatlined, and Ben
Speaker 1: called and said a couple of things. He said, first
Speaker 1: of all, you need to get help, and you need
Speaker 1: to hire leaders who have done this kind of thing before.
Speaker 1: And second of all, he said, you need to keep
Speaker 1: the main thing the main thing. In our case, it
Speaker 1: was focusing on the right go to market segment and
Speaker 1: pivoting too much large organizations that actually have serious identity
Speaker 1: management opportunities and problems. So it's Octus five year anniversary
Speaker 1: actually this month, I believe, and it's been an incredible ride.
Speaker 1: Sheriffs have gone way up more recently that they've come
Speaker 1: a bit down from their peak. What is the hardest
Speaker 1: lesson you've learned in the five years since going public?
Speaker 1: I think keeping a view on where you're going in
Speaker 1: the long term and reminding employees that we're building something
Speaker 1: that's important in a big market that matters too many people.
Speaker 1: So if you pay attention too much to this stock
Speaker 1: on a day to day basis, you might feel as
Speaker 1: though you're not sure you're focused on the right things.
Speaker 1: But if you take the long view, look, we're in
Speaker 1: markets that are worth eighty billion dollars, the companies a
Speaker 1: billion and a half in revenue, growing fifty year over year,
Speaker 1: and we've set very clear benchmarks for FY twenty six
Speaker 1: of four billion dollars of revenue with FCF margins. If
Speaker 1: you keep a good view on that long term perspective,
Speaker 1: I think we're going to be in great shape. I'm
Speaker 1: sure you've learned a few lessons from the hack, and Todd,
Speaker 1: your CEO and co founder, was recently on the show
Speaker 1: to talk about what happened. Take a quick listen to
Speaker 1: what he had to say. We are a trusted brand
Speaker 1: and that trust has been damaged, and we do take
Speaker 1: accountability for all the mistakes we've made, and we have
Speaker 1: made mistakes, and one of them, as you mentioned, is
Speaker 1: the communication was not as clear as it should have been.
Speaker 1: What's the lesson here, Well, there's a number of lessons.
Speaker 1: First of all, as the global leader and I identity,
Speaker 1: we realize now and appreciate what critical infrastructure Octave is
Speaker 1: for our customers. And look, we take all security events
Speaker 1: very seriously. Uh, there's two things I want to clarify.
Speaker 1: First of all, the Octave service was not breached. Second all,
Speaker 1: the Octo product did what it was supposed to do
Speaker 1: uh and actually prevented a major breach from happening. There's
Speaker 1: a number of things that we've learned here. I think,
Speaker 1: first of all, from a technology perspective, we need to
Speaker 1: take make sure that our third party partners are held
Speaker 1: accountable to the same standards we are. And then secondly,
Speaker 1: we have to improve communication. Look, we're a trusted brand,
Speaker 1: as Todd said, and our customers rely on us for
Speaker 1: communication and trust when it comes to the platform what
Speaker 1: we say and how we communicate with them, and that's
Speaker 1: paramount So great learning opportunity for us, and things will
Speaker 1: certainly do better in the future. How much harder will
Speaker 1: security and identity management be in Web three? And what
Speaker 1: is octaves play there? Yeah? Well Web three obviously is exciting.
Speaker 1: It's a combination of both decentralization and modern advanced technology. Look,
Speaker 1: I think frankly identity could be a game chain. You're
Speaker 1: on the blockchain, think about you and as consumers information
Speaker 1: like health and credit, These are things that we should
Speaker 1: own and make sure the right people have access, not
Speaker 1: entrust them the third party credit agencies who have breaches
Speaker 1: like we saw a couple of years ago. The challenge
Speaker 1: and the opportunity and Web three of course, is this
Speaker 1: is not just cutting edge technology. This is bleeding edge technology,
Speaker 1: and we really have to move it forward becoming before
Speaker 1: it becomes mainstream. Elon Musk making a play for Twitter,
Speaker 1: what do you think? I think it's very exciting as
Speaker 1: an entrepreneur. I mean Elon Musk's track record stands for itself.
Speaker 1: I think this is an undervalued asset in Twitter, you
Speaker 1: compared to Facebook Meta, which is a graph of the
Speaker 1: people you know. It's important, but Twitter has a lot
Speaker 1: more critical information and what you care about, what you
Speaker 1: can follow now. I do think he's shaking things up clearly.
Speaker 1: I think there's an opportunity for that board to be
Speaker 1: born involved in governance. But I think this might be
Speaker 1: Elon's Rupert Murdoch moment. If you think back to seventy
Speaker 1: six when Rupert Murdoch bought The New York Post, it
Speaker 1: gave that first voice into broad media and communications, and
Speaker 1: I think that's what you're seeing right now with the
Speaker 1: interesting though he's unpredictable on any given day, does that
Speaker 1: concern you. It looks at the end of the day,
Speaker 1: Twitter is a huge megaphone form. I mean he has
Speaker 1: eighty two million followers. Uh, it's clearly an underperforming asset.
Speaker 1: S MP five hundred has outperformed the Twitter stock over
Speaker 1: the last decade by a factor of two to one.
Speaker 1: And Fran think there's a lot he could do with
Speaker 1: the business. If you separate out that technology business from
Speaker 1: the media part, you open source who can have access
Speaker 1: to that information. The question of moderation goes away. Let
Speaker 1: the capital markets decide how much moderation people want on
Speaker 1: their version of Twitter. Well in and not unlike Elon Musk,
Speaker 1: you actually have another company that's focused on the brain,
Speaker 1: focused on curing brain disease. Can you talk to us
Speaker 1: a little bit about this. Yes, it's a great company
Speaker 1: called horofilis uh that we have forty five folks based
Speaker 1: here in San Francisco. We are focused on AI empowered
Speaker 1: neuro therapeutics, trying to cure central nervous system disease. Two
Speaker 1: major ones that we have breakthroughs on all Timers and
Speaker 1: Rhett syndrome that are going into the clinic soon. And
Speaker 1: it's something I'm very excited about interesting. Well, thanks so
Speaker 1: much for joining us and telling us about that and
Speaker 1: your new book zero to I p O available. Thank
Speaker 1: you very much, Thank you. Time for our crypto report
Speaker 1: now Bitcoin jumping briefly past and up since the beginning
Speaker 1: of the week, but still staying in that tight range.
Speaker 1: Our crypto contributor Snali Bossik here now for more not moving,
Speaker 1: not moving, Shinali? Why not moving so much friction, Emily,
Speaker 1: when you take a look at it, we're back to
Speaker 1: where we really started the week again pretty much. We
Speaker 1: were back down to forty eight hundreds, so a little
Speaker 1: higher than where we ended Monday, but back to where
Speaker 1: we were pretty much last week. I mean, we haven't
Speaker 1: moved at all in Booklyn, but I want to chase
Speaker 1: meals because there's some long term trends here about how
Speaker 1: people are using bitcoin that are worth taking a look at,
Speaker 1: and that settlements bitcoins surpass Visa in the amount it's
Speaker 1: been settling, with more than thirteen trillion dollars on chain,
Speaker 1: and a lot of that is due to the work
Speaker 1: on Layer two protocols. So it's worth taking a look
Speaker 1: into how the bitcoin and its networks are changing and
Speaker 1: facilitating more payments because that's going to be the adoption
Speaker 1: that drives the price later on. Alright, Hanalie, thank you,
Speaker 1: stick with us. I want to bring in our next guest,
Speaker 1: Kathleen Brightman, co founder and CEO of the blockchain based
Speaker 1: smart contract platform TESOS. Kathleen, wouldn't make the fact that
Speaker 1: we're not seeing a lot of movement here in crypto markets.
Speaker 1: It's really trading along with with traditional equities. You know,
Speaker 1: what does that have to say about the future of cryptocurrency. Well, definitely,
Speaker 1: rupture is one of the main narratives that people have
Speaker 1: been saying for many years, which is that bitcoin is
Speaker 1: kind of this anti correlated asset or uncrrelated asset to
Speaker 1: traditional equity work. It's, um, we've seen that's on the case.
Speaker 1: We've also seen some things that we're um, you know, unexpected, Uh,
Speaker 1: especially at the beginning of the pandemic. I'm curious, Kathleen,
Speaker 1: what you think about the conversation around bitcoin versus etherium
Speaker 1: as everybody waits for the merge and the idea of
Speaker 1: proof of steak and what that might do to change
Speaker 1: how people interact with blockchain here. Yeah, so there's a
Speaker 1: lot of things in that question. Um, I mean basically, uh,
Speaker 1: Bitcoin and ethereum secure themselves through a mechanism called proof
Speaker 1: of work. UM. We just come into scrutiny as the
Speaker 1: technology has got more popular because in effect, what it
Speaker 1: does UM is it consumes energy in order to secure
Speaker 1: the blockchain. UM. Proof of steak networks do not do this,
Speaker 1: and you know, they've been looked at since people have
Speaker 1: realized that bitcoin is very energy. Can sometive as an
Speaker 1: alternative UM, but there isn't one that's as popular as
Speaker 1: bitcoiner ethereum UM. The theorium of course has an advertising
Speaker 1: itself as imminently transitioning to proof of steak, since it
Speaker 1: does in fourteen, but it has failed to do so
Speaker 1: to date. So it's been a big debate, Like you know, basically,
Speaker 1: do you value this technology enough to UM hold your
Speaker 1: nose and accept that it UM I guess consumes of
Speaker 1: energy and most instances, or do you want to go
Speaker 1: to alternatives like tessos which don't uses energy consumption? Yeah,
Speaker 1: and how do you think about that in terms of
Speaker 1: not just energy consumption, Kathleen, but in terms of transferring assets.
Speaker 1: There's been so much conversation this year about Lightning network,
Speaker 1: for example, on the ability to fill the facilitate payments
Speaker 1: over bitcoin. But we've had a conversation internally it's like
Speaker 1: you can do that more simply without another layer on ethereum.
Speaker 1: So where does Tasa's plan to that conversation. Yes, so
Speaker 1: I think tessos U addresses a problem that both bitquin
Speaker 1: and Ethereum have been unable to solve, which is it
Speaker 1: has a formal governance mechanism for ratifying and instantiating upgrades
Speaker 1: to the protocol. So it happens on the flight, happen seamlessly.
Speaker 1: In fact, it's happened nine times without any drug, mostly
Speaker 1: adding to the technological capability of the blockchain itself. UM.
Speaker 1: So I think, you know, basically for this tough to
Speaker 1: scale effectively, you need to have a formal governance mechanism
Speaker 1: that actually instances upgrades in a meaningful fashion. Um. That's
Speaker 1: the way it would work if you we're thinking about
Speaker 1: this happening, you know, the order of millions or not
Speaker 1: billions of participants. Um. And I think Teslas is the
Speaker 1: only block teain that really addresses this issue of stasis
Speaker 1: uh in in the code base. And so that's why
Speaker 1: I think it's you know, obviously the future um. But
Speaker 1: but bit Quin and Ethereum to date have had a
Speaker 1: lot of promising a lot of under delivering in terms
Speaker 1: of technical technical I guess instantiations. We've seen limitations of
Speaker 1: that over the last year or so, when Ethereum has
Speaker 1: fallen under scrutiny for having a large energy energy consumption,
Speaker 1: but has still failed to upgrade itself to the proof
Speaker 1: of state version that it's been promising since as four
Speaker 1: team Kathleen Tesla is the second only two Ethereum and
Speaker 1: Twitter and f T discussions in the art world. And
Speaker 1: I'm curious what you think about the prospect of Elon
Speaker 1: Musk owning Twitter UM. I mean, it's certainly pound for
Speaker 1: pound in terms of entertainment value. Has not disappointed UM,
Speaker 1: as is Elon's want um. I think, you know, basically
Speaker 1: Tessa's right now feels like Greenach Village in the nineteen sixties.
Speaker 1: All the cool kids are hanging out there and minting
Speaker 1: a lot of art. Um. It's just a matter of
Speaker 1: time where people see it. Uh. And Twitter has been
Speaker 1: an excellent forum for discussion about this in in the
Speaker 1: cryptocurrency space, where you know, basically the project gets a
Speaker 1: lot of airtime that it wouldn't otherwise because of these
Speaker 1: discussions in the forum that's created. UM. So I'm in
Speaker 1: for the thunderdome elon Musk version of Twitter where you
Speaker 1: likely censorship doesn't happen. I don't know. I don't know
Speaker 1: what his great bus UM, but it certainly has kept
Speaker 1: me on the site in terms of entertainment value in
Speaker 1: Matt Lavina Matt Levine articles so good. I mean, I
Speaker 1: wonder interesting, I want, yes, I wonder also, you know,
Speaker 1: what is the future of communicating about crypto? Is it
Speaker 1: some Twitter discord mash up here? I mean, ultimately, there
Speaker 1: there seems to be some need or want for a
Speaker 1: more social communication aspect to cryptocurrencies, above and beyond just payments. Yeah,
Speaker 1: I think UM. I think a lot of these projects
Speaker 1: that are trying to do social alternatives on a blockchain
Speaker 1: or something like that have been mostly reactions from right
Speaker 1: wing people who have been largely banned on Twitter. UM.
Speaker 1: And you know the problem with that is that they
Speaker 1: often say very odious things. So I do think there's
Speaker 1: like a sort of uncensored version of the web that
Speaker 1: is very promising. I do think that UM, once it
Speaker 1: stops being championed by repugnant people of that most of
Speaker 1: the place society doesn't really quite like. Um, you know,
Speaker 1: it'll it'll actually take off. Fascinating. Kathleen Brightman, co founder
Speaker 1: and CEO of the blockchain based smart contract platform tesos,
Speaker 1: along with our own Shinnali BOSSI lots of food for
Speaker 1: thought there. Thanks. Crusoe Energy Systems, a cryptocompany taking waste
Speaker 1: gas from oil fields and harnessing it to power bitcoin mining,
Speaker 1: just announced three million dollars in new equity funding, providing
Speaker 1: new capital to accelerate their mission to align the future
Speaker 1: of computing with the future of the climate. I want
Speaker 1: to bring in Crusoe CEO and co founder Chase lock
Speaker 1: Miller now for more on this. Thank you so much
Speaker 1: for being here. So this is gas that would otherwise
Speaker 1: not be used, right, being used to power bitcoin mining.
Speaker 1: How does it work? That's correct. So what happens in
Speaker 1: the oil field is there's something called flaring. It's one
Speaker 1: of the largest mission sources from oil production. What happens
Speaker 1: is an oil company will draw an oil well and
Speaker 1: one of the byproducts of that is natural gas. And
Speaker 1: if they don't have access to a pipeline, the best
Speaker 1: most economic thing for them to do is just lighted
Speaker 1: on fire, and when they do that, they end up
Speaker 1: actually venting quite a bit of the methane in the atmosphere.
Speaker 1: And methane is a very potent greenhouse gas. It traps
Speaker 1: eighty two and a half times more heat in the
Speaker 1: atmosphere than c O two, and so it creates this
Speaker 1: massive waste with no beneficial use, and everybody kind of
Speaker 1: loses in the situation. So how do you then use
Speaker 1: it to power bitcoin mining? Sure? So Crusoe developed a
Speaker 1: technology called digital flare mitigation where we build, operate, and
Speaker 1: manage these mobile modular data centers that we deploy into
Speaker 1: the oil field and we co locate on site with
Speaker 1: the sites that would be flaring, and now instead of
Speaker 1: the gas being flared, it feeds into the digital flare
Speaker 1: mitigation systems to create low cost computing infrastructure to power
Speaker 1: digital currency mining, high performance computing GPU, uh GPU r GP,
Speaker 1: cloud computing product and things like artificial intelligence research. You're
Speaker 1: running a pilot program using excess natural gas from x
Speaker 1: on in North Dakota. How's that going? We actually can't
Speaker 1: comment on the relationship with x on UM. It's it's
Speaker 1: uh yeah, it's just no comment on that for time being,
Speaker 1: but can you tell us a little bit more about
Speaker 1: the process. I mean, certainly if you can rack up
Speaker 1: big partners, this could be quite powerful. Sure. So flaring
Speaker 1: is a global problem, and the World Bank has this
Speaker 1: initiative to end routine flaring. Today, there's about fourteen billion
Speaker 1: cubic feet today that get flared with no beneficial use.
Speaker 1: To put it in context of like if we could
Speaker 1: capture all of that gas and harness it for computing,
Speaker 1: we could actually power the whole Bitcoin network eight times over.
Speaker 1: So you know, it's a very very large waist. UM.
Speaker 1: It's enough to power all of Sub Saharan Africa. UM.
Speaker 1: So you know, it's a very very significant amount of
Speaker 1: wasted gas globally. UH. Today we operate in in the
Speaker 1: bach In in in North Dakota as well as Colorado
Speaker 1: and Wyoming. But with this additional financing, we're planning to
Speaker 1: expand into markets like the Permian Basin in Texas, the
Speaker 1: Vaca Marta down in Argentina, um, places like Abu Dhabi
Speaker 1: and Oman in the Middle East where flaring, you know,
Speaker 1: has been a persistent challenge for many decades. So longer term,
Speaker 1: what are the opportunities. You see two as you say,
Speaker 1: align the future of computing to the future of the climate. Sure,
Speaker 1: So Cruso's core mission is to align the future of
Speaker 1: computing with the future of the climate. What does that mean, UM?
Speaker 1: For us, that means building large scale climate aligned computing
Speaker 1: infrastructure to solve the world's most energy intensive computing problems.
Speaker 1: And like you know, digital currency mining is a great
Speaker 1: example artificial intelligence research high performance computing UM. And if
Speaker 1: you look at many estimates, they sort of project that
Speaker 1: the global power can sump from computing is going to
Speaker 1: exceed ten pc in the near term. And Crusoe's focus
Speaker 1: is trying to enable humanity to be able to benefit
Speaker 1: from all of those computing lead innovations that are gonna
Speaker 1: come about from that without having to suffer the environmental
Speaker 1: consequences of sourcing that power in a non climate align capacity.
Speaker 1: So let's say this doesn't happen. Is bitcoin mining on
Speaker 1: a path to significantly hurt the climate? Uh? Well, I
Speaker 1: mean our focus is trying to, uh, you know, ensure
Speaker 1: that that doesn't happen. So we but how you know,
Speaker 1: given the way it's happening now, and there are plenty
Speaker 1: of people who have you know, raised alarm about how
Speaker 1: bitcoin is created? Um, you know, just how much is
Speaker 1: the way that it happens now hurting the climate? So
Speaker 1: I think bitcoin mining is an industry is actually one
Speaker 1: of the cleanest power sourcing industries in the world by
Speaker 1: many estimates. It's you know, fifty six of the total
Speaker 1: power powering the bitcoin network is sourced in a climate
Speaker 1: align renewable UH, you know, a mission reducing way UM
Speaker 1: like digital flair mitigation UH. And you compare that to
Speaker 1: you know, the standard grid that's you know, that's you know,
Speaker 1: multiples of of what the what the u S grid
Speaker 1: for instance, UM is powered from our renewable perspective. So
Speaker 1: if you can harness all of this, then you could
Speaker 1: probably power many more things than bitcoin mining, right correct?
Speaker 1: So what else? So we've recently launched the Crusoe Cloud UM,
Speaker 1: which is a high performance GPU cloud service that's focused
Speaker 1: on delivering low cost and UH low impact computing solutions
Speaker 1: for people focused on AI research. We're working with amazing
Speaker 1: research universities like m I T to help researchers there
Speaker 1: discovery mysteries of the universe UM in a way that
Speaker 1: UH doesn't impact the climate and can doesn't impact their
Speaker 1: pocketbook too much. All right, well, we'll be following the
Speaker 1: latest developments. Keep us posted on your progress. Thank you
Speaker 1: so much, Thanks so much for having Emily, for joining us.
Speaker 1: CRUSOE CEO and co founder Chase lock Miller. And that
Speaker 1: does it for this edition of Bloomberg Technology. We're gonna
Speaker 1: be right back here tomorrow. Don't forget to check out
Speaker 1: our podcast. You can find it anywhere you get your podcasts,
Speaker 1: your Bloomberg Tech daily news Roundup. I'm Emily Chang in
Speaker 1: San Francisco. This is Bloomberg